Solar and wind power will dominate the global energy market at the end of the decade as they become cheaper to install than the operational costs of fossil fuel facilities, according to a report published by management consultancy McKinsey & Company.
The 2021 Global Energy Perspective study predicts solar and wind power plants will make up almost half the world’s power generation capacity by 2035 and cites the cost competitiveness of renewables-powered green hydrogen by 2030 as another game changer for the energy transition.
With global coal-fired power demand having already peaked, according to the report, the high point for oil will be hit in 2029 and for gas, in 2037, McKinsey predicted. That would add up to the world’s thirst for all fossil fuels combined peaking in 2027.
The McKinsey report considers four future energy scenarios and, under its business-as-usual reference case, predicts the world is currently “significantly off of the 1.5C [degrees Celsius] pathway,” in terms of the maximum desired level of global heating. To keep global temperature rises to no more than 1.5C this century would require carbon emissions to halve this decade and to fall 85% by mid century, according to the study, which expects the world to burn through its 2100 carbon budget in the “early 2030s.”
In addition to the gloomy reference case, the study posits two positive future outlooks: one consistent with a 1.5C global heating pathway and a more ambitious scenario in which 10 existing trends, such as the move to electric vehicles, are accelerated. The final, worst-case outlook is predicated on the world’s policymakers prioritizing an economic recovery from Covid-19 to the detriment of energy transition-driven legislation.
The impact of Covid-19 is estimated to have hit global energy demand to the extent a recovery could take 1-4 years, according to the McKinsey report, with electricity and gas demand bouncing back faster than oil.
However, the report considers the continuation of pre-pandemic trends such as reduced car ownership to be a more influential driver of the energy transition than the impact of the world health crisis.
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