McKinsey’s research shows that combined demand for fossil fuels will reach a peak in 2027 – the peak for coal has already been achieved with oil likely to be reached in 2029 and gas in 2037.
The pandemic has resulted in a profound reduction in energy demand, McKinsey reported, and it will take between one to four years for it to be restored. And electricity and gas demand will bounce back more quickly than demand for oil.
But demand for fossil fuels will never return to pre-pandemic levels, the consultants said. And in the long run, the influence of COVID will be less than that of trends towards lower levels of car ownership, growing fuel efficiencies and greater use of electric vehicles – their impact is estimated to be three to nine times higher than that of the pandemic by 2050.
“While the pandemic has certainly provided a substantial shock for the energy sector across all fuel sources, the story of the century is still a rapid and continuous shift to lower-carbon energy systems,” wrote Christer Tryggestad, Senior Partner at McKinsey.
McKinsey predicts that the share of electricity in the energy balance will grow by about 50 % by 2050, but fossil fuels will continue to play a significant role for some time and account for about half of all energy demand.
As a result, the objectives of eliminating carbon emissions and reducing global warming will not be met as the world will run out of its carbon budget for 2100 in the early 2030s.
Tryggestad said that the aim of keeping to the agreed global temperature rise of 1.5 degrees C will require annual emissions to be around 50 % lower than current trends in 2030 and 85 % lower by 2050.