Countries dependent on oil revenues for much of their budgets will become increasingly vulnerable to problems caused by the global energy transition, the head of the International Energy Agency, Fatih Birol, told Bloomberg in an interview.
The world will still need oil this year and next, and for years to come, but it will need less and less of it, Birol said, noting that government regulation was instrumental in cementing the global course to a more renewable energy future.
Birol’s comments came after the IEA reported it will later this year release the first comprehensive roadmap to net zero emissions by 2050. The roadmap, according to the report, “will set out in detail what is needed from governments, companies, investors and citizens to fully decarbonise the energy sector and put emissions on a path in line with a temperature rise of 1.5 degrees Celsius.”
“The energy that powers our daily lives and our economies also produces three-quarters of global emissions. This means our climate challenge is essentially an energy challenge. The IEA is determined to tackle that challenge and lead global clean energy transitions,” Birol said in the release.
In Bloomberg’s interview, the head of the agency noted that without sufficient government commitment, however, oil demand will continue rising as it did before the pandemic. He pointed to China as a case in point: China’s demand for oil is already higher than it was before the pandemic, Birol said, because the government in Beijing has made no substantial change in its energy priorities.
Over the short term, however, the world may need more oil than it is currently producing, the official also said, noting that U.S. shale as one possible source of oil to fill the gap left by other producers. He added that “a big chunk” of U.S. shale oil is profitable at current WTI prices.