IEA data shows fossil fuels peaking before 2030. Here’s what that means for green technology, AI-driven energy solutions, and your long-term strategy.
Most investors still pour billions into long-lived oil and gas projects even as the data points the other way: the International Energy Agency (IEA) now expects global fossil-fuel demand to peak before 2030 under existing government plans.
This matters because peaking demand doesn’t just shift climate trajectories; it reshapes where value will be created over the next 10–20 years. If you run a business, invest in infrastructure, or build technology, you’re either aligned with that shift or you’re fighting a structural trend you will eventually lose.
In this article, I’ll break down what the IEA’s latest World Energy Outlook 2025 actually says, why the “current policies” debate is more political than economic, and where green technology and AI fit into the opportunity. The reality? It’s simpler than you think: fossil fuels fade, clean energy grows, and the winners are the ones who move first and build smart.
1. What the IEA is really saying about the end of fossil growth
The IEA’s 2025 outlook outlines several scenarios, but one message is consistent: even under conservative assumptions, fossil-fuel demand is heading for a peak, not endless growth.
Under the Stated Policies Scenario (STEPS) – which reflects policies governments have already adopted plus those they’re very likely to implement – the agency sees:
- Coal at or near its peak now, then entering structural decline
- Oil peaking around 2030
- Gas plateauing and peaking around 2035, not 2050 or beyond
At the same time, clean energy use surges:
- Nuclear output up about 39% by 2035
- Solar capacity up roughly 344% by 2035
- Wind up about 178% by 2035
So even in a world where climate policy is messier than we’d like, the direction of travel is clear: more electrons from low‑carbon sources, fewer molecules from fossil fuels. That’s the demand backdrop every business and policymaker is operating in right now.
The uncomfortable part: under these stated policies, the IEA still expects around 2.5°C of warming by 2100. That’s above the Paris Agreement’s 1.5–2°C goals and guarantees more climate risk, more volatility and more regulatory response.
From a green technology standpoint, that gap between 2.5°C and 1.5°C is exactly where the opportunity sits: everything needed to close it is a market waiting to be built.
2. The “current policies” scenario: not business as usual – a rollback scenario
Here’s the thing about the new Current Policies Scenario (CPS) in the 2025 outlook: it’s being presented in some US political circles as “reality” and the more climate‑aligned scenarios as fantasy. That framing just doesn’t hold up.
The CPS assumes governments abandon their own stated plans and only keep policies already in law. That includes:
- No follow‑through on updated power-sector plans in Japan and South Korea
- China halting power-market reforms and dropping provincial clean-power targets
- EU countries missing coal phase‑out commitments
- California and other US states freezing or scaling back clean energy targets
- Emissions trading schemes in Brazil, Turkey, India and China stalling or not expanding
In other words, CPS isn’t “do nothing”; it’s “tear up your own plans and slow-walk green technology.”
Under that world, the IEA expects:
- Oil and gas demand to keep rising for decades
- Coal demand to fall more slowly
- Warming to reach 2.9°C by 2100 and keep rising after that
The IEA itself calls CPS a “narrow reading of today’s policy settings.” It has to assume pessimistic barriers to new technology adoption to force fossil demand to keep climbing.
If you’re planning strategy, treating CPS as the baseline is risky. It assumes a global political U‑turn against clean energy just as the economics, public opinion, and technology learning curves all point in the opposite direction.
For anyone building or buying green technology, this actually strengthens the business case: if your project or product only works in a perfect‑policy world, it’s fragile. If it’s profitable even in a CPS‑type world, where fossil fuels hang on longer, you’re building something resilient.
3. Where fossil fuels peak – and where demand is shifting
From a market perspective, the detail on each fuel matters. It determines which assets become stranded first, which sectors transform fastest, and where green solutions find the lowest‑friction entry.
Coal: peak now, decline locked in
In the stated policies scenario, coal demand is at or very close to a definitive peak. After that, it enters structural decline as renewables undercut coal on cost and policy pressure ramps up.
The IEA explicitly dismisses the idea of a long‑term coal comeback, calling sustained growth “highly unlikely”. China’s shift away from coal‑heavy growth and the rapid rise of renewables make the story pretty clear.
For green tech, coal’s decline means:
- Massive room for utility‑scale solar and wind, plus storage
- Growing markets for grid‑scale batteries and advanced grid management
- Openings for AI-driven dispatch optimisation and predictive maintenance in renewables fleets
Oil: road transport is the tipping point
Oil still peaks in the 2030s in almost all realistic scenarios. The main driver is road transport:
- Electric vehicles cut into gasoline and diesel demand
- More efficient internal combustion engines narrow the remaining demand
The IEA now expects oil demand to decline after peaking, but a bit more slowly than it thought a year ago. Still, the trajectory is down, not up.
Where green technology and AI matter most here:
- Smart charging to integrate millions of EVs without overloading grids
- Fleet optimisation and routing that cut fuel use long before full electrification
- Predictive analytics for charging infrastructure to improve uptime and returns
Gas: slower peak, but pressure is building
Natural gas is the main pivot point. This year the IEA nudged its expected demand peak from 2030 to around 2035 under stated policies.
Gas demand still grows in the near term, but less than in the past, because of:
- Continued deployment of renewables
- Efficiency improvements across buildings and industry
- Electrification of heating and some industrial loads
Even in the pessimistic CPS, renewables nearly triple by 2050 and become the largest energy source before 2050. Gas grows, but it fights a constant headwind from cheaper clean power and rising carbon risk.
For green tech builders, that means two parallel tracks:
- Direct gas displacement with renewables, heat pumps, and electrified industrial processes
- Efficiency and optimisation in existing gas systems, using AI to cut leakage, improve load factors, and lower emissions where infrastructure can’t be swapped out overnight
4. The 1.5°C pathway: overshoot, CO₂ removal, and the role of AI
The IEA’s Net Zero Emissions by 2050 (NZE) scenario is the roadmap for a 1.5°C‑aligned world. The 2025 edition is harsher than earlier versions: because emissions stayed high in the 2020s, the IEA now expects temperatures to overshoot to about 1.65°C before coming back down to 1.5°C by 2100.
That path requires two big things:
- Extremely rapid clean energy deployment across power, transport, buildings, and industry
- Large‑scale CO₂ removal using technologies that are still unproven at the scale needed
This is where green technology and AI move from “nice to have” to systems-critical:
- AI-optimised renewables: forecasting, dispatch and maintenance to push solar and wind to very high penetration without sacrificing reliability
- Flexible demand: smart buildings and industrial processes that shape demand curves instead of just meeting them
- Carbon removal scaling: from bio‑based solutions to direct air capture, AI helps with site selection, process control, and cost reduction
- Equitable access: the IEA’s new ACCESS scenario – universal electricity by 2035 and clean cooking by 2040 – only works if technologies are affordable, modular and easy to operate in low‑income settings. AI‑powered microgrids and low‑cost IoT monitoring are part of that puzzle.
If you’re working in green technology, the NZE and ACCESS scenarios aren’t abstract modelling; they’re a product roadmap of what the world will need to buy between now and 2050.
5. What this means for businesses building or adopting green technology
Most companies get this wrong. They read long‑term climate scenarios, nod, and then treat them as someone else’s problem. The smarter move is to back‑cast: if fossil fuels peak by 2030 and clean energy keeps scaling, what decisions are you making today that either align with that world or trap you in the old one?
Here’s a practical way to use the IEA outlook in your own planning.
A. Assume renewables dominance, not fossil forever
By the early 2040s under stated policies, renewables overtake oil as the largest energy source, not just in electricity but across total energy use. The cost curves for solar, wind and batteries are still falling – around 90% declines since 2010 for solar and batteries, 70% for wind – with another 10–40% drop by 2035.
Concrete actions:
- When modelling projects, treat fossil fuel price stability as a risk, not a comfort.
- Run scenarios where power prices fall with high renewable penetration, and check if your investment still works.
- If your product or process depends on cheap fossil fuels, start designing a low‑carbon variant now.
B. Use AI to squeeze emissions and cost at the same time
Green technology isn’t just hardware. The biggest gains over the next decade often come from software and AI that make existing assets behave like new ones.
Examples that already work in practice:
- AI-driven energy management in commercial buildings: 10–30% energy savings without capex‑heavy retrofits
- Predictive maintenance on wind and solar fleets: higher capacity factors and fewer breakdowns
- Smart EV fleet charging: lower peak demand charges, better use of on‑site solar, and fewer grid upgrades
The pattern is consistent: the same tools that cut emissions also lower operating costs. That’s exactly the combination that wins in any of the IEA scenarios.
C. Treat policy risk as a source of upside, not just fear
The IEA’s CPS vs STEPS vs NZE gap illustrates a simple reality: future policy will tighten. Maybe slower than climate science suggests, but faster than a 2.9°C world.
You can respond in two ways:
- Delay decisions and hope you’re not hit by the next regulation
- Or build products, services and infrastructure that become more valuable as policy tightens
Examples of the second path:
- Industrial systems designed for low‑carbon heat (e.g., electric boilers, heat pumps) instead of gas-only options
- Digital twins of plants and buildings that make compliance reporting and optimisation trivial
- Embedded carbon accounting and optimisation in enterprise software
Those are the kinds of moves that turn climate policy from a cost centre into a growth driver.
6. Where the opportunity really is: building the green technology stack
The IEA outlook isn’t just a warning about climate risk. It’s a blueprint for where value will concentrate as fossil fuel demand peaks and clean systems take over.
For the Green Technology series, this is the bigger story we keep coming back to:
- Energy: AI‑enabled renewables, storage, and demand flexibility
- Cities: smart grids, efficient buildings, and intelligent transport
- Industry: electrified processes, low‑carbon materials, and precise resource management
- Access: distributed energy and digital tools delivering clean power and clean cooking to billions
If fossil fuel use peaks before 2030, the 2030s become the decade when green technology stops being “alternative energy” and simply becomes the energy system. The companies that thrive will be the ones already building, testing and scaling those solutions now.
So the real question isn’t whether coal, oil and gas will peak. The IEA data is clear enough on that. The question is where you and your organisation will be positioned when they do – locked into declining assets, or leading the systems that replace them.
Ready to move from scenarios to strategy?
If you’re mapping your own transition – whether that’s decarbonising operations, investing in clean infrastructure, or building AI‑driven green tech – now is the right moment to stress‑test your plans against a world where fossil fuels peak this decade.
Because the transition isn’t waiting for perfect policy. It’s already unfolding in project bids, procurement choices, software deployments and capital flows. The next move is yours.