 |
| Curtesy of IEA |
The World Energy Outlook 2024 (WEO-2024), published by IEA, confirms that global clean energy momentum remains strong enough to bring about a peak in demand for oil, natural gas, and coal globally before 2030 in all major scenarios. While low-emissions sources, primarily renewables, are set to generate more than half of the world's electricity before 2030, the report heavily emphasises that geopolitical risks remain highly elevated, particularly stemming from escalating conflicts in the Middle East.
Focus on the Middle East (2030 Outlook)
The Middle East is scrutinised as its energy architecture remains dominated by fossil fuels, accounting for roughly 98% of its energy demand in 2023. This high dependence is shifting slowly: in the Stated Policies Scenario (STEPS), the region's energy demand is expected to rise by nearly 25% by 2035.
Key Findings for the Middle East by 2030:
- Geopolitical Vulnerability: Around 20% of today’s global oil and LNG supplies flow through the Strait of Hormuz, a critical maritime chokepoint in the region.
- Fossil Fuel Supply Growth: The Middle East is set to be the largest source of growth in regional natural gas supply in the STEPS, alongside Russia and Qatar.
- Domestic Gas Demand: Middle East natural gas demand rises significantly, projected to reach 702 billion cubic metres (bcm) by 2030 in the STEPS [Table A.13, 464].
- Oil Demand Shift: The region consumed approximately 1.7 million barrels per day (mb/d) of oil in its power sector in 2023. In the STEPS, policies supporting the transition away from oil to natural gas and renewables are expected to reduce oil use in the power sector by about 900 thousand barrels per day (kb/d) by 2030. However, this transition is sensitive to delays, and oil demand could be 500 kb/d higher by 2030 if these shifts stall.
- Clean Energy Ambition: The region's power sector, which sourced 95% of its electricity from fossil fuels in 2023, is planning a massive scale-up of renewables. Renewables generation is set to increase ten-fold by 2035 in the STEPS. The region also possesses significant technical expertise and geological capacity for Carbon Capture, Utilisation, and Storage (CCUS), with planned capacity reaching over 30 Mt CO2 by 2035 in the STEPS.
Highlight on Iran
Iran is explicitly mentioned as a major regional player in both supply and consumption trends:
- Gas Supply: The Middle East's planned growth in natural gas production, essential for the STEPS trajectory, is led by Qatar, Saudi Arabia, and Iran.
- Oil Consumption: Iran is identified as a major consumer of oil-fired power within the region, accounting for over 20% of the Middle East's oil-fired power generation.
- Geopolitical Context: Global crude oil spare capacity calculations specifically exclude Iran and Russia.
China’s Energy Outlook: Rapid Electrification and Fossil Fuel Peaks
China’s energy sector profoundly shapes global trends, standing as the largest emitter worldwide and accounting for nearly 80% of global CO2 emission growth over the last decade. However, China is also leading the clean energy transition, possessing extensive manufacturing capacity and experiencing accelerating domestic deployment.
Renewable Energy Deployment by 2030: China is a clean energy powerhouse, having installed a record 260 GW of solar PV and over 75 GW of wind in 2023. The country accounted for 60% of the new renewable capacity added globally in 2023.
- China is on track to achieve its 2030 target of 1,200 GW of wind and solar capacity already in 2024.
- The Chinese government aims for non-fossil energy sources to comprise 25% of the total energy mix by 2030.
- In the Stated Policies Scenario (STEPS), the annual growth of clean electricity supply in China is set to exceed the average annual growth of electricity demand through 2030.
- The expansion is so fast that by the early 2030s, solar PV generation in China alone is on course to exceed the total electricity demand of the United States today.
- The share of electricity in China's total final consumption is projected to reach almost one-third by 2030, making it the most electrified major economy in the world.
Fossil Fuel Reliability and Peaks by 2030: The intense deployment of renewables and rapid electrification are set to bring about peaks in China's fossil fuel demand, helping the country meet its goal of securing a peak in emissions before 2030.
- China’s oil demand peaks before 2030 in the STEPS, primarily due to the electrification of road transport. Electric cars are projected to capture nearly 70% of new sales in 2030.
- Despite this near-term peak, China is projected to surpass the United States by 2030 to become the world’s largest oil market.
- Coal demand for electricity generation is also projected to peak by 2030. However, China's total CO2 emissions decline by only 3% annually between 2030 and 2050 in the STEPS.
- While China dominates the manufacturing capacity for key clean energy technologies, accounting for over 80% of global solar PV modules and EV battery cells, the biggest risk to its energy transition is the challenge of grid integration due to the rapid influx of variable renewables.
China's Reliance on Iranian Oil and Energy Trade
China is highly dependent on imported fossil fuels and plays a critical role in global oil and gas trade, while Iran is a major regional oil producer whose capacity is often excluded from global assessments due to geopolitical factors.
China as an Importer: China remains the world's largest oil importer through to 2050, as projected in the STEPS. Its dependence on oil imports is set to increase from approximately 75% today to more than 80% by 2050. Although its overall oil demand is set to peak before 2030, oil use as a chemical feedstock in the petrochemicals sector is projected to continue rising, reaching around 5 mb/d by 2035.
Context on Iran and Trade Routes: The Middle East is the world’s largest crude oil exporter, and the share of its exports flowing to emerging market and developing economies in Asia, including China, is set to rise significantly.
- Iran is explicitly mentioned as a major regional producer and a primary consumer of oil-fired power in the Middle East.
- Global crude oil spare capacity calculations specifically exclude Iran and Russia.
- Regarding natural gas, the potential for China to conclude an additional gas supply contract with Russia for the Power of Siberia-2 pipeline represents a major "wild card" for the LNG industry, which is facing a potential global glut. The STEPS does not assume that this Russian pipeline comes online, resulting in Russia's exports to China peaking at a maximum level of 60 bcm per year through to 2050.
The available sources emphasise the significant and rising role of the Middle East region in supplying Asia's increasing oil and LNG demand, but do not specifically quantify China's reliability or dependency on Iranian oil exports by 2030.
 |
| Curtesy of IEA |
