Global energy demand to decouple from economic growth by 2035, but not quick enough for a 2C world
Global energy demand will decouple from economic growth for the first time by 2035, due to zero-carbon energy sources accounting for more than half of the global power supply - a feat that still puts a 2C-pathway "out of reach".
That is the key finding of the 2019 Global Energy Perspective, published today (12 February) by McKinsey Energy Insights (MEI), the energy data arm of McKinsey & Company.
Driven by zero-carbon energy sources and more efficient processes, global energy demand will plateau by the mid-2030s. During this time, MEI predicts “strong” GDP and population growth, marking the first time ever that global energy demand and economic growth will be decoupled.
The report highlights that global energy demand will plateau by 2035, as developed OECD countries transition away from fossil fuels to green sources of energy. It is predicted that renewable generation will account for more than 50% of global power supply post-2035, with oil peaking in the early 2030s and natural gas beginning its decline after 2035.
As a result, global energy-related emissions are set to peak by 2024 and fall by 20% by 2050. However, the reduction in emissions driven by OECD countries – notably in China – will be balanced by growing population and industrialisation in African and Asian nations. The report states that energy demand in Africa and India will 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,” McKinsey’s senior partner, Christer Tryggestad, said.
Cant’ see the 2C
Despite the predicted fall in energy-related emissions, a 2C pathway by 2050 envisioned by the Paris Agreement will “stay out of reach” according to the report.
A rapid phase-out of coal in the power sector will lead to a predicted reduction of six gigatons of CO2 emissions – equivalent to the total of today’s emissions from the US and Japan combined.
The report notes that technologies such as hydrogen could have a key role to play in driving the world towards the 2C pathway, but that market prices for the technology would have to drop below $3.5 per kg, well below today’s retail price of $13.99/kg.
Related research from ING recently found that low-carbon technologies including electric vehicles (EVs), renewable energy arrays and innovative new fuels could help the world reduce carbon emissions currently accounted for by energy generation and use by almost two-thirds (54%).
If the realisation of delivering a 2C pathway looks bleak, relating energy use against the Sustainable Development Goals (SDGs) also appears unpromising.
The Tracking SDG7: The Energy Progress Report was published last year in a joint effort from the International Energy Agency (IEA), the International Renewable Energy Agency (IRENA), United Nations Statistics Division (UNSD), the World Bank, and the World Health Organisation (WHO).
The report found that nations are not on track to deliver SDG 7, which targets universal access to affordable and modern energy globally by 2030. You can read a round-up of that report here.
© Faversham House Ltd 2023 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.