This is the fourth edition of
Rystad’s flagship Global Energy Scenarios report. The forward, written by
Jarand Rystad, acknowledges that we have moved to a hybrid energy system of
renewable and fossil energy sources. He gives the three basic energy transition
tasks: 1) decarbonize the power sector; 2) electrify everything possible; and
3) address the residual emissions. Different countries are on different parts
of the pathway, some far along, others just beginning. He also notes that
countries with endowments like hydropower, such as the Nordic countries and
Canada, have a head start on decarbonization. France has a well-developed
nuclear sector, which also gives it an advantage. The last mile, which usually
refers to decarbonizing the last 20% of the power sector, is the hardest to
abate. It will rely on immature technologies like hydrogen, CCS, and biofuels.
Rystad developed four global
decarbonization scenarios. Three of them are degree scenarios to 2100, and one
is a nationally determined contribution (NDC) scenario to 2035. These are
described as follows: 1) a “Climate first” scenario aiming for 1.6-degrees of
warming – (not likely to be realized); 2) a Pragmatic middle-road scenario
aiming for 1.9 degrees of warming; 3) a Fossil-first scenario aiming for 2.2
degrees of warming; and 4) “NDC scenario takes on a lens of what the world
may look like if country pledges are implemented.” Rystad utilizes its
proprietary database to map global energy at asset, company, and country
levels. Below are displayed the likely prevailing narratives of energy in the
future.
The next graph compares past
energy transitions with the current energy transition.
The report predicts a peak in
global emissions in 2026, which is a little unexpected, I think. Some may well
disagree, but Rystad has good data and analysis, so perhaps they are correct.
“Global CO₂ emissions are expected to peak around 2026
before starting a gradual decline, driven by rapid renewable deployment in
power and EV adoption in transport. This marks a turning point, showing that
the world is moving from growth to decline in emissions.”
Rystad notes that its “house
view” accords with its pragmatic 1.9 degree scenario. I think they are being a
bit too optimistic. They acknowledge that the energy transition is not going to
be linear and will vary between countries, be affected by geopolitics,
protectionism, and cost considerations. Below are the scenarios.
The next two graphs cover
energy investments. The first, which goes from 2015 to 2030, shows clean energy
investments overtaking oil & gas investments beginning in 2022. According
to the graph, oil & gas investments will peak in 2028-2029, and grid
investments will overtake oil & gas investments sometime in the early-mid
2030s.
Asia, and particularly China,
has dominated solar, wind, and battery deployments in recent years,
particularly so far in 2025. Rystad notes that China is in part motivated by
energy security as it must import a lot of its oil & gas.
As the next graphs show,
fossil fuels will remain in demand, with natural gas demand expected to keep
rising to 2035. They have oil demand peaking from 2025 to 2029. There is much
debate about that. Coal, in a demand plateau since the mid-2010s, is expected
to drop off strongly beginning around 2029-2030.
The next graph shows the
energy demand mix by scenario. It shows which sources will be required to ramp
up or down for each scenario.
The next section is
interesting. Here, they show all the power losses inherent in fuel-based energy
sources and the superior efficiency of electrification. Of course, with that
increased efficiency also comes lower energy density. They distinguish primary
energy, 20% of which is lost in fuel-based sources, including
refining, final energy, 30% of which is lost via combustion,
and useful energy, which is the energy left over after the
aforementioned losses. The increasing efficiency provided by electrification
allows useful energy to grow while primary energy stays the same or drops.
The next section is
interesting as well, where they divide emissions reductions into three tasks:
Task 1: Clean up and grow the power sector
Task 2: Electrify almost everything
Task 3: Clean up the residual
Task 1 has been and will
continue to be the main decarbonization driver. Task 2 – electrification – will
continue to grow, perhaps at accelerated rates. Task 3 involves steps like CCS
and switching to lower-carbon fuels. They seem to think it will be mainly used
to abate hard-to-abate sectors. They don’t mention natural gas replacing coal,
which has been and continues to be a major decarbonization driver. Below, they
calculate the emissions reduction potential for each Task in each scenario.
They see overall clean energy deployment being led by Europe and
electrification being led by Asia. Task 3 progress has been much slower so far,
they note.
The next section involves its nationally
determined contribution (NDC) scenario to 2035, which is mainly based on the
Paris agreement’s 1.7 °C scenario, which is probably unrealistic, so no real
need to focus on it. It is close to Rystad’s Climate-first scenario (1.5 °C),
between it and its Pragmatic scenario (1.9 °C). Contributions by energy
technology and Task for this scenario are given in the second graph.
They predict that by 2030,
renewables will provide nearly 50% of power. I have to wonder, as I often do,
how much of these “renewables” is hydropower and how much is biomass. Thus, the
graph below likely does not show just wind and solar but hydro and
biomass/biofuels as well. Solar, in particular, has grown faster than previous
estimates, which can be seen as optimistic for continued solar deployment.
Battery and wind deployment are continuing to rise, but solar is leading the
charge due to its better economics.
The next section is
interesting. It divides countries into three roles they have been playing in
the energy transition and in clean energy deployment. The three roles are The
Pathfinders – which points to early deployers setting the pace. The Scalers
refers to countries that scale up, in both cases here = China. The Accelerators
are countries that later take the mature tech and deploy it to scale quickly.
The graph below shows solar PV deployment, with Europe being Pathfinder, China
being Scaler, and the Global South being Accelerator.
They expect power demand to
grow by 37% over the next decade, or 3.7% per year. Industry power demand is
expected to lead growth by a wide margin, about four times that of data centers
and more than twice that of transport and residential power demand growth.
The next section gets back to
the efficiency advantages of electrification and useful energy.
“Electrification lets consumers use less energy for the
same service.”
An EV powered by a power grid
powered with PV solar will be just over three times more efficient in using
energy than a typical internal combustion engine vehicle.
The next section gets back to
the three Tasks and uses them to track EV growth, where Norway is seen as
Pathfinder, China as Scaler, and Thailand, Costa Rica, and Uruguay as
Accelerators.
The next section addresses
hard-to-abate sectors. It notes increased demand for industrial products,
mainly steel and cement, but also chemical/petrochemical, shipping, and
aviation. They note that abating these sectors will take a long time as
economics are tough and growth continues.
They see both hydrogen and
CCS taking off in the 2030s, although I think they see too much of the hydrogen
being green hydrogen than seems to be economical, at least at present.
“Overall, the market for clean hydrogen and CCUS is
shifting from counting announcements to focusing on delivering capacity…”
The next section involves
replacing conventional fuels with biofuels and sustainable aviation fuels for
shipping and aviation. There are some uncertainties and contingencies here. One
is the International Maritime Organization (IMO)’s possible new rules set for
another vote by 2027.
Overall, this was a great report with some interesting observations, perspectives, and metrics.
References:
Rystad
Energy: Executive Summary: Global Energy Scenarios 2025. The next energy era. October
2025. PowerPoint
Presentation
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