The International Energy Agency (IEA) predicts that global demand for coal, natural gas and oil will peak by 2030 amid an “unstoppable” energy transition. According to the agency, carbon pollution from the three fossil fuels will also peak by the end of the decade, thanks to the proliferation of renewable energy.
The IEA report predicted that there would be close to 10 times more electric cars than there are now by the end of 2030. Renewable energy sources such as wind and solar will also account for nearly one-half of the worldwide energy mix compared to 30% in 2023.
Most nations have pledged to phase out dirty fuels such as coal and oil in favor of cleaner alternatives such as solar to cut down carbon emissions and mitigate global warming. Although dirty fuels now power a large portion of the global economy, demand is sure to drop as nations around the world ramp up investment in clean energy and turn away from fossil fuels.
The IEA notes that reduced economic growth in China will also cause demand for fossil fuels to drop. China is currently the second-largest economy, the largest energy consumer and the largest polluter on the globe. The Asian nation has made significant investments in green energy and has more installed solar panels than the rest of the world combined. Furthermore, China also represents the world’s largest electric vehicle market and currently accounts for more than one-half of global electric vehicle sales.
However, China has hit an inflection point, and the nation’s energy demands are set to peak in the middle of the decade, IEA says. IEA executive director Faith Birol said the green-energy transition is happening globally and it’s only a matter of time before renewable energy powers the world. This will significantly dampen demand for fossil fuels over the next decade as clean energies and alternative energy vehicles overshadow internal combustion engine (ICE) cars.
In the meantime, geopolitical events are causing gold prices around the world to surge higher by the day. The Russia-Ukraine war was the catalyst that caused sweeping energy shortages and soaring prices. but the IEA says the ongoing situation in Gaza may cause oil prices to rise even further.
Global benchmark prices have already risen by close to 7%, and the conflict may impact oil markets in the region, much like the 1973 Yom Kippur war triggered a chain of events that plunged the world into an energy crisis.
Coal companies such as Alliance Resource Partners LP (NASDAQ: ARLP) have a few more years to enjoy the current favorable market conditions before the demand for coal starts a steady decline until it no longer makes business sense to remain in that vertical.
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