Global consulting firm McKinsey & Company revealed in their October 2023 Global Energy Perspectives report that fossil fuel demand, including oil and gas, is projected to peak before 2030.
In the report, all scenarios project a peak in total demand for fossil fuels by 2030 while coal demand is expected to experience a sharp decline in all scenarios, oil and natural gas are predicted to continue growing over the next few years and remain integral to the global energy mix for decades.
Looking ahead to 2040, McKinsey highlighted key trends in the future of energy investments:
1. Fossil Fuel Investments: Despite increasing environmental regulations and reduced fossil fuel demand, a substantial portion (20% to 40%) of investments in 2040 will still be directed toward fossil fuel projects. Rising development costs for fossil fuel initiatives contribute to this, while green technologies are anticipated to become more cost-effective.
2. Natural Gas Demand: Natural gas demand is expected to rise through 2040, primarily due to its role in balancing renewable energy sources, particularly until large-scale battery deployment becomes more widespread. Gas demand may follow different trajectories based on varying scenarios, from steady growth in conservative projections to a sharp decline in scenarios with rapid renewable energy adoption.
3. Energy Sector Investments: Annual investments in the global energy sector are projected to increase by 2% to 4% per year, in line with global GDP growth. By 2040, these investments may range from $2 trillion to $3.2 trillion.
4. Shift to Green Technologies: There will be a gradual transition in investment focus from fossil fuels to green technologies and electric transmission and distribution. Green technologies, which represented only 20% of total investments in 2015, are expected to account for 40% to 50% of total investments by 2040.
The shift reflects the evolving landscape of global energy investments, with natural gas continuing to play a pivotal role in the transition to renewable energy.
While fossil fuel investments persist, a significant transition is underway towards green technologies and sustainable practices.
During the 3rd Biennial International Conference on Hydrocarbon Science and Technology (ICHST) organized by the Petroleum Training Institute (PTI) on October 23, the Minister of State for Petroleum Resources, Heineken Lokpobiri, emphasized the need to address the unique challenges facing the oil industry.
He encouraged researchers to develop tailored solutions to enhance oil production, aligning with the Federal Government's commitment to strengthen the sector.
Meanwhile, the Minister of State for Gas, Ekeprikpe Ekpo, emphasized the importance of focusing on issues such as energy transition, sustainability, and energy security.
These considerations are vital to fully harness Nigeria's abundant gas resources. He highlighted the significance of bolstering the domestic gas market and addressing challenges like inadequate infrastructure and regulatory environments, sabotage of pipelines, and suboptimal value optimization from gas reserves in Nigeria.
“With a particular reference to gas, Nigeria was inadequately prepared and did not seize the opportunities created by the increase in the demand for gas supply to Europe and other parts of the world.
“On our home front, there is the need to boost the domestic market for gas. Nigeria is known to be a gas-rich country rather than oil with a proven reserve of over 200tcf of gas.
"Local issues include inadequate infrastructure, unfair regulatory environment for gas, sabotage of pipelines and the inability to optimize value from abundant gas reserves.”
The global energy landscape is undergoing transformation, emphasizing the critical role of natural gas in the transition to cleaner energy sources and a gradual shift towards green technologies and sustainability.