McKinsey: Fossil Fuels will dominate the global energy usage beyond 2050

According to a McKinsey study, oil, coal and gas will dominate the global energy mix long after 2050. This is because the demand for electricity continues to grow faster than the transition to renewables.

Why it's important

The continued use of fossil fuels is a major obstacle to reaching global climate targets.

The report states that the main reason for the increase in electricity demand is a 20-40% projected rise from the building and industry sectors by 2050. North American data centres are seen as the major contributors.

Natural gas use for electricity production is expected to increase significantly. Coal use could also continue at higher levels.

By the Numbers

McKinsey predicts that fossil fuels will account for approximately 41-55% (down from 64% today) of global energy consumption by 2050. This is a decrease from the current 64%, but a higher percentage than previous projections.

Data centers in the United States are expected to increase their power consumption by nearly 25% per year from now until 2030. The global average is 17% per year, between 2022 and 3022, with a particular growth of 17% for OECD countries.

McKinsey stated that alternative fuels will not be widely adopted before 2040, unless they are mandated. However, renewables have the potential of providing 61-67% the global energy mix in 2050.

KEY QUOTE

Diego Hernandez Diaz, McKinsey's partner, said that this was the biggest change in McKinsey's thinking about the evolution of energy systems. McKinsey does not expect oil demand will plateau until 2030.

Combining regional and global economics with some fossil fuels "we can see up to 55% (of the global energy stack) being fossil fuels by 2050."

CONTEXT

Geopolitical insecurity is influencing the global energy outlook, and governments are prioritizing energy affordability and energy security over meeting Paris Agreement goals.

McKinsey’s report also mentions energy recession risk, tariffs and tech innovation as reasons for continued fossil fuel dependence.

(source: Reuters)