Global energy demand is projected to increase by over 60% by 2060, largely fueled by emerging economies like Brazil, India, Nigeria, and Indonesia, according to an S&P Global report. This surge is comparable to adding another China to current world consumption. While renewable energy capacity is expanding, the report suggests that oil and gas will remain crucial for meeting this growing demand.
The projected surge in global energy demand, primarily from developing nations, signals continued reliance on fossil fuels alongside renewables, potentially complicating climate targets. This sustained demand for oil and gas will impact commodity markets and energy company strategies, while the growth in emerging economies highlights the challenges of energy poverty and the need for diverse energy
Emerging economies are expected to significantly drive up global energy demand in the coming decades, with a new report from S&P Global projecting an increase of over 60% by 2060. This surge is comparable to adding the entire energy consumption of China to the current global total. Countries such as Brazil, India, Nigeria, and Indonesia are actively expanding their energy production and imports to support rapid economic development.
While these nations are making efforts to increase their renewable energy capacity, the report indicates that meeting the escalating demand will necessitate an "all-of-the-above" energy strategy, which will likely extend the lifespan of oil and gas. China plays a pivotal role as the world's largest manufacturer of clean energy infrastructure, supplying affordable solar technology that has contributed to the rapid growth of solar installations in many developing countries. This trend, coupled with volatility in oil and gas markets, has positioned emerging economies as key players in the renewable energy transition.
Despite the momentum in renewables, S&P Global suggests that a complete takeover by clean energy is unlikely in the near term. Dan Yergin, vice chairman of S&P Global, stated that demand growth will be met by a variety of energy sources, with coal potentially seeing increased use and oil and gas remaining significant components of the energy mix for longer than anticipated. This reality poses challenges to achieving climate goals, as emerging economies resist the expectation to bypass fossil fuel development entirely, especially given the historical emissions from developed nations.
Katie Auth, deputy executive director at the Energy for Growth Hub, highlighted that energy demand growth is a positive indicator for developing nations, correlating with economic development, rising incomes, and job creation. She pointed out the severe energy poverty in some regions, citing Liberia as an example where average annual electricity consumption is less than that of a refrigerator. The recent surge in energy demand and carbon footprint in developed countries, partly driven by artificial intelligence, further strengthens the argument for developing nations to pursue their energy growth.
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