McKinsey & Company’s Global Energy Perspective report

Analysis of the scenarios shows that the world requires a major course correction to reach the Paris Agreement goals, says Bram Smeets, Partner at McKinsey

Leading global consultancy McKinsey & Company has released its 2023 Global Energy Perspective, which shows that tackling energy transition technology bottlenecks with substitute materials, innovation, infrastructure build out and regulation will be crucial to achieving net zero targets that aim to limit global warming to well below 2°C above pre-industrial levels and to pursue efforts to limit temperature increases to 1.5°C, in line with the Paris Agreement. 

 “History has shown us that new technologies develop much faster than anticipated with the right catalysts and incentives,” shares Ole Rolser, Partner at McKinsey. 

“To deliver on the steep climate commitments globally, substantial pivots are needed across industries and geographies. With positive price signals and a buoyant innovation landscape, the ingredients exist to enable the course correction towards a 1.5°C pathway and overcome bottlenecks.”

Based in McKinsey’s Amsterdam office, Rolser leads the firm’s Global Energy Perspective (GEP), with particular focus on topics around the future of gas spanning from LNG portfolio optimisation to hydrogen as well as the wider implications for the energy system.

Supply and demand in energy 

“The analysis of these bottom-up scenarios shows that the world requires a major course correction to reach the goals aligned with the Paris Agreement,” adds Bram Smeets, Partner at McKinsey and Lead Author of the report.

Leader of McKinsey's Global Energy Perspective and Sustainability Insights groups, Smeets supports McKinsey clients to navigate the rapid shifts in today's energy landscape, including investors, national governments, Oil & Gas majors, power companies and innovative technology players.

“While we see a strong increase in low-carbon technologies such as solar, wind and electric heat pumps, urgent global momentum and collaboration across the energy value chain is needed to resolve bottlenecks and fulfil critical prerequisites for accelerated decarbonisation.”  

The report models the outlook for demand and supply of energy commodities across a 1.5°C pathway, and four bottom-up energy transition scenarios. These energy transition scenarios examine outcomes ranging from warming of 1.6°C to 2.9°C by 2100 (scenario descriptions outlined below). These wide-ranging scenarios are shaped by more than 400 drivers across sectors, technologies, policies, costs, and fuels, serving as a fact base to inform decision makers on the challenges to be overcome.  

“While the energy transition has gathered pace, it will be further enabled by continued growth in investment into green technologies and electric transmission and distribution,” contributes Luciano Di Fiori, Partner at McKinsey. 

Based in Houston, Di Fiori leads the Energy Insights team for the Americas, serving clients on strategy and merger & acquisition issues across North America, including oil & gas operators.

“Investment in a broad and balanced portfolio of low-carbon solutions is one of  the most critical levers for debottlenecking the transition.” 

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