Fossil Fuels Won’t Quit – Powering the World Past 2050

The global energy transition is entering a new phase - one where pragmatism, affordability, and reliability take center stage. According to McKinsey & Company's Global Energy Perspective 2025, fossil fuels will remain a major part of the world's energy mix for decades to come, even as renewable energy gains ground and decarbonization efforts intensify.

McKinsey projects that fossil fuel demand will plateau between 2030 and 2035 under its "Continued Momentum" scenario, rather than collapsing outright. Natural gas is expected to see the strongest growth among fossil fuels, largely due to its role in power generation and as a substitute for higher-emission energy sources. Coal, while declining globally, may persist longer in certain regions.

This outlook signals that the oil and gas industry still has a long runway ahead, but success will depend on staying cost-competitive and resilient amid evolving regulations and rising sustainability expectations.

Slow Adoption of Alternative Fuels

The report suggests that key low-carbon fuels such as green hydrogen and synthetic alternatives are unlikely to reach widespread adoption before 2040 unless governments introduce strong mandates. With affordability and bankability driving investment decisions, traditional fuels will continue to dominate in the near term. In short, the world's energy system is transforming, but not fast enough to fully replace oil and gas just yet.

Regional Differences Shape the Transition

McKinsey emphasizes that the pace of transition will vary widely across regions. China is expected to continue leading electrification, followed by North America and India. Each region's unique mix of resources, policy priorities, and industrial structures will determine how fast decarbonization progresses.

For oil and gas producers, this means that strategies must be tailored by geography. Opportunities in natural gas and carbon-efficient production will differ significantly between markets.

Power Demand Surges

Global electricity demand is expected to climb sharply, driven by electrification, population growth, and the rapid expansion of data centers. While buildings and industry will continue to consume the most power in emerging markets, data centers are emerging as the top driver in developed economies, particularly in the United States, Europe, and China.

That rising demand for electricity could, in turn, sustain natural-gas-fired power generation for decades as it helps stabilize grids with intermittent renewable output.

Renewables and Gas to Lead New Power Supply

Variable renewable energy sources such as solar and wind will likely dominate new capacity additions, supported by gas-powered generation for reliability. McKinsey expects renewables to make up between 61 and 67 percent of the global power mix by 2050, with natural gas acting as a balancing force in many markets.

Technologies that provide continuous, carbon-free power, such as nuclear, geothermal, and hydropower, are expected to expand alongside energy-storage systems like batteries and pumped hydro. Together, these resources will be essential to ensure system reliability as more renewable capacity comes online.

Taking a System-Wide View

McKinsey highlights the value of a holistic approach to decarbonization. Instead of focusing solely on the last few percentage points of power-sector emissions, allocating investments across sectors could deliver faster and cheaper emission reductions. For energy companies, that means exploring opportunities beyond production-into storage, infrastructure, and clean-power partnerships.

While the report underscores ongoing momentum toward cleaner energy, it also offers a sobering reminder: global emissions reached record highs over the past year. McKinsey's models now project temperature increases of 1.9 °C in a "Sustainable Transformation" scenario, 2.3 °C under "Continued Momentum," and 2.7 °C in "Slow Evolution." All exceed the 1.5 °C goal set by the Paris Agreement.

The takeaway is clear - oil and gas will remain essential to meeting global energy needs for decades, but the industry must innovate, adapt, and collaborate to balance reliability, affordability, and sustainability in a rapidly changing world.