Recent developments and emerging trends
The Energy Outlook scenarios are informed by recent trends and developments in the global energy system
Global energy demand has continued to grow, averaging around 1% between 2019 and 2024, with all this growth coming from emerging economies, driven by increasing prosperity and growth.
The pace of improvement in energy efficiency – measured as the amount of total final energy consumed per unit of GDP – continues to be subpar, averaging just 1.5% per annum between 2019 and 2024, down from almost 2% p.a. in the previous 10 years. This weakness has underpinned the continued steady growth of fossil fuels despite rapid increases in low carbon energy.
Emissions
Carbon emissions have continued to increase, growing at an average rate of 0.6% per annum over the past five years (2019-2024). If CO2 emissions remain close to recent levels, the carbon budget estimated by the Intergovernmental Panel on Climate Change (IPCC) to be consistent with a high probability of limiting global temperature rises to 2°C would be exhausted by the early 2040s.
Energy security
There has been a significant increase in geopolitical tensions and conflicts in recent years, including the wars in Ukraine and the Middle East, and the increasing use of trade sanctions and tariffs. These heightened tensions have led many countries to attach increased importance to their energy security.
Greater focus on energy security could give rise to a number of different and offsetting impacts on the energy system, including an increased preference for domestically produced rather than imported energy, and a desire to develop domestic or more diverse supply chains for low carbon technologies rather than rely on lowest-cost international providers.
These developments are likely to have differing effects on countries depending on the structure of their energy systems, leading to greater diversity in the energy pathways followed by different countries. Some energy importers may choose to increase the pace of electrification, powered by (domestic) low carbon energy, and so reduce their reliance on imported fossil fuels. In contrast, some energy producers may prefer to continue to use their domestic fossil fuels rather than increase their dependency on low carbon technologies, dominated by international supply chains.
Oil and natural gas
Growth in oil demand since 2019 has averaged 0.6Mb/d per year. All this growth has been due to increasing consumption in emerging economies. China’s oil demand, which accounted for around half of global oil demand growth over the past decade, looks set to plateau in the second half of the 2020s.
The pattern of oil demand growth is shifting, with its use as a feedstock in the petrochemical sector replacing road transport demand as the main source of future growth.
Growth in natural gas demand has been led by China, and to a lesser extent the Middle East and the US. The relative lack of domestic resources and availability of pipeline gas in China and other emerging Asian countries, combined with the continued loss of Russian pipeline gas exports to Europe, has further increased the importance of liquefied natural gas (LNG).
Based on LNG export facilities which are either under construction or have taken Final Investment Decision (FID), global LNG exports are set to increase by more than half by 2035 relative to 2024, with the US and Middle East accounting for around two-thirds of that increase.
The growing demand from data centres to support the increasing adoption of generative artificial intelligence (AI) applications is already providing a significant boost to power demand in some markets and is set to grow rapidly in coming years. This impact is most pronounced in the US, which currently accounts for around a half of global data centre power demand in 2023, against a backdrop of almost flat power demand in the previous decade.
Low carbon energy
The International Energy Agency (IEA) estimate that investment in ‘clean energy’ has grown rapidly in recent years and is expected to reach around $2.2 trillion in 2025, up 70% since 20001. This investment was heavily concentrated in developed economies and China, with far lower investment levels in other emerging economies, where financing costs pose a heavy burden.
Much of this investment has been deployed in electrification and in low carbon power generation, led by wind and solar power. Wind and solar power generation has doubled between 2019 and 2024, driven by solar. Growth in renewable power generation has been led by China which accounted for over half of the increase in wind and solar generation in the past five years.
Sales of electric vehicles (EVs) continue to increase rapidly, with China accounting for over half of global sales in recent years. Growth in the EU and the US – the other two major markets for EVs – has remained dependent on vehicle emissions regulations.
The rapid growth in both electricity demand and low carbon generation is putting increased pressure on network planning and power system operation. For example, in the US, the typical time from interconnection request to commercial operation has increased from under two years in the 2000s to nearly five years.
The development of less mature, higher cost low carbon energy vectors and technologies – including low carbon hydrogen, sustainable aviation fuel, and carbon capture use and storage – remain at a very early stage and heavily dependent on policy and regulatory support.
Despite growing concerns about the availability of critical minerals and the security of supply chains, investment growth slowed in 2024, and exploration activity was flat. The pressure on available supplies of copper look set to increase materially over the next 5-10 years.