S&P Global Finds 1.5C Target Unattainable Due to Demand Growth

S&P Global’s Multidimensional Global Energy Pathways study concludes that limiting global warming to 1.5 degrees Celsius is unattainable under any plausible trajectory. The analysis attributes this failure to rapid energy demand growth in emerging markets and developing economies (EMDEs), which are driven by industrialization and urbanization. Consequently, the study asserts that achieving global net-zero emissions before 2100 is unlikely, as most EMDEs will not reach carbon neutrality until late in the century.

The report projects that primary energy demand in EMDEs will increase by over 60 percent by 2060, adding approximately 155 exajoules to global consumption. In contrast, demand in advanced economies and China is expected to remain broadly flat. This divergence forces a distinction in strategy: advanced nations must transform existing systems, while EMDEs must drastically expand their infrastructure to meet rising needs, often adding low-carbon supply alongside existing fossil fuel sources rather than replacing them.

Capital Requirements for 2 Degree Path

Holding temperature rise to 2 degrees Celsius remains possible only under the study's most aggressive Emissions Reduction Pathway. This scenario requires global solar and wind capacity to increase eight-fold by 2060, with an eighteen-fold expansion specifically in EMDEs. These renewable sources would need to provide 73 percent of global electricity generation. Additionally, the pathway mandates a 25-fold rise in grid-scale battery storage to manage intermittent generation.

The financial implications of this expansion are substantial. The study estimates a need for $50 trillion in power-sector investment to meet these targets. Furthermore, it projects more than $11 trillion in upstream oil and gas investment, even as global oil demand is expected to fall by over 40 percent. This indicates that fossil fuel infrastructure will continue to play a significant role in the energy mix during the transition period, rather than being phased out immediately.

Divergence Between Policy and Reality

Daniel Yergin, Vice Chairman of S&P Global, stated that previous policy frameworks have collided with the realities of economic development and technological pace. The study adopts a bottom-up, country-level view that accounts for differences in resource endowments, institutional capacity, and financial access. This approach reveals that the largest source of long-term demand growth will come from regions where energy needs are tied to rising incomes and industrialization.

Under the Current Realities Pathway, which reflects the current policy environment, total greenhouse gas emissions are projected to decline by a modest margin. This contrasts sharply with the aggressive decarbonization required for the 2-degree outcome. The analysis suggests that without unprecedented investment and expansion in low-carbon energy, the gap between climate goals and energy demand will widen, particularly in developing economies that prioritize growth and stability over rapid decarbonization.

Implications for Energy Sector Investment

For stakeholders in the energy sector, the findings underscore a shift in investment priorities. The necessity for massive grid battery expansion and renewable capacity increases creates long-term demand for hardware and infrastructure. However, the continued investment in upstream oil and gas signals that traditional energy companies will remain central to the global supply chain through 2060. This dual-track reality requires businesses to balance immediate fossil fuel operations with long-term renewable infrastructure commitments to remain viable in a constrained climate framework.