Power consumption is set to more than double by 2050 as electrification increases, according to new research from McKinsey.
The consultancy found that the share of electricity in energy consumption will grow to 30% by 2050, up from 19% today. Renewables will be dominating this from 2030, with cost reductions over the next decade resulting in the technology becoming cheaper than existing fossil fuel plants.
This is to trigger a sharp uptake in the installed capacity of solar and onshore and offshore wind, with 5TW of new solar and wind capacity installed by 2035 and over 50% of global power power generation coming from renewables the same year.
The consultancy is also predicting that the aggregate fossil fuel demand peak will be brought forward to 2027 partially as a result of COVID-19’s impact on energy demand.
It found that while global coal demand has already peaked, oil and gas are now not far behind, falling in 2029 and 2037 respectively.
In McKinsey's report The Global Energy Perspective 2021, it discusses how the pandemic has resulted in a significant reduction in energy demand, which it will likely take between one and four years to recover from. Additionally, the company expects that electricity and gas demand will bounce back quicker than demand for oil, and that demand for fossil fuels overall will never return to its pre-pandemic growth curve.
However, McKinsey did state that over the long-term, the impacts of behavioural shifts due to COVID-19 are minor compared to more known long-term shifts such as decreasing car ownership, growing fuel efficiencies and a trend towards electric vehicles, whose impact is estimated to be three-to-nine times higher than the pandemic’s by 2050.
Despite the earlier peak of hydrocarbon demand resulting in a substantial reduction in forecast carbon emissions, the report continues to state that the world remains significantly off of the 1.5ºC pathway.
This is detailed in particular in the Reference Case scenario, one of four modelled by McKinsey, which saw more than half of all global energy demand continuing to be met by fossil fuels by 2050. This scenario is McKinsey’s outlook on the continuation of existing trends, examining its expectations of how current technologies can evolve, and is compared against a 1.5 ºC pathway, a delayed transition where the societal focus is on economic recovery post-COVID-19 and an accelerated transition.
Christer Tryggestad, senior partner at McKinsey, said that there is still “a long way to go” to avert substantial global climate change, with annual emissions needing to be around 50% lower in 2030 and 85% lower by 2050 than current trends predict.
Tryggestad added that many governments need to translate "ambitious targets into specific actions", with the focus of stimulus packages for COVID-19 to "play a key role in shaping energy systems in the decades to come".