McKinsey Energy Insights (MEI), the data and analytics specialist for the global energy industry, part of McKinsey & Company, has just launched its 2019 Global Energy Perspective – highlighting various changes in the energy demand landscape. The report reveals that global energy demand will plateau by 2035 despite strong GDP and population growth. This is the first time in history that economic growth and global energy demand will be decoupled.
Key findings in the report highlight that OECD countries will see a decline in energy demand due to investment in more green and efficient sources of energy. These high-income countries will demand less energy from fossil fuels, after more than a century of rapid growth, due to the rise of renewables. There will be a reduction of coal use in power generation, especially in China, as renewable generation becomes the cheaper option, accounting for more than 50% of power supply post-2035. Oil demand is projected to slow down substantially and peak in the early 2030’s, while natural gas will continue to grow its share of global energy demand (the only fossil fuel to do so) before plateauing and then showing a decline after 2035.
The decrease in energy demand in OECD countries is balanced out by a population peak and growing industrialization in African and Asian countries. While most OECD countries see a decline, energy demand in Africa and India will roughly double until 2050.
“For the very first time, we are on the cusp of seeing global economic growth decouple from rising energy demand: a truly historic moment. Our scenario is bolder than comparable studies, with energy demand declining faster and sooner, but this reflects what we see in the sector,” said Christer Tryggestad, Senior Partner at McKinsey.
The energy perspective also outlines that zero-carbon energy sources, which include renewables complemented by nuclear, will almost double their share in the energy mix from now until 2050. By 2025, new-build renewables will outcompete existing fossil fuel generation on cost in most countries. However, although emissions are projected to decline due to decreasing coal demand, a 2-degree pathway by 2050 will still stay out of reach.
The findings are taken from MEI’s Global Energy Perspective Reference Case, which captures McKinsey’s view on how energy demand may evolve over the next few decades. The report also looks at greenhouse gas emissions, plastics, electric vehicles, improving battery technology, and the change in our electricity consumption. To read the outlook, download a copy here.