Total demand for fossil fuels is projected to peak by 2030 in all scenarios. Although a sharp decline in coal demand is expected under all scenarios,
natural gas and oil are expected to grow further in the next few years and then remain a core part of the world’s energy mix for decades to come.
Total natural gas demand to 2040 is projected to increase under most scenarios, driven in large part by the balancing role that gas is expected to play for
renewables-based power generation until batteries are deployed at scale. In the decade to 2050, the outlook for gas demand diers widely by scenario,
from a steady increase under conservative scenarios to a steep decline under scenarios in which renewables and electrication advance faster.
For oil, total demand is projected to continue growing for much of this decade and then to fall after 2030—but the extent of the decline diers
signicantly across scenarios. In the Achieved Commitments scenario, oil demand almost halves by 2050, mainly driven by the slowdown in car-parc
growth, enhanced engine eciency in road transport, and the continued electrication of transport. In the Fading Momentum scenario, oil demand would
decline by just 3 percent over the same period; this reects much slower electrication of the global car parc and lower penetration of alternative fuels in
the aviation, maritime, and chemicals sectors as bottlenecks on materials and infrastructure limit their growth.
Renewables are expected to continue their rapid growth, driven in part by their cost competitiveness—in many regions they are already the lowest-cost
option for incremental new-build power generation. Renewable energy sources are expected to provide between 45 and 50 percent of global generation
by 2030, and between 65 and 85 percent by 2050. In all scenarios, solar is the biggest contributor of renewable energy, followed by wind.
The ramp-up of renewables could see emissions from power generation reduced by between 17 and 71 percent by 2050 compared to present levels,
despite a doubling or even tripling of demand. However, the renewables build-out faces challenges, from supply-chain issues to slow permitting and grid
build-out implications.
The uptake of nuclear and carbon capture, utilization, and storage (CCUS) technologies could lower the burden on the renewables build-out, but depends
on the political landscape and future cost development.
Coal (without CCUS) is expected to be phased out gradually. Power generation from hydrogen-ready gas plants—which support grid stability—is likely to
increase.
Total annual investments in the energy sector are projected to grow by between 2 and 4 percent per annum—roughly in line with global GDP growth—to
reach between $2 trillion and $3.2 trillion in 2040.
Despite the increasing regulatory push for decarbonization and a declining demand for fossil fuels, between 20 and 40 percent of investments (excluding
transmission and distribution) in 2040 will still be deployed in fossil fuels. In part, this is due to the increasing development costs of fossil fuel projects,
while those of green technologies are expected to decrease.
There will be a gradual but continued shift of investment focus from fossil fuels to green technologies and electric transmission and distribution. While
accounting for only 20 percent of total investments in 2015, power renewables and decarbonization technologies are projected to make up between 40
and 50 percent of total investments by 2040.
Decarbonization technologies show the highest growth at between 6 and 11 percent per annum, mainly driven by the strong uptake of EV charging
infrastructure and CCUS, which together are projected to account for of the bulk of decarbonization investments by 2040.
In the more progressive scenarios, higher investments are mostly oset by lower total operating expenditure, such as fuel cost, due to the shift towards
more capital expenditure-intensive technologies like renewables.
Despite the absolute increase, investments as a share of GDP remain stable at between 1.2 and 2.2 percent across all years and scenarios.
To deliver on the steep climate commitments around the world, substantial pivots are needed across industries and geographies. Even the more modest
transition scenarios require that multiple bottlenecks are overcome.
Potential bottlenecks include land availability, energy infrastructure, manufacturing capacity, consumer aordability, investment willingness, and material
availability.
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