Kampala – Uganda – In a recent report, the Energy Security and Climate Initiative at Brookings argues that addressing oil demand is a better approach to combat climate change than curbing oil production. Some experts also question President Biden’s previous emphasis on reducing U.S. fossil fuel production.
During his presidential campaign, Joe Biden promised not to permit new oil and gas drilling on federal lands. After taking office, he suspended new leasing and drilling permits for public lands. However, circumstances changed due to the COVID-19 pandemic and the conflict in Ukraine. President Biden encouraged U.S. oil producers to increase production to counter soaring oil and gas prices. As part of the IRA bill, the government included a provision for offering specific federal onshore and offshore areas for oil and gas leasing to promote renewable energy development.
In March, the Biden administration approved ConocoPhillips’ contentious $8 billion Willow project in Alaska, which drew criticism from environmentalists who called it a “carbon bomb” incompatible with U.S. climate goals.
Some climate and environmental experts now argue that President Biden’s focus on reducing U.S. fossil fuel production might not be the most effective strategy. The Energy Security and Climate Initiative at Brookings (ESCI) suggests that cutting oil demand, rather than production, is the key. They point out that if the U.S. significantly reduces production, other global producers may compensate by increasing theirs. This could lead to a loss of energy security in the United States and a mere shift in greenhouse gas emissions to other countries. ESCI contends that as long as there is demand for oil, someone will produce it. For example, projects like Tilenga in Uganda and Eridu in Iraq are set to begin production soon, with significant capacities.
Global oil demand has rebounded from pandemic lows, reaching a record high of 103 million barrels a day in June, driven by strong economic growth in OECD countries, increased oil consumption in China, particularly for petrochemical production, and robust summer air travel.
ESCI sees the transition to electric vehicles (EVs) as one of the most effective ways to reduce oil demand. The transportation sector is responsible for nearly 60% of global oil demand, with passenger vehicles and trucks being the major consumers. EV sales are on the rise due to new compelling models, advancements in battery technology, policy support, and improved charging infrastructure. Electrification is also expanding into new segments of road transport.
However, the transition to EVs faces challenges as there are currently only 26 million EVs globally out of 1.4 billion light vehicles. Forecasts for the adoption of EVs by 2030 vary, ranging from 11% to 63% of total passenger car sales, and projections for 2050 range from 31% to nearly 100%. In more conservative estimates, passenger vehicle oil demand is expected to decrease from today’s 25 million barrels per day to 3–6 million barrels per day by 2050.
Additionally, the European Union’s move toward green aviation fuels could significantly contribute to emissions reduction since the global aviation industry consumes approximately 15% of global oil production. EU lawmakers recently approved rules mandating that at least 2% of jet fuel used by airlines be sustainable by 2025, with plans to increase this share to 70% by 2050. Wider adoption of such measures could play a crucial role in the fight against climate change, but it may come at a higher cost for travelers due to the expense of sustainable aviation fuels.
