Peak Oil Is Not Dead: Reviewing the IEA’s World Energy Outlook for 2025

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A month ago, media all over the internet went crazy repeating the following headline (or a similar one) over and over:

“IEA scraps Peak Oil, says oil demand will continue growing until 2050.”

All this oil-positive hype was a result of the IEA’s World Energy Outlook for 2025. This report was published back in November, and, unlike the previous report from 2024, included one forecast in which oil demand was not expected to peak before 2030, growing instead through 2050, something that has of course been used by oil advocates to claim that the mere concept of “Peak Oil Demand” (of which we spoke in more detail in this article) is now dead.

Reality, as always, is more complex than that. Let’s dive deeper into the IEA’s report and what it really means.

Politics, forecasts, and scenarios

Let’s be blunt here: as many of our readers surely know, this was first and foremost a result of political pressure. The US government is a substantial source of funds for the IEA, and Donald Trump’s government, therefore, has the means to pressure this institution into including different forecasts under different assumptions. In this case, what led to this “oil positive” forecast was the re-introduction of the “Current Policies” (CPS) scenario, a forecast that basically assumes no further actions will be taken against climate change from a policy perspective.

This scenario had been abandoned in 2019, with the IEA instead favoring the “Stated Policies” (STEPS) scenario, one which considers that action against climate change has historically increased through time and integrates that information into the forecast. And lo and behold, if we look at the “Stated Policies” scenario in the 2025 World Energy Outlook (because it’s still there), oil demand once again is forecasted to fall after a peak in 2030, just as it was in 2024.

As much as this was a result of political interference, there’s an argument to be made here: the fact that the US is currently undergoing a vast reversal from Biden’s IRA policies promoting renewable energies and electric vehicles is in itself proof that assuming ever-increasing policies against climate change is not accurate. Trump’s government, in this sense, is both judge and executioner, forcing the IEA to recognize that the US is now firmly on the pro-oil side, and will try to keep money flowing to oil barons (as well as keeping emissions rising) for a while longer.

But this brings us to the crux of the matter: forecasts based upon policies as of 2025 are, in my opinion, obsolete.

The problem with all “Policies” scenarios

Indeed, if the main reason for growth in EV sales and renewable generation was public policy, a reversal such as the USA’s could wreak havoc on any forecast. For example: Biden’s IRA was supposed to bring the US into the 21^st century, but now Trump is doing all he possibly can to drag the country back to the 20^th. Yet, as we will see, the US could be an outlier here.

First of all, let’s look at what the IEA says regarding the CPS and STEPS scenarios:

The Current Policies Scenario builds on a narrow reading of today’s policies, taking only those that are adopted in legislation and regulation. It offers a generally cautious perspective on the speed at which new energy technologies are deployed and integrated into the energy system. It tends to project slower growth in the adoption of new technologies in the energy system than seen in recent years, or than projected in the STEPS. Consequently, the CPS projects a somewhat bigger continuing role for traditional fuels.

The Stated Policies Scenario builds on a broader reading of the policy landscape, taking account of those that have been formally tabled but not yet adopted as well as of other official strategy documents that indicate the desired direction of travel. It does not, however, assume that aspirational targets are met. It offers a more dynamic perspective on energy technology and market trends, and it projects a slightly more rapid introduction of new energy technologies than the CPS.

Of course, factors other than public policy (including technological developments) are included in the report, but it’s these two scenarios that set the main narrative, and both are heavily inclined to analyze what actions governments will take to curb emissions. And to be completely fair, in the current status of the USA, this is most likely true: Biden’s IRA led to a significant increase in wind, solar, battery, and EV production and deployment; and under Trump these have slowed down (solar), stagnated (batteries, wind), and even faced a reversal (EVs).

But the US under Trump is beset by a set of circumstances that are by no means permanent, nor do they apply to the rest of the world. Facing a trade war with China, the US remains unable to exploit the hyper-affordable cleantech coming from that country. Meanwhile, the fossil fuel lobby has done a superb job not only promoting fossil fuel extraction, but also limiting renewable energy deployment both through significant propaganda (“rates are increasing because of solar”) and outright political intervention (such as the cancellation of Esmeralda 7 in Nevada or the recent suspension of land leasing to Revolution Wind, Sunrise Wind, Vineyard Wind 1, Coastal Virginia Offshore Wind, and Empire Wind 1).

As far as I know, no other country is facing conditions remotely like these: even in right-wing led countries (like Argentina) we see massive deployment of solar and increasing EV adoption driven not by policy, but for the sheer economic advantages these technologies bring.

This means that even if the IEA’s scenarios are somewhat accurate vis-à-vis the current conditions in the US, they’re not likely to cover the full scope of the transition happening elsewhere in the world. And for that, I want to point out two examples that show how far behind the IEA’s thought could be regarding the true drivers of the energy transition.

The IEA’s blind spots

Let’s look at a couple of fragments from the IEA’s most recent report:

“[In the CPS] Solar PV and wind continue to expand, but they face mounting integration challenges in the CPS in the absence of additional government policies, which slow their deployment. Annual solar PV capacity additions average 540 GW to 2035, holding steady at roughly the 2024 level, and halting the trend that has seen deployment rise ten-fold from 2015 to 2024.”

[…]

“Renewables are set to expand significantly in the STEPS. Their installed capacity nearly triples by 2035, raising the renewables share of global electricity generation from one-third in 2024 to over half. Solar PV and wind continue to lead the way, with solar PV capacity projected to increase more than fourfold to 2035 with annual additions reaching around 650 GW.”

Most of our readers are probably shaking their heads at this very moment. I mean, I knew the IEA was supposed to be a bit pessimistic in its predictions regarding solar, but this is absurd even for the “optimistic” STEPS scenario.

According to Ember Energy, solar additions worldwide will amount to just over 600 GW in 2025 (with 482GW already deployed by September). This means that the IEA’s “optimistic” STEPS scenario assumes nearly 0% growth in solar deployment through the next 10 years, whereas the CPS actually expects solar deployment to decrease.

But this is an absurd proposition. Solar panels are getting cheaper by the day, meaning adoption will increase simply by mere economics. Even if this wasn’t the case, they’re cheap enough to outcompete any other current alternative and batteries are also getting cheaper, meaning more solar energy will be deployed in already solar-rich areas once there’s some storage to take advantage of it. There’s also an institutional inertia here: utilities used to the centralized model of fossil fuels, nuclear, and hydro will take a while to adopt renewables at a large scale not because of economics, but because of the know-how needed to make it work, yet these utilities will eventually adopt solar (and wind) at increased rates even if price does not further reduce as their ability to integrate it into the system improves.

And this is why I want to point out this chart, which I feel summarizes my perception on the IEA’s blind spots regarding this transition:

A big chunk of the Emerging Markets and Developing Economies (EMDE) exists within the “Sun belts” surrounding the Tropics of Capricorn and Cancer, as well as within the Intertropical Convergence Zone, which, even if it receives less sun than the semi-arid regions to the north and the south, has steady sun all over the year, making it ideal for predictable solar generation. In this sense, to claim that these rapidly growing, price-sensitive regions will only reach 25% in 25 years seems naïve (more so as, later on, the IEA forecasts more gas additions than solar through the next decade in these same countries).

Why the IEA is wrong on EVs

Regarding energy deployment, I could be off: I know my way around renewables, but they’re far from my specialty. But I’m absolutely certain that both forecasts for EV sales — CPS and STEPS — are dramatically underestimating adoption for electric vehicles in developing countries within the coming decade.

(I also think they’re off the mark in advanced economies, but I guess the US could in theory fumble up this transition so badly as to bring the average down by that much).

Many of you have already read some of my articles, so you may know where I’m coming from, but let’s make a list of arguments on why we can already see this won’t be the case. The lines aren’t completely clear on the numbers, but it seems under CPS we (EMDE) sit at below 10% adoption, and under STEPS we sit at just below 20%. Both numbers massively miss the mark because:

1. We’re already seeing rapid change in several large markets in developing countries that command their regional averages. Our report on Latin America’s EV Sales revealed a 6% for Q3 2025, with the largest markets in the region (Brazil and Mexico) presenting rapid growth, and, in the case of Brazil, significant Chinese investment in local manufacturing. South-East Asia also has its own giants rapidly rising, with Indonesia and Thailand (its biggest markets) already above 15% and 20% respectively, and with Thailand becoming a hub for EV production. Together, LatAm + ASEAN account for almost 10 million units, or over a third of all vehicles sold outside China and developed economies. And it is not limited to that, of course: we’ve also seen significant growth in markets like Türkiye, and it’s likely many Central Asian and African countries are also rising fast, even though limited data does not allow us to have a full picture here.
2. There’s a growing relationship between China and the developing world. China is offering poor countries affordable gear to either produce electricity without fuel requirements or to move people around, and much as the economical factor matters here, politics also do. China’s influence in Central Asia, for example, may allow for traditionally oil-centered countries to pivot to EVs, whereas its inroads in Africa and Latin America are already showing results.
3. A huuuuge amount of these countries are resource-depri, specifically lacking oil reserves. Truly poor countries know very well the steep cost of fuel imports at times of failing exports, and from Bolivia to Sri Lanka they will pivot to EVs as soon as materially possible, as means of protecting themselves. Middle-income countries don’t have such a hurry, but they still know they’re much better off importing vehicles which can be fueled with locally produced electricity versus expensive foreign oil. Even oil producing nations (particularly those who don’t have a lot of reserves) can benefit from lower oil consumption, freeing more of the resource to fuel exports and bring valuable foreign currency.
4. China’s EV boom and the “overcapacity” that came with it has allowed developing nations to access EVs at very similar prices to ICEVs. Those who have not reached this point will do so in the second half of this decade, thus fueling EV adoption.
5. As I’ve said before, developing nations have a cultural ethos that prioritizes economy over comfort, this is, they will tolerate a worse fueling experience and limited autonomy (in order to save money) at much higher rates than folks in Europe and the US.

I will be very surprised if Latin America hasn’t reached at least 30% EV market share by the end of the decade, and I expect South-East Asia to be further ahead, so who’s going to bring the average down to 20% even by 2030? The Middle East, perhaps? India, I’d count out since they lack oil reserves and have rapidly rising EV adoption. So count me out on the IEA’s forecast for Emerging Markets and Developing Economies.

Politics vs economics

My feeling here is that public policy in developing countries has been the driving force for renewable deployment and EV adoption for so long that the IEA’s analysis has not had time to adapt to the new realities where the Global South is spearheading adoption for these technologies to protect their economic interest.

This is also why I don’t want to delve much on the IEA’s forecast for developing nations, as the US is completely isolated from Chinese imports and Europe is also somewhat protected, meaning they do not operate under the same framework and thus the institution could have better aim here.

Regardless, I think it’s time to let go of the obsolete notion that this transition will be led by wealthier countries.

Final thoughts

This article is long enough as it is, but there’s something that always surprises me regarding energy forecasts, both from the IEA and OPEC, and it’s how much they both expect energy demand to grow through 2050.

It’s not that I think they’re wrong, it’s that instead of the 20% to 30% energy demand growth that they both project, I’d expect perhaps a doubling, more so with AI’s boom (even though Mr. Barnard has already pointed out that all that energy demand may be overblown).

More importantly, both the IEA in its Current Policies scenario and OPEC seem to agree that fossil fuels will not be replaced by renewables, as much as be complemented by them, meaning none of these institutions is considering the reduction on net energy consumption thanks to higher efficiency.

But, assuming they’re roughly right and net energy consumption is unlikely to rise more than 30% through the next two and half decades, I feel that they’re vastly overestimating the resilience of fossil fuels. As solar and batteries become cheaper, as countries learn how to successfully integrate renewables into their grids, as nations all over the world learn more and more to be partially independent from grids and build solar + EV arrays in their communities to tend their most critical needs, I would expect that fossil fuels would not only not rise anymore, but experience a steep decline.

However, it’s true that political, cultural, and economical inertia are a powerful force, and that oil demand has been more resilient than I expected amidst the world’s EV boom in 2025. Instead of a leveling up, we’re almost certain to see an increase in demand of some 800,000 barrels a day, and even if most (or all) of that is going into storage, it means that the dawn of fossil fuels may yet take us a few more years to reach.

Hopefully, a year from now, we will be celebrating higher EV sales, higher solar and wind deployment, and stagnant or even falling sales for oil, gas, and coal.