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From ‘peak oil’ to ‘peak energy’: what might the world expect?

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By Philippe Benoit

· 6 min read

The International Energy Agency now projects oil, gas, and coal use will all peak this decade. This constitutes a dramatic shift from the last 150 years when the thirst for fossil fuels persistently rose. But now this growth is nearing its end sooner than many expected, driven in part by a surge in renewables

This significant event, however, masks a more striking possible future: One in which total global energy use peaks and energy’s weight in world affairs diminishes. 

The modern era has been marked by increasing energy demand, largely driven by rising populations (more people using energy) and growing economies and incomes fueling increased energy consumption per capita. 

Over the last 50 years, energy use more than doubled from 250 exajoules to more than 600 as the world’s population increased from 3.7 to 7.8 billion people and global GDP expanded from $3 trillion to more than $85 trillion. The IEA projects energy demand may grow another 25 percent by 2050, servicing 9.7 billion people and a world economy projected to have further expanded annually by just under 3 percent. Renewables increase dramatically to meet this demand. 

Significantly, energy use drops under the IEA’s climate scenarios, driven by more robust climate policies than currently exist. While these scenarios may eventually materialize to counter the threat of climate change, they remain uncertain. 

There are, however, three forces operating largely independent of climate considerations that are likely to lead to peak global energy use before the end of this century. They are longer-term downward global population trends, structural shifts in emerging economies as their incomes rise and continued progress in energy efficiency.    

Ever since Malthus coined his theory, there have been fears that exponential population growth would outstrip food supply. Now, rather than uncontrolled population growth, the projections point to a global peak around 2085 or earlier, dropping thereafter to below 9 billion people by this century’s end. This new trend removes what had been an important source of upward pressure on global energy use. 

Second, as countries initially develop, they transition from agrarian to more energy-intensive industrial activities. But as they continue to grow, their economies move to less energy-intensive services activities, now dominant in advanced economies and expanding in China, India and other emerging economies

Third, energy efficiency programs being implemented worldwide, including in the U.S.China and other large economies, are dampening demand even as economies expand. These programs are motivated by both non-climate objectives (e.g., enhanced energy security and affordability) and climate ones

These forces have already helped produce energy peaks in the U.S.Japan, and Europe. Emerging economies and poorer countries are at earlier phases of development — a reason why the IEA has projected further growth in energy demand in China, India and elsewhere. But even there, population, structural and energy efficiency dynamics are ultimately likely to have their effect. For example, China’s energy demand is now projected to peak later this decade

Why is this “peak energy” significant? Because it will have a variety of economic, policy, geopolitical and even security impacts. 

For example, it points to a future global economic landscape in which energy plays a diminished role. This includes a lower share of energy in global GDP, especially as economies continue to grow, and even potentially a peak in energy spending in absolute terms after accounting for inflation. 

One dynamic likely to drive this change in spending is the shift from large capital investments involved in expanding energy systems or transitioning to a low emissions future, to the less costly maintenance and periodic replacement of assets inherent in a peaked system. Another is the ongoing displacement of fossil fuels that require recurring new exploration and development expenditures with renewables which are inherently self-replenishing. 

Renewables, moreover, typically draw from national resources such as local sunshine and wind patterns rather than foreign trade. As these resources move into a leading role in a peak energy future, domestic policies and considerations should gain importance for governments relative to trade and other international ones.  

Other affected areas will include diplomacy, including the lessened importance of petrostates for the U.S., China and the military, such as a possible redeployment of the U.S. Fifth Fleet from the Persian Gulf. These shifts may already begin to be triggered by peak oil and gas even before the advent of peak energy but will likely deepen under the latter.  

Various developments could counter energy peaking, such as a surge in energy-intensive activities like space tourism. Another frightening possibility is widespread war as seen last century. Combat consumes a great deal of fuel and reconstructing buildings and infrastructure destroyed by war is energy-intensive. Alternatively, the discovery of a cheap, clean and accessible energy source such as fusion could lead to creative new ways to use that energy. 

Conversely, more robust climate policies can accelerate peak energy. For example, the IEA’s Net-Zero Emissions by 2050 Scenario foresees a global energy use in 2050 which is 15 percent lower than today’s total. This drop is driven largely by strengthened energy efficiency programs that counteract the upward pressures of population and economic growth. 

However, in contrast to peak coal or oil being potentially followed by significant declines in their use over time, peak energy is unlikely to presage a subsequent large drop in consumption as growing economies will buoy demand. In fact, as GDP growth continues through the next century and beyond, energy demand could once again start to rise as, notably, energy efficiency gains reach their limits. 

In a broader sense, just as history has included the stone, bronze and iron ages, we have been living since the Industrial Revolution in an energy age. But this age, during which energy has dominated so many economic, geopolitical and other dimensions, may be coming to an end with peak energy. 

Beyond the projections of oil, gas and coal demand reaching its heights this decade, and notwithstanding the current growth in renewables, overall energy use may also hit a high point later this century. This “peak energy” is a future we should now start contemplating and analyzing. 

This article is also published on The Hill. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Philippe Benoit is the Managing Director for Global Infrastructure Advisory Services 2050. He also served as Division Head of the IEA's Energy Environment and Energy Efficiency Divisions, and as Energy Sector Manager at the World Bank. In addition, Philippe previously worked as an investment banker and corporate lawyer focusing on energy.

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