Green Dreams Meet Harsh Reality: The IEA's About-Face

The International Energy Agency (IEA), once a beacon of the green energy transition, is now hedging its bets. A new model quietly released alongside the UN climate talks in Belém, Brazil, suggests that global demand for oil and gas could continue its upward trajectory until mid-century. This isn't just a minor tweak; it's a potential course correction that demands a closer look.

The Numbers Tell a Story

The IEA's revised forecast projects oil and gas demand to reach 105 million barrels a day in 2035 and a staggering 113 million barrels a day by 2050. That's a significant jump from the 100 million barrels consumed daily in 2024. This projection isn't pulled from thin air. The IEA cites policy shifts in the US towards fossil fuels and a potentially slower adoption rate of electric vehicles (EVs) as key drivers. It's a cold, hard assessment of the current geopolitical and technological landscape.

And let's not forget about LNG (liquefied natural gas). Final investment decisions for new LNG projects have surged this year, promising a 50% increase in global LNG supply by 2030 – that’s 300 billion cubic meters of new annual export capacity. The implications are clear: the world is gearing up for more, not less, natural gas consumption. Are all countries really going to be able to quit gas? Probably not.

Australia's Solar Paradox

Meanwhile, Down Under, Australia is painting a somewhat conflicting picture. The IEA reports that Australia installed 5.2 GW of solar capacity in 2024, bringing its total to 40 GW. That’s more than all installations up to the end of 2015, which stood at 5.1 GW. Impressive, right? Well, here's the catch: despite this record-breaking year, Australia didn't even crack the top ten markets for annual solar installations. This marks the second year outside the top 10. Australia installs 5.2 GW of solar in 2024

Australia does, however, have a world-leading installation rate of more than 1.52 kW per capita. And with 26.1 GW of distributed solar and 13.4 GW of centralized solar, solar power now meets over 20% of the nation’s total electricity demands. That's significant, but it also highlights a critical point: even with substantial solar capacity, a country can still be heavily reliant on fossil fuels. In South Australia, with a population of 1.77 million, rooftop solar alone has routinely been sufficient to power the state with excess power from rooftop and large scale being exported to neighboring states for over the four hours around mid-day.

I've looked at hundreds of these energy reports, and this particular juxtaposition—record solar growth alongside increased fossil fuel projections—is jarring. It's like seeing a company tout its recycling program while simultaneously expanding its coal-fired power plant. It raises a fundamental question: are we truly transitioning away from fossil fuels, or are we just adding renewables on top of an existing, carbon-intensive system?

The EV Plateau and Gridlock

The IEA's forecast that EV sales will plateau after 2035 is another potential red flag. If EVs don't continue their exponential growth, the demand for oil will inevitably remain high. And while Australia is making strides in solar, the report also points out issues related to connection approvals, congestion management, and fragmented access arrangements that increase costs and risks for grid-scale projects. These are the kinds of bottlenecks that can derail even the most ambitious renewable energy plans. The Capacity Investment Scheme and its 40 GW target are laudable, but execution is everything.

The Great Decoupling? Not So Fast.

So, what's the real story? The data suggests a more complex and nuanced picture than the simple narrative of a rapid transition to renewable energy. The IEA's revised forecast is a sobering reminder that the world's appetite for oil and gas isn't going away anytime soon. Australia's solar achievements are commendable, but they also highlight the challenges of integrating renewables into an existing energy infrastructure and the importance of addressing gridlock. The dream of a rapid and complete decoupling from fossil fuels may be further off than many policymakers would like to admit.

The Illusion of Green: We're Still Hooked.

The IEA's about-face isn't just a forecast change; it's an admission of reality. The world isn't weaning itself off fossil fuels; it's developing a green veneer while still mainlining oil and gas. Australia's solar success is a bright spot, but it's not enough to offset the global trend. We're not solving the problem; we're just dressing it up in solar panels.