As China's economy becomes more consumer-oriented, the rate of growth in oil demand in the country is expected to slow down through 2023, a recent report said.
Considering factors including better efficiency, the fast development of electric vehicles and the restructuring of the energy mix, the growth rate of oil demand in China will gradually slow down during the next six years, said Neil Atkinson, head of the oil industry and markets division at the IEA.
He made the remarks during the China Launch of the IEA Market Report Series: Oil 2018 held in Beijing on Monday.
According to the report, there are signs of substitution of oil by other energy sources in various countries with China being a prime example, which has some of the world's most stringent fuel efficiency and emissions regulations.
As the country recognizes the urgent need to tackle poor air quality in cities, efforts are intensifying, with sales of electric vehicles rising and a strong growth in the deployment of natural gas vehicles, particularly into fleets of trucks and buses. A rising number of electric buses and LNG-fueled trucks in China will significantly slow gas and oil demand growth, it said.
China has become the world's biggest electric vehicle market with the help of subsidies in only a few years. Figures from the IEA show China saw 336,00 new electric car registrations in 2016.
Other clean energy substitutes, including liquefied natural gas, have also replaced consumption of petroleum and diesel in the country, Atkinson said.
According to a recent report released by Bloomberg New Energy Finance, China is expected to invest $3 trillion in power generation over the next 25 years, with some 75 percent of the investment expected to be into the renewable energy sector.
However, global oil demand growth remains healthy, driven by developing countries in Asia, even as oil consumption growth slows in China thanks to new environmental policies designed to curb air pollution. Strong petrochemical demand globally is another key area of growth.
According to the IEA, in the upcoming six years, petrochemicals will be a key driver of oil demand growth. The fastest-growing source of global oil demand growth is petrochemicals, particularly in the United States and China.
According to Wang Lu, an analyst from Bloomberg Intelligence, China's economy is becoming less oil-intensive as it shifts away from heavy industry to services and higher-margin manufacturing. Gains in fuel efficiency, slower car-sales growth and China's 10 percent ethanol-blend mandate will dent the country's oil demand in the next five years, she said.