Making it add up: why fossil fuels play a vital role in energy addition

Global energy demand is increasing faster than ever. According to the International Energy Agency (IEA), demand grew more in 2024 than the average rate for the past 10 years.(1) This demand growth was across all types of energy, including renewables, fossil fuels, and nuclear.

The needs will only continue to grow in the years ahead. Demand for electricity will double by 2050, says the IEA, driven by electrification across industries, China’s energy transition, and the growing need to power the data centers that the boom in artificial intelligence will require.

AI is predicted to drive data center requirements to as much as 9% of total electricity demand by 2050.(2) Importantly, data center energy demand is constant, requiring a traditional fuel, such as gas, to balance out the intermittent nature of renewables.

Energy addition, which focuses on the broad expansion of energy supply rather than the replacement of existing capacity with clean technology, will therefore be a necessary strategy. Fossil fuels are likely to be a vital and growing contributor to energy capacity.

Energy addition is complementary to energy transition but allows for the continuation or expansion of fossil fuel use, even as renewable capacity scales up and is increasingly integrated into the overall supply picture.

A record amount of new clean energy capacity was deployed in 2023, but two-thirds of the increase in energy demand that year was met by fossil fuels.⁽³⁾ Renewables continue to face challenges of scaling, deployment, and reliability, often necessitating the use of traditional fuels to supplement or act as backup.

Under the “Current Trajectory” scenario projected in the latest edition of BP’s Energy Outlook,(4) a 10% growth in primary energy demand by 2050(5) will be driven by a doubling of the world economy over that period, with emerging markets accounting for 80% of that increase. Primary energy in ex-China emerging markets will grow by 50% by 2050.

While renewables will be the fastest-growing source of primary energy, oil will remain the largest single source over most of the period, and will still contribute 30% in 2035, only marginally lower than today. Natural gas demand is expected to rise on current trends, to be some 20% higher than today by 2050, BP finds, with oil and gas combined accounting for more than half of primary energy demand.

Developed economies like the European Union and the U.S. have already moved from the energy addition phase to energy substitution, the point at which fossil fuel use is falling as renewables meet more of the growth in overall energy demand. However, this progression is still at an earlier stage in emerging markets. According to BP’s projections, China will move into energy substitution in 2030, but Brazil will not until the 2040s.

It is clear that supporting energy addition is therefore a necessary and pragmatic way to balance the competing needs of growth, decarbonization, and energy security. However, in recent years, there has been underinvestment in oil and gas resources, raising the risk of shortages if the switch to clean energy proves slower than the most optimistic hopes.

Amin Nasser, CEO of Saudi Aramco, has recently warned of the dangers of a supply crunch, particularly as U.S. shale begins to decline in the years ahead. More capital must now flow toward developing hydrocarbon resources, which is why large national and international oil companies are actively pursuing long-duration resource capture today.

In this context, the GCC region, and the UAE in particular, will be of vital importance. Blessed with the most competitive subsurface for resource extraction, they will be critical to meeting the global energy demand of the future.

References:  

• (1) https://www.iea.org/reports/global-energy-review-2025/key-findings
• (2) https://www.mckinsey.com/industries/energy-and-materials/our-insights/global-energy-perspective.
• ⁽³⁾ https://www.iea.org/reports/world-energy-outlook-2024/executive-summary
• ⁽⁴⁾https://www.bp.com/en/global/corporate/energy-economics/energy-outlook.html
• ⁽⁵⁾https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/country-and-regional-insights.html#:~:text=Primary%20energy%20demand%20increases%20by%20nearly%2010%%20to%202050%20in%20Current%20Trajectory