Global Energy Perspective 2024

Increased energy demand and the continued role of fossil fuels in the energy system mean emissions could continue rising through 2025–35. Emissions have not yet peaked, and global CO₂ emissions from combustion and industrial processes are projected to increase until around 2025 under all our bottom-up scenarios. The scenarios begin to diverge toward 2030, with all showing a decline in emissions by 2050. Despite this projected decline, 2050 emissions are still meaningfully above net-zero targets across all scenarios.

The emissions decline is driven primarily by economic factors, particularly the increasing cost-effectiveness of low-carbon technology in sectors such as power and road transport. For example, solar photovoltaic (PV) deployment in Europe is on track to reach 2030 targets, while China is making strides in both solar and electric vehicle (EV) adoption. Policy and regulations will also continue to contribute to the adoption of low-carbon technology and support a decline in emissions.

In all our bottom-up scenarios, rising emissions would lead to global temperature increases above 1.5°C by 2050, from around 1.8°C in the Sustainable Transformation scenario, through around 2.2°C in Continued Momentum, to around 2.6°C in Slow Evolution.

Global energy demand is growing faster than expected and a more challenging geopolitical landscape—combined with the emergence of new sources of demand and smaller-than-expected efficiency gains—means the evolution of demand growth could see rapid changes in unexpected directions.

Global energy demand is projected to grow between 11 percent (in the Continued Momentum scenario) and 18 percent (in the Slow Evolution scenario) by 2050. Most of this growth will come from emerging economies, where growing populations and a strengthening middle class will result in higher energy demand. The relocation of manufacturing industries from mature to emerging economies will further shift demand to these economies.

Developments in emerging economies, particularly ASEAN countries, India, and the Middle East, are critical, given that these regions are projected to drive between 66 and 95 percent of energy demand growth to 2050, depending on the scenario. A substantial part of this growth is projected to come from ASEAN countries, cementing the region as a key energy demand center—further reshaping global energy trade flows and increasing the region’s geopolitical importance.

In mature economies, as well as in China, overall demand is projected to flatten in the short to medium term. However, there are several forces at work that could affect the demand trajectory in different regions. In the United States, industrial resurgence would drive demand growth through electrification, while in Europe, by contrast, continued deindustrialization would lead to declining demand in the region.

How the world will meet the projected increase in energy demand is one of the key questions of the energy transition. Both RES and new fossil fuels build-out will be required to ensure demand is met by supply, and nuclear power could play a bigger role in the years beyond 2050. However, for all these energy sources, lengthy project timelines and higher interest rates could add costs and put project execution at risk.

Electrification is accelerating—our analysis suggests that, between 2023 and 2050, electricity consumption could more than double in slower energy transition scenarios, and nearly triple in faster scenarios. This is in comparison to total energy consumption growth of up to 21 percent over the same period. Electricity is projected to become the largest source of energy by 2050 across scenarios, with consumption coming from traditional sectors (for example, electrification of buildings) as well as newer sectors (such as data centers, EVs, and green hydrogen).

Of these new demand centers, the most striking is the rise of artificial intelligence (AI) and the associated boom in data centers. The effect that AI could have on future energy demand could vary substantially depending on the growth trajectories of its many applications, as well as those of other technologies. Our research estimates that the rise of cloud solutions, cryptocurrency, and AI could see data centers accounting for 2,500 to 4,500 terawatt hours (TWh) of global electricity demand by 2050 (5 to 9 percent of total electricity demand). Data centers are mostly powered by electricity (with backup generators) and have constant demand, creating greater need for gas or other firming sources of energy to balance out the intermittency of renewable energy sources (RES).

Under the Continued Momentum scenario, global green hydrogen consumption is projected to increase to 179 megatons per annum (Mtpa) by 2050, up from less than 1 Mtpa today and 5 Mtpa in 2030. This could lead to a growth in power consumption of 20 percent per year for the sector.

Electricity consumption in transport could grow by around 10 percent annually in the Continued Momentum scenario, driven by increased penetration of EVs. Battery electric vehicles (BEVs) are projected to account for most global passenger car sales by 2050, up from 13 percent today.

Low-carbon energy sources are projected to grow, accounting for 65 to 80 percent of global power generation by 2050, depending on the scenario, up from 32 percent today. This growth is primarily driven by the lower cost of RES, though policy and incentives also play a role.

Growth rates are projected to differ by technology. Those technologies for which the levelized cost of energy (LCOE) is already low at the point of production, such as solar, wind, and energy storage systems, are projected to continue to grow, while those with higher costs—including hydrogen and other sustainable fuels, and carbon capture, utilization, and storage (CCUS)—lack sufficient demand and policy support for strong growth. Solar stands out with particularly strong growth projections, while hydrogen growth to 2050 has been revised downward by 10 to 25 percent compared to previous estimates due to higher cost projections.

To supply projected energy demand and increase the viability of RES-based power systems, stakeholders now need to consider how to build a fully running and reliable energy system based on renewables. Here, emerging economies have an opportunity to build a renewables-based system from the ground up to meet their burgeoning energy needs, potentially leapfrogging some of the constraints imposed by adapting a preexisting energy system to run on renewables. Doing so would require conscious planning; purposeful, pragmatic action; and a supportive policy environment to ensure that a renewables-based energy system could meet rapidly growing demand.

A set of new and existing challenges to RES build-out will need to be overcome to ensure the energy transition continues at pace. While RES are now cheaper and make up a larger part of the energy mix than ever before, more work is needed around the economic feasibility of some RES business cases.

An emerging challenge affecting energy systems with a high penetration of renewables is power pricing. The comparatively lower marginal costs of RES mean that the price of electricity tends toward zero—or even negative pricing—at certain times of day. For new RES installations, this could potentially impact the business case, requiring electricity providers to derisk their positions. In some scenarios, including those with the most cost-effective decarbonization pathways, our analysis shows that new RES build-out would not have a positive business case without regulatory intervention.

Achieving firmness in a renewables-based system introduces another complex challenge. The business case for firming capacity, such as from gas or battery electric storage systems (BESS), needs to make sense and be supported by government and correct market design. Even though a renewables-based system may be cheaper than a fossil-based one, the need for firmness is nontrivial—and this, in combination with the required grid investment, could make the final cost of power for the consumer higher than previously anticipated.

Policy and regulation can play a role in ensuring the build-out of low-carbon firm energy sources is feasible, with robust business cases that result in affordable power for end users. Additionally, BESS and other long-duration energy storage (LDES) technologies could play an important role in meeting demand located far from the grid and in balancing a renewables-based system.

Despite progress in RES build-out, the energy transition has been slower than expected in certain areas, and key transition levers are not yet mature, scalable, or cost-effective. This, combined with the constraints facing renewables build-out and growing energy demand, means renewables alone are not currently projected to be sufficient to meet the world’s future energy needs in all our bottom-up scenarios.

Fossil fuels, including oil, natural gas, and coal, are therefore projected to continue to play a role, albeit a moderating one, in the global energy system to 2050, meeting between 40 and 60 percent of global energy demand in 2050, depending on the scenario, down from 78 percent in 2023. Analysis of the data shows that investment and capital flow into fossil fuels are projected to continue for at least the next ten years to ensure the global energy system can keep up with demand.

This means that future fossil fuel demand in 2030 is best characterized as a decade-spanning plateau rather than a peak, with the duration of this plateau varying by scenario. Reducing the duration of this plateau will depend on several levers, including accelerated electrification of the economy, particularly in transport (EV adoption) and faster industrial heat pump deployment, enhanced adoption of bio and synfuels in difficult-to-abate sectors such as heavy transport and other industrial segments, and accelerated build-out of RES in the power sector.

It is increasingly clear from our analysis that the energy system is not a zero-sum game—our analysis shows that both fossil fuels and RES will form part of the energy mix for the foreseeable future, with fossil fuels projected to meet the demand unable to be met by RES due to slow build-out, and to provide firming capacity for renewables-based energy systems.

Maintaining or accelerating the pace of the global energy transition will require overcoming several bottlenecks impacting the continued uptake of low-carbon technologies. The global energy system is fragile, lacks redundancy, and is highly complex, all of which means that bottlenecks could have significant effects if they go unresolved. Additionally, as the energy transition progresses, difficult trade-offs will need to be made between multiple objectives, including affordability, reliability, industrial competitiveness, and energy security. The major bottlenecks identified affect electricity generation, but other low-carbon energy sources, such as sustainable fuels and key low-carbon technologies such as EV batteries, face bottlenecks of their own.

As electrification continues, significant grid build-out will be needed. Electrification requires purpose-built and resilient grids that can connect new RES and support bidirectional flows—requiring a significant amount of infrastructure to be built. Achieving this required build-out may be challenging in many areas, resulting in grid congestion and preventing new RES projects from being connected to the grid.

The grid build-out needed to enable the uptake of electrification requires significant capital. Transmission and distribution (T&D) investments would need to grow about threefold by 2050 to recover from underinvestment and to accommodate intermittent RES. This would result in an increase in the share of grid cost in total average delivered power costs to customers. As costs increase, grids could become congested and labor shortages emerge. Demand management could help alleviate increases in delivered power costs. Nevertheless, as the grid decarbonizes with an increased share of renewables, the average generation cost is projected to decline, which could bring down the system cost of electricity in some cases.

Despite the projected growth in electricity demand, it remains uncertain whether this demand will fully materialize, particularly in Europe. Drivers of this uncertainty include a slowdown in heat pump installations, slower-than-expected EV sales, lack of investment into industrial electrification, and uncertainties in project development. The expected reduction in industrial output in some sectors, such as iron and steel, paper and pulp, and chemicals, is another contributing factor. The lack of clarity in how demand will unfold could dampen the appetite to invest in next-generation clean energy projects, potentially stalling or slowing the energy transition.

The availability of an appropriately skilled workforce is another bottleneck for both renewables and fossil fuels. These industries may struggle to attract skilled workers, with new talent choosing to work in less traditional sectors, and older workers retiring. The net-zero transition is also changing the materials and mining demand profile as low-carbon technologies require more and different materials than conventional technologies.

Because bottlenecks are, in general, caused by the lack of affordability and strong business cases, a common thread in solving them is ensuring a viable business case for technology uptake or build-out, with the right policy and financial frameworks and incentives in place—and willingness from stakeholders to adopt these solutions. Pragmatic and adaptive regulation, informed by the evolving energy transition landscape, could also be an important component in resolving bottlenecks.

One major cross-cutting bottleneck facing the energy transition is a lack of firm commitment to project pipelines—not helped by concerns surrounding project economics and long-term returns, and much less by the fact there is no precedent for the global energy transition.

Despite significant announced investment and a supportive policy environment, this lack of firm commitment could put a significant number of RES projects at risk. Despite continued reductions in the LCOE, the deployment of low-carbon power generation faces challenges related to broader market design and infrastructure.

Notwithstanding numerous announcements spurred by policies such as the US Inflation Reduction Act, clean commodities production faces a significant shortfall in firm commitments. The pace of the final investment decision (FID) is not on track to meet net-zero targets, following concerns over feedstock availability and competitive pricing. Currently, less than half of the deployment pipeline to 2030 for low-carbon power has reached FID.