The International Energy Agency said on Wednesday that oil demand will continue to grow until 2040.
The agency said in its annual World Energy Outlook said it expects natural gas and renewable energy to lead the way in meeting global energy demand until 2040.
“We see clear winners for the next 25 years – natural gas but especially wind and solar – replacing the champion of the previous 25 years, coal,” IEA executive director Dr. Fatih Birol said.
The agency expects global oil demand continues to grow until 2040 mainly due to a lack of “easy alternatives” to oil in road freight, aviation and petrochemicals.
However, the IEA expects oil demand from passenger cars to fall even as the number of vehicles doubles in the next 25 years thanks to improved efficiency, more electric car ownership and the use of biofuels.
The IEA also flagged concerns about falling oil and gas investment levels.
The agency said that another year of lower upstream oil investment in 2017 would “create a significant risk of a shortfall in new conventional supply within a few years.”
The report added that oil and gas investment will be essential to meet demand and replace production declines but growth in renewables and energy efficiency will lessen the need for imports in many countries.
“If oil prices rise in the short term, then shale producers can react quite quickly to put more oil on the market, producing a see-saw movement. And if we continue to see subdued investments in new conventional oil projects, this could have profound consequences in the longer term,” Birol said.
The IEA expects coal consumption to “barely” grow iover the next 25 years due to falling demand in China.
Liquid natural gas is forecast to account for more than half of the global long-distance gas trade over the next decades, up from a quarter in 2000.
The EIA said that, with the natural gas market is already “well-supplied,” new LNG from Australia, the United States and elsewhere will create more competitive markets and prompt changes in contractual terms and pricing.
Birol expects renewables to make “large strides” in the coming decades but expects those gains to be “largely confined” to electricity generation.
“The next frontier for the renewable story is to expand their use in the industrial, building and transportation sectors where enormous potential for growth exists,” Birol added.