Fossil fuels to dominate global energy supply until 2050: Report
A recent report by management consulting firm McKinsey, suggests that fossil fuels will continue to be a significant part of the global energy supply, contributing 40-60% by 2050. This projection is based on the slower-than-anticipated adoption of electric vehicles (EVs) and challenges in scaling up clean energy technologies. The study also highlights that gas will remain an essential source of energy, providing stability to power grids as renewables become more prevalent.
Fossil fuel consumption to plateau amid clean energy transition
The McKinsey report predicts that fossil fuel consumption will reach a plateau between 2025 and 2035. However, investments in this sector are expected to continue to ensure energy reliability during the global transition toward cleaner sources. The study also forecasts a significant increase in global energy demand, potentially rising by as much as 18% by 2050, with emerging economies playing a crucial role in driving this growth.
Emerging economies to drive global energy demand
Factors such as population growth, rising GDP, and industrial relocation to countries in the ASEAN region, India, and the Middle East are expected to boost energy consumption. Despite this surge, per capita energy consumption in emerging markets is projected to remain lower than in major economies due to efforts toward improving energy efficiency. Technological advancements like artificial intelligence (AI) and data centers are also anticipated to contribute vastly to global energy demand growth.
Low-carbon energy sources face hurdles in expansion
Low-carbon energy sources like wind and solar power are expected to account for 65-80% of global power generation by 2050. While solar energy is expected to grow rapidly due to its low cost, other technologies such as hydrogen and carbon capture face hurdles. Slow deployment, high costs, and inadequate policy support are preventing these technologies from expanding at the pace needed to meet global climate goals.
Nuclear energy growth constrained by regulatory hurdles
The growth of nuclear energy is constrained by regulatory hurdles, public safety concerns, and challenges in managing nuclear waste. Without a change in policy and public sentiment, nuclear energy's contribution to the energy transition may be limited in the short to medium term. The report also highlights that one of the major obstacles to a faster global energy transition is the current low price of carbon.
Carbon price hike needed to meet global climate targets
The McKinsey report suggests that the price of carbon needs to increase significantly—from its current level to between $150 and $225 per ton of CO2—to drive the adoption of technologies such as carbon capture, utilization, and storage (CCUS). Without this price adjustment, it will be difficult to accelerate decarbonization efforts and reach global climate targets. The study also notes that the global energy transition heavily depends on the availability of raw materials like lithium, nickel, and cobalt.
Supply chain complexities and geopolitical tensions slow clean energy transition
The supply of these materials, essential for low-carbon technologies, is limited by long development timelines and uncertain demand. This makes it difficult for investors to justify new mining and processing projects. Geopolitical tensions and domestic energy security concerns are further complicating supply chains. In response, countries are developing parallel supply chains for critical materials, which could slow the transition to cleaner energy sources.
