The countries driving energy demand growth can't wait for renewables to get cheaper

Over the next 30 years or so, rich countries like the U.S. won’t be driving global demand growth for energy. Instead, it will be happening in emerging economies — places like India, Brazil, and Nigeria. And a lot of those countries will need both fossil fuels and renewables to power that growth, according to a new report by S&P Global Energy.

By 2060, emerging economies could increase global energy demand by over 60%. That’s comparable to adding another China to world consumption.

“This demand growth is going to be met with a multiplicity of different energies,” said Dan Yergin, vice chairman of S&P Global. “Renewables will be an important part of it. You're going to see perhaps more coal now … and oil and gas will continue to be part of the demand picture for longer than many people think.”

Take India, where both the economy and energy demand are growing rapidly, according to Atul Arya, chief energy strategist at S&P Global Energy.

“Most of that energy supply is coming from hydrocarbons. They have a very large renewable power program, but transportation needs are all being met by oil,” he said.

All of this makes it harder to meet climate goals, like keeping the rise in average global temperature well below two degrees Celsius.

“The world can still try to achieve the two degree, but that's also becoming extremely challenging. And it's because the world needs energy in these emerging markets,” Arya said.

But growing energy demand is a good thing in less advanced economies, said Katie Auth, deputy executive director at the Energy for Growth Hub.

“It's being driven by economic development, rising incomes, job creation. Right now, the average Liberian consumes less electricity in a year than my refrigerator does. So the scale of energy poverty is far worse than I imagine most Americans would ever think about,” she said.

Emerging economies can’t wait on renewables getting cheaper to grow their energy systems, Auth said. But richer countries can help them develop their energy mix to be cleaner.