The energy transition is accelerating with the share of renewables in global power generation expected to double in the next 15 years and fossil fuel demand projected to peak before 2030, according to new research by consultancy McKinsey & Company.
Global oil demand is projected to peak in the next three to five years, primarily driven by the uptake of electric vehicles, and the global energy mix is projected to shift towards low-carbon solutions with a particularly strong role for power, hydrogen and synfuels, according to the Global Energy Perspective 2022 report.
Renewables are projected to grow threefold by 2050, accounting for 50% of power generation globally by 2030 and 80–90% by 2050, predicts McKinsey. Already 61% of new renewable capacity installation is priced lower than fossil fuel alternatives. Battery costs have also fallen by nearly half in the past four years.
The research also expects hydrogen demand to grow by four to six times by 2050, driven primarily by road transport, maritime and aviation; and hydrogen and hydrogen-derived synfuels to account for 10% of global energy consumption by 2050. Also, by 2050, carbon capture, utilisation and storage could grow more than 100-fold from today’s low base.
“In the past few years, we have certainly seen the energy transition pick up pace,” says Christer Tryggestad, a senior partner at McKinsey. “Every year we’ve published this report, peak oil demand has moved closer. Under our middle scenario assumptions, oil demand could even peak in the next three to five years, primarily driven by electric vehicle adoption.”
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Nonetheless, despite net-zero commitments from governments and corporations, an 85% renewable power system by 2050, and the rapid uptake of EVs and decarbonisation technologies, McKinsey still forecasts global warming to exceed 1.7°C.