This piece was written by Aaron Cosbey and originally published in the International Institute for Sustainable Development on September 16, 2022.
- International Energy Agency scenarios project a decline in oil demand globally as climate policies intensify.
- Canada’s own energy body, the Canada Energy Regulator, shows a projected decline in Canadian production.
- Decline in oil demand is driven primarily by road transport, the largest component of crude oil demand at 44%, with the electrification of passenger vehicles especially leading the way.
- Other end uses for oil will reduce demand post-2030 or earlier under aggressive policy scenarios.
- Trends suggest global demand for oil will be in decline by 2030 and will drop significantly thereafter.
What is the future of global demand for oil? This is a critically important question for Canada as the global energy transition gains momentum, and governments establish policies to limit greenhouse gas (GHG) emissions, support economic stability, and promote energy security. To limit warming to 1.5°C, the world’s economy must quickly move away from fossil fuel consumption and reduce demand significantly, and trends in policies and technologies suggest this transition is already underway. This means that Canada, as a major oil exporter, will have to contend with a shrinking global market post-2030.
This brief will make the case for a near future with much less global demand for oil. Future briefs in this series will explore what this means specifically for Canadian producers.
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