A new report by McKinsey & Company projects a rapid shift in the global energy mix in the coming decade, with the share of renewables in global power generation expected to double in the next 15 years while total fossil fuel demand is projected to peak before 2030, depending on the scenario.
McKinsey’s data show that renewables are projected to grow 3x by 2050, accounting for 50% of power generation globally already by 2030 and 80-90% by 2050.
However, the firm’s experts believe that even with current government commitments and forecasted technology trends, global warming is projected to exceed 1.7°C by 2100, while reaching a 1.5°C pathway is increasingly challenging.
“This year’s Global Energy Perspective launches when global energy markets are facing an unprecedented array of uncertainties, including the conflict in Ukraine. Nonetheless, the long-term transition to low-carbon energy systems continues to see strong momentum and, in several respects, acceleration,” the report reads.
The document points out that going forward, the global energy mix will see a shift towards low-carbon solutions, with a particularly strong role for hydrogen and synfuels.
Hydrogen demand is expected to grow 4-6x by 2050, driven primarily by road transport, maritime, and aviation, while hydrogen and hydrogen-derived synfuels are expected to account for 10% of global final energy consumption by 2050.
When it comes to solar, McKinsey says that technological developments and supply chain optimization have collectively halved its cost, while wind costs have also fallen by almost one-third.
“As a result, 61% of new renewable capacity installation is already priced lower than fossil fuel alternatives. Battery costs have also fallen by nearly half in the past four years,” the dossier states.
Global oil demand, on the other hand, is projected to peak in the next three to five years.
“Future growth in energy investments will almost entirely be driven by renewables and decarbonization technologies,” the report reads. “Despite net-zero commitments from governments and corporations, an 85% renewable power system by 2050, and the rapid update of EVs and decarbonization technologies, global warming is projected to exceed 1.7 degrees.”