Harry Geels: Demand for oil and gas will continue to rise for another 25 years

November 18, 2025

_{This column was originally written in Dutch. This is an English translation.}

By Harry Geels

It comes as no surprise that demand for energy, including oil and gas, continues to grow for the time being. The Jevons paradox offers an interesting perspective on this, suggesting that more efficient and cheaper technology can actually lead to higher consumption. The recent boom in AI is a striking example of this.

An IEA report published last week shows that, based on current policy scenarios, demand for oil and gas will continue to rise until 2050, making a desirable rapid peak in demand for fossil fuels increasingly unlikely. The report implicitly places a heavy responsibility on policymakers: to make the 1.5°C target achievable, governments must not only block new oil and gas fields, but also actively limit demand for fossil fuels.

Figure 1: Demand for fossil fuels will continue to rise until 2050

Source: IEA; Note: STEPS= Stated Policies Scenario/APS=Announced Pledged Scenario

At the same time, the economic and geopolitical consequences of a (too) rapid phase-out should not be underestimated: price volatility and energy security are real risks. According to the IEA, transitional measures and international coordination are crucial. For investors and companies, this means that strategies must focus on the energy transition, while fossil fuel projects carry an increasingly high risk. Strangely enough, the report pays little attention to the underlying causes of rising demand.

Increasing demand

The continued growth in global energy demand is an uncomfortable truth. This rising demand is at the heart of the CO₂ problem. After all, the energy transition to renewable sources requires a lot of raw materials and still also fossil fuels. For example, it takes one to three years to recoup the CO₂ costs of a solar panel. For electric cars, the payback period can easily be up to four years, depending on the number of kilometres driven.

Other factors reinforce this trend. The world's population is still growing and the average global citizen is becoming better off, which means that per capita energy consumption continues to rise. At the same time, the energy transition is largely being directed by governments. They use regulation and tax incentives, which do not always produce the most efficient results. We should have introduced “true pricing” much earlier: allowing the real costs of fossil energy to be passed on to the market.

When it comes to government planning, a distinction must be made between current policies, stated policies and announced pledges. The IEA has calculated the “policy paths” based on the latest data. See Figure 2 for oil.

Figure 2: Demand for oil under different scenarios

Source: IEA

The AI rat race

A third complication is the rise of AI, with all its enormous data storage and computing power. Not so long ago, various people felt shame about their showering, flying or bbq. When it comes to swiping, digital posting or AI, however, those inhibitions seem to have disappeared. Huge investments are being made in AI and there is a clear AI race between China and the US. Energy availability could well become the determining factor in this rat race, and China seems to have better cards than the US, let alone Europe.

The Jevons paradox: efficiency can actually drive up demand

Technological efficiencies, such as those currently seen in AI, do not automatically lead to lower consumption. On the contrary, as they increase, we actually use more of them. Historically, we saw this with steam engines, cars and air conditioning. More efficient technologies actually caused an increase in total consumption (and energy). This is called the Jevons paradox, and the world is suddenly obsessed with it because of AI.

The same applies to renewable energy. For example, cheaper solar panels and electric cars paradoxically lead to higher demand. Not only for electricity, but indirectly (for the time being) also for fossil fuels. More than two millennia ago, Plato already stated that as human civilisation advances and individuals gain more control over the external world through technology and material progress, the possibilities for satisfying our desires also increase and that this can become a self-reinforcing spiral unless we exercise restraint.

Looking ahead: further shaping the energy transition

What does this mean for the future? On the one hand, it is essential to create better market incentives for a reduction in fossil fuel consumption. This can be achieved, for example, by making fossil fuels more expensive and clean energy cheaper, although we face practical challenges such as congestion in the energy network. On the other hand, some factors are not mentioned enough. Adaptation – adjusting the environment to rising temperatures and changing conditions – can prevent many problems.

Similarly, technological innovations such as CO₂ extraction and hydrogen can play an important role in the energy transition. In addition, according to Plato, human behaviour is crucial. An awareness of “moderation”, as the Stoics call one of the four cardinal virtues, can help: consuming less, recycling more, or finding well-being and happiness in less material things. I have not yet given up hope that something like this could work.

In conclusion

The energy transition will therefore require a combination of incentives and smarter rules, technological innovation, adaptation and behavioural change. From this perspective, it becomes clear that efficiency (in energy demand and supply) alone is not enough. Technology can reduce CO₂ emissions, but without behavioural and market adjustments, global demand for energy, and therefore fossil fuels, will continue to grow for decades to come.

This article contains the personal opinion of Harry Geels

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