Global Power Demand Surge Puts 2050 Net-Zero Target Out of Reach, Wood Mackenzie Says

Global electricity demand is climbing so rapidly that the world is now on track for 2.6 degrees Celsius of warming, making the goal of net zero by 2050 unattainable under current trends, consultancy Wood Mackenzie said in its Energy Transition Outlook 2025–2026 published this week. The report said that achieving a 2°C pathway would require annual investment of about US$4.3 trillion between 2025 and 2060, lifting energy spending from 2.5% to 3.35% of global GDP within the next decade. Few countries are meeting their 2030 emissions goals, with none of the major G7 economies on track, the report found. Wood Mackenzie’s base scenario projects global greenhouse gas emissions peaking in 2028 before falling by around 2% a year, resulting in an estimated 2.6°C rise in average temperatures. Renewables are expected to play an increasingly central role, with variable sources such as wind and solar forecast to expand from 20% of global generation today to 60% by 2050. Solar capacity is projected to double by 2030, overtaking gas-fired power by 2033 and coal a year later. “As power demand surges due to the expansion of technologies such as AI and electrification, what was once a mostly aspirational shift towards decarbonisation is now facing the hard trade-offs of scale, system integration, capital allocation and geopolitics,” said Prakash Sharma, Wood Mackenzie’s vice president for scenarios and technologies. The consultancy said climate leadership is shifting toward China, which continues to increase renewable energy investment, while the United States “doubles down on fossil fuels” and Europe maintains its focus on clean technologies for energy security. China is projected to invest around US$913 billion annually in energy transition efforts by 2040, compared with US$455 billion in Europe and US$388 billion in the United States. To align with a net-zero trajectory, those investments would need to grow by 29%, 36% and 76%, respectively. The report also warned that reliance on critical minerals such as lithium, copper, nickel, cobalt and rare earths poses new geopolitical risks as China maintains dominance in refining and processing. “Critical minerals have become the new strategic battleground,” Sharma said. Soaring energy use from data centres driven by artificial intelligence is reshaping electricity systems, with consumption expected to reach 700 terawatt-hours in 2025 and potentially double by 2030. The trend, while pressuring clean energy targets, could also accelerate technological progress through advances in simulation and optimisation, the report noted. Wood Mackenzie forecast oil demand to peak in 2032—two years later than previously expected—while natural gas remains a “bridge fuel” in the transition. Carbon capture, hydrogen and bioenergy technologies are expected to deliver up to 30% of total emissions reductions under net-zero scenarios. “Oil, gas, coal and power can no longer operate in silos,” Sharma said. “Geopolitical shocks or resource constraints in one fuel cascade across others, while shared infrastructure and technologies define the future energy system.”

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