Demand for oil is projected to peak in the next five years - but gas demand looks set to rise through to 2035.
McKinsey's Global Energy Perspective 2022 report says the need for the hydrocarbon will hit its highest between 2024 and 2027, at which point an increase in the uptake of electric vehicles is expected to shift the balance away from oil.
Gas demand on the other hand is likely to increase up to 2035, after which it will be subject to "large uncertainties", in part due to the development of hydrogen.
The report states: "Toward 2035, gas demand across all scenarios is projected to grow another 10–20% compared to today; after 2035, gas demand will likely be subject to larger uncertainties, driven especially by the interplay with hydrogen."
The report supports the case for a staged energy transition, avoiding a cliff-edge end to oil and gas production while the world's energy markets change.
Russia's invasion of Ukraine has amplified underlying supply and demand issues that have forced commodity prices through the roof, sparking inflationary concerns.
And there are fears it could get worse before it gets better, as western governments try to rapidly reduce imports of Russian gas and oil.
According to the McKinsey report, the European Union might become independent of Russian gas imports by 2030.
By that point renewables are expected to account for 50% of the power mix, rising to 85% by 2050.
Power shift
"Going forward, the energy mix is projected to shift toward power," the report states.
"By 2050, electricity and enabling hydrogen and synfuels could account for 50% of the energy mix. Electricity demand is projected to triple by 2050 as sectors electrify and hydrogen and hydrogen-based fuels increase their market share due to decarbonisation.
"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 grow by a factor of five and eight respectively.
"Hydrogen demand in new sectors could reach 350–600 mtpa in 2050 (compared to ~80 mtpa today)."
Investment
Total investments across energy sectors are projected to grow by more than 4% per annum and are projected to be increasingly skewed towards non-fossil and decarbonisation technologies, even though returns remain uncertain, the report says.
Annual investments in energy supply and production are expected to double by 2035 to reach $1.5trillion to $1.6trillion; almost all growth is expected to come from decarbonisation technologies and power, which will by 2050 exceed today’s total energy investments.