Global energy demand set to plateau by 2035

With the rise of renewable energies and the improvement of energy efficiency technologies, global energy demand is expected to plateau by 2035. Despite growth in GDP and population, a report has found that fossil fuel use will also see a large fall by 2050, in part due to the increasing prevalence of electric cars.

Changing perceptions regarding the sustainability of the world’s current energy model is starting to affect investment decisions by a range of stakeholders, as well as consumers, some of whom are investing in distributed energy generation and electric vehicles. In addition, consumers, governments and businesses are looking critically at the waste produced in their value chains.

With improved energy efficiency technologies taking hold and the population expansion in growing nations showing signs of slowing, the rate at which energy demand has risen is decreasing too. According to a new report from McKinsey Energy Insights (MEI), global energy demand will finally plateau by 2035, even though it will double in Africa and India by 2050.

The Global Energy Perspective 2019 dossier also stated that electricity demand will double by the year 2050, with renewables making up 50% of the total power generation by 2035. By 2050, 73% of energy production will be from renewable sources, and by 2025 new-build renewables will out-compete existing fossil fuel generation on cost throughout the world.

Encouragingly for those keen to see a decline in carbon emissions, fossil fuels will continue to decline in the years to come. Demand for oil is expected to peak in the early 2030s at 108 million barrels per day, while coal production already peaked in 2014. McKinsey anticipates the demand for coal will fall by 40% by 2050, mostly due to China opting for alternative energy sources. Natural gas is the only fossil fuel that will rise in use in the next 20 years, but even then, its production is forecast to fall after 2038.

By 2035, renewables will be the second most common source of energy, at 25%. By 2050, it will leapfrog the oil industry, and account for more than a third of all energy consumption. McKinsey’s researchers concluded that a large portion of this change will come from the increased use of electric vehicles. Electric vehicle sales are estimated to top 100 million worldwide by 2035, and there could be 2 billion electric vehicles on the road by 2050 – something that will help drive global emissions down 22% by 2050.

This would mark a key moment in the battle against climate change, and would see emissions below the warming pathways laid out by the Intergovernmental Panel on Climate Change.

Christer Tryggestad, a Senior Partner at MEI, said, “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.”