The global economy is facing a significant shift, with emerging markets and developing economies (EMDEs) poised to drive most of the future energy demand growth. A study by S&P Global Energy indicates that energy demand from EMDEs could rise by over 60% by 2060, effectively adding another China to global primary energy demand. In contrast, demand from advanced economies and China is expected to stabilize over the long term due to advancements in energy efficiency and electrification.
The new dynamics of meeting rising demand while ensuring energy security and affordability complicate ambitious climate goals. Daniel Yergin, S&P Global’s vice chairman, emphasizes that the realities of economic development, geopolitics, and technology have shifted the conversation around energy transitions. While some advanced economies may approach carbon neutrality by 2060, most EMDEs are unlikely to reach this goal until later.
The study asserts that the most aggressive climate targets, such as limiting global temperature increases to 1.5°C, are unattainable under plausible conditions. Limiting the rise to 2°C remains possible with significant decarbonization efforts but faces technical and commercial hurdles. A substantial investment of about $50 trillion in global power generation infrastructure is projected to be necessary by 2060.
Nonetheless, fossil fuels are expected to continue playing a significant role in global energy systems, with an investment of over $11 trillion required for oil and gas by 2060 even as demand declines. Ultimately, each country’s energy strategy will be influenced by local conditions rather than a one-size-fits-all solution. The energy transition will therefore require a nuanced approach, addressing the complex needs of both advanced and developing economies.
