CHEAPER RENEWABLES DRIVE ENERGY TRANSITION, CHALLENGING THE FOSSIL FUEL ERA
LONDON — November 12, 2025. Global demand for oil and gas is projected to continue growing until 2050, even as the energy sector undergoes its fastest transformation in decades — driven by surging investment in renewable energy and new technologies that are rapidly lowering costs.
According to the International Energy Agency (IEA), oil consumption will peak in the late 2030s but remain resilient for decades, sustained by transportation, aviation, and petrochemicals. Natural gas, meanwhile, is expected to serve as a “transition fuel,” bridging the gap between fossil fuels and renewable systems across emerging markets.
The IEA report underscores the paradox of the global energy landscape: while renewables are now the cheapest source of electricity in more than 80% of the world, fossil fuels continue to dominate total consumption due to slow adoption rates in heavy industry and logistics.
“The world is at a turning point,” said Fatih Birol, IEA executive director. “Renewables are growing faster than expected, but fossil fuel demand has not yet entered permanent decline — it’s more of a plateau.”
Solar and wind power are forecast to make up nearly half of all electricity generation by 2050, up from just 12% today, driven by major cost reductions and battery innovation. Still, coal, oil, and gas are projected to supply more than 60% of total energy needs two decades from now.
Energy analysts say the dual reality — growth in both renewables and hydrocarbons — reflects competing priorities: energy security, affordability, and climate goals. “Emerging economies are still prioritizing reliability over decarbonization,” said Amrita Sen, chief analyst at Energy Aspects. “That means oil and gas will remain critical for decades, even as the clean-energy economy explodes.”
Investment trends show that renewable energy spending surpassed fossil fuel exploration for the first time in 2024, but developing nations continue to rely on hydrocarbons to power manufacturing and transport infrastructure.
The IEA warns that without stronger policy alignment and large-scale storage breakthroughs, the energy system will remain carbon-heavy, putting global net-zero targets further out of reach.
“The future is not about choosing between oil and renewables,” Birol added. “It’s about managing a complex transition — one that has already begun, but not yet finished.”
