The energy transition is continuing, with renewable energy’s share of global power output predicted to double in the next 15 years, while total fossil fuel demand is expected to peak before 2030, according to McKinsey’s annual report.
This year’s Global Energy Perspective is published at a time when global energy markets are confronted with unprecedented levels of uncertainty, including the Russia-Ukraine conflict. Despite this, the long-term shift to low-carbon energy systems is gaining traction and, in some respects, speeding up, with renewable power, hydrogen, and synfuels playing a particularly important role.
The report also estimates that global oil demand will peak in the next three to five years as electric vehicles become more popular.
“In the past few years, we have certainly seen the energy transition pick up pace,” said Christer Tryggestad, a senior partner at McKinsey. “Every year we’ve published this report, peak oil demand has moved closer.”
Nonetheless, even with current government commitments and technological advancements, global warming is expected to exceed 1.7°C by 2100, making a 1.5°C path extremely difficult, the report stated.
The report forecasts that renewable energy is expected to account for 50% of global power output by 2030 and 80-90% by 2050, tripling in size in the next 15 years.
Meanwhile, by 2050, hydrogen demand is predicted to increase four to sixfold, driven mostly by road transportation, maritime, and aviation, with hydrogen and derived synfuels accounting for 10% of worldwide final energy consumption.
According to the report, 61% of new renewable energy capacity is already cheaper than fossil fuels, and battery costs have dropped by nearly half in the last four years.
Besides, carbon capture, utilization, and storage technology could expand more than 100-fold by 2050, with investment opportunities exceeding LNG markets.