Oil, gas and coal will continue to dominate the world’s energy mix well beyond 2050, as soaring electricity demand outpaces the shift to renewables, according to a new McKinsey report.
WHY IT’S IMPORTANT
Continued use of fossil fuels poses a major challenge to achieving global net-zero climate targets.
Electricity demand will rise mainly due to a projected 20-40% increase from the industry and buildings sectors by 2050, according to the report, with North American data centres seen as the biggest contributors to the surge.
The use of natural gas for electricity generation is expected to grow significantly, while coal use may also persist at higher levels.
BY THE NUMBERS
McKinsey expects fossil fuels to account for about 41-55% of global energy consumption in 2050, down from today’s 64% but higher than previous projections.
U.S. data-center-related power demand is expected to grow nearly 25% a year until 2030, while demand from data centers globally would average 17% growth per year between 2022 and 2030, especially in OECD countries.
Alternative fuels are not likely to achieve broad adoption before 2040 unless mandated, but renewables do have the potential to provide 61-67% of the 2050 global power mix, McKinsey said.
KEY QUOTE
“This has probably been our biggest shift in thinking on the evolution of the energy system,” McKinsey partner Diego Hernandez Diaz told Reuters, adding that McKinsey did not now expect oil demand to plateau until the 2030s.
Combined with the regional and global economics of some fossil fuels, “it leads us to…see up to 55% of the global energy stack being fossil fuels in 2050.”
CONTEXT
The global energy outlook is being shaped by geopolitical uncertainty and governments prioritising energy affordability and security over meeting Paris Agreement targets.
McKinsey’s report also cites energy recession risks, tariffs, and tech innovation as factors behind continued fossil fuel reliance.
(Reporting by Sharon Kimathi; Editing by Kirsten Donovan)