Electricity, hydrogen and synfuels could account for 50% of the global energy mix by 2050, while electricity demand is projected to triple by then. Renewable generation is projected to reach 80-90% of the global energy mix by 2050 as the global build-out rates for solar and wind will grow by a factor of five and eight, respectively, according to McKinsey's 'Global Energy Perspective 2022'.

The hydrogen demand in new sectors could reach 350-600 million tonnes per annum (mtpa) in 2050 (compared to 80 mtpa today). Global demand for sustainable fuels is also expected to mature, reaching 8-22% of all liquid fuels by 2050.

The projected peak in demand for fossil fuels continues to move forward and demand for oil is projected to peak in the next five years.

Coal demand peaked in the year 2013, and after a temporary rebound in 2021, it is projected to continue its downward trajectory. Toward 2035, the gas demand across all scenarios is projected to grow another 10–20% compared to today and after 2035, the gas demand will likely be subject to larger uncertainties, driven especially by the interplay with hydrogen.

It said annual investments in energy supply and production are expected to double by 2035 to reach $1.5 lakh crore to $1.6 lakh crore, almost all growth is expected to come from decarbonisation technologies and power, which will by 2050 exceed today’s total energy investment.

EBIT in decarbonisation technologies and power is expected to grow by 5% per annum and could outpace the growth in underlying investments. Business models in a highly decarbonised system are expected to remain uncertain across sectors, and will likely rely on adjustments in market design (for example, capacity payments for flexible thermal power generation), subsidies, or other support mechanisms (for example, support for CCUS on top of CO2 prices), said the report.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.