Article By Maksym Skotarenko
The sustained rise in global energy availability over the past two centuries has underpinned higher living standards, longer life expectancy, and economic growth. According to the Energy Institute, global primary energy consumption increased roughly fifteenfold between 1900 and 2024, with only brief interruptions followed by rapid rebounds. The COVID-19 pandemic provided a recent illustration, with global energy demand briefly falling by 3.5% in 2020 before sharply recovering and setting new records across all major energy sources.
Looking ahead, projections from the International Energy Agency (IEA) suggest that global energy needs could rise by up to 20% by 2050, driven by emerging-market growth, electrification, and continued economic expansion. Electricity, which today accounts for roughly one-fifth of final energy use, is expected to more than double by mid-century, approaching half of global final energy consumption under policies already in place and announced. Notably, artificial intelligence and data-centre infrastructure are emerging as significant incremental drivers of electricity demand. McKinsey & Company, the global management consulting firm, estimates that global data-centre electricity consumption could reach 4,500 TWh by 2050, equivalent to roughly 9% of global electricity demand. Under more aggressive assumptions, OpenAI, a leading developer of artificial intelligence technologies, has outlined ambitions for AI-focused data centres with up to 250 GW of electrical capacity by 2033, broadly equivalent to India’s current electricity demand or the output of 250 nuclear power plants. Meeting demand at this scale will require major investment in generation capacity, grid infrastructure and firm power to maintain system realibility.
While investment in electricity generation has accelerated, spending on grids, storage, and system flexibility has lagged. The IEA estimates annual power-generation investment at around USD 1 trillion, versus roughly USD 400 billion for grids, creating a structural imbalance that constrains transmission capacity and increases electricity price volatility. Battery storage has expanded rapidly but remains insufficient for long-duration and seasonal balancing. As a result, dispatchable energy sources remain essential for system reliability. Even with rapid renewable deployment, fossil fuels are expected to account for around two-thirds of the global energy mix by 2050, down from roughly 80% today. Coal is the main driver of the decline, with its global energy share projected to fall by around 13% by 2050, largely offset by the expansion of renewables, whose combined share is expected to rise from 15.4% in 2024 to 26.3% by mid-century. These projections remain highly sensitive, however, as grid constraints, slower renewable deployment, or stronger-than-expected demand for power could extend coal’s role where alternatives fail to scale.
Natural gas, the least carbon-intensive and generally lowest-cost fossil fuel, follows a distinct transition path. It is expected to overtake coal as the second-largest energy source in the 2030s, reaching around 23% of global energy consumption by 2050. Incremental demand is concentrated in emerging economies, in particular Asia and the Middle East, driven by power generation and industrial usage. Gas will remain critical for system reliability as a dispatchable complement to renewables, but its future role depends on sustained investment in upstream supply, pipelines, liquefied natural gas (LNG) infrastructure, and gas-fired power capacity.
Nuclear energy, with its high capacity factor and near-zero direct emissions, is also seeing renewed interest, with more than 40 countries developing projects and over 70 reactors currently under construction. However, capital intensity, long construction timelines, and regulatory complexities constrain the pace of deployment, limiting expected nuclear’s global energy share to around 6.6% by 2050, up from 4.8% today.
Oil demand, still dominated by transportation, is expected to plateau in the 2030s. Its share of global primary energy declines only marginally from 30.6% to 29.8% by 2050, while absolute oil demand continues to grow. Growth is increasingly driven by petrochemicals, aviation, and mobility in emerging markets, led by India, Southeast Asia, and Africa, while demand in more advanced economies declines. Despite perceptions of near-term oversupply, the longer-term outlook is constrained. Although global proven reserves indicate more than four decades of supply, effective production is constrained by natural fields decline and chronic underinvestment in exploration and infrastucture. Nearly 90% of upstream oil and gas capital expenditure since 2019 has gone toward offsetting declines rather than expanding capacity according to the IEA. With new fields typically requiring at least a decade to reach first production, replacing lost output will require a material increase in investment, service capacity, and risk appetite that is not yet evident.
Against this backdrop, it is difficult to argue that markets fully recognise energy as a foundational driver of future economic growth. Today, the energy sector accounts for just 3.3% of the MSCI World Index, while the five largest individual companies collectively represent 19.3% of the index. This disconnect is material given rising energy intensity of the businesses, relying on vast amounts of power to operate digital infrastructure, logistics networks, and global supply chains. A similar asymmetry appears in energy commodity pricing as 1 ounce of gold now buys roughly 80 barrels of oil, a level exceeded only briefly during the COVID-19 oil price collapse. Historically, this ratio has ranged between 10:1 and 30:1 for 80% of the time since 1860s. With comparable patterns evident across all energy-related industries, questions arise as to how markets are currently pricing the structural role of the energy sector in sustaining long-term economic growth and system resilience.
Maksym Skotarenko is a Research Analyst and Portfolio Manager at Curmi & Partners Ltd.
The information presented in this commentary is solely provided for informational purposes and is not to be interpreted as investment advice, or to be used or considered as an offer or a solicitation to sell/buy or subscribe for any financial instruments, nor to constitute any advice or recommendation with respect to such financial instruments. The Energy Sector is not regulated by the MFSA. Curmi & Partners Ltd, with registered address Finance House, Princess Elizabeth Street, Ta Xbiex, Malta XBX 1102, is a member of the Malta Stock Exchange and is licensed by the MFSA to conduct investment services business.