Renewable sources are growing at record rates, attracting investments and gaining space in electricity production. But oil, gas and coal continue to meet growing global demand. New technologies are thus added to traditional sources faster than they are able to replace them, while decarbonisation risks moving away from international climate objectives.
McKinsey's Global Energy Perspective 2026 analyzes this transformation across different economic, technological and geopolitical scenarios. In 2025, global energy demand increased by 2.7% and investments in low-emission technologies exceeded those in fossil fuels for the second consecutive year. Yet coal hit a new consumption record, gas grew in all major regions and oil hit its highest level since 2019.
The expansion of emerging economies, the electrification of consumption and digital technologies are supporting energy needs. In the Hydrocarbon Resilience scenario, characterized by sustained economic growth and a slower reduction in the costs of clean technologies, McKinsey hypothesizes that oil demand could approach 130 million barrels per day by 2035, 30% more than today. One of the possible trajectories, not the central prediction of the report.
Geopolitics intervenes to complicate the picture. The world could divide into three large energy blocs, gravitating around China, the United States and Europe, committed to strengthening their industrial supply chains. Rebuilding supply chains outside of China could increase investment costs in photovoltaics by 20-25% and those in batteries by 40-50% in Europe and the United States. In fact, Beijing controls around 80% of the world's production of photovoltaic modules and 75% of the production capacity of battery cells. Dependence on imported fossil fuels thus risks being replaced by dependence on critical technologies and materials.
Another unknown is artificial intelligence. In the Continued Momentum reference scenario, data center electricity demand would increase by 24% per year until 2030, becoming one of the main drivers of consumption growth in OECD countries. The pace could then slow down to 5% per year in the following decade, also depending on improvements in the efficiency of computing systems.
The growth in electricity demand accentuates the main bottleneck of the transition: infrastructure. New renewable plants are of little use without networks capable of connecting them to consumers, storage systems and generation capacity available when the sun and wind are not producing. Global investments in transmission and distribution networks could rise from $443 billion in 2025 to $970 billion annually by 2050, offsetting part of the savings resulting from falling costs of renewables.
In Europe, 50% additional flexibility could be needed by 2030 to adapt consumption to electricity availability. But more than 70% of EU households still do not have dynamic pricing contracts, which would allow them to use more energy at times when it costs less.
Meanwhile, attention is returning to nuclear power, a source of continuous, low-emission electricity. In the Decarbonization Delivers scenario, characterized by faster technological progress, McKinsey hypothesizes average net increases in nuclear capacity of 40 gigawatts per year between 2025 and 2050, compared to 18 in the reference scenario. An expansion subordinated to the reduction of costs and construction times and the industrial development of small modular reactors.
