The continued global reliance on oil and gas is pushing climate ambitions out of reach, a leading market analyst believes.
This supports the view that global energy emissions will reach their peak in 2032, with “deteriorating optimism” in decarbonisation efforts.
BMI – a unit of Fitch Solutions – forecasts global energy emissions to grow by 3 per cent from 37,000 million tonnes (Mt) CO2, or 37 gigatonnes, in 2025 to 38,100Mt CO2 by 2034.
“This is driven by oil and gas emissions, which are expected to grow by 16 per cent and 5 per cent, respectively, over the same period, while coal emissions will decline by 5 per cent,” BMI said.
BMI believes China will lead the way, making up nearly a third of global emissions by 2034 (11,400Mt CO2) and nearly double the next largest emitter, the US, which will account for 13 per cent of global energy emissions that year.
“While China’s reliance on coal remains high, there are downside risks to our emissions forecasts due to China’s accelerated buildout of clean energy,” BMI said.
“China is deploying wind, solar, and battery storage capacity at record levels, consistently outpacing previous targets.”
BMI acknowledged the fact China has submitted a clear NDC (Nationally Determined Contribution) target to reduce emissions between 7 per cent and 10 per cent below peak levels by 2035.
“While this goal is not particularly ambitious given current trends, we already forecast China to meet it, with the potential for overachievement if renewables deployment continues to accelerate,” BMI said.
“The target itself, however, raises the prospect of China’s energy emissions peaking earlier than expected and then declining faster, which places further downside risk on our global emissions forecasts.”
Fossil fuel resurgence
BMI said the “attractiveness” of oil and gas has grown, fuelled by falling energy prices and local policy prioritising domestic fossil fuel energy supply.
The US has become a leader in the reversal of climate action.
“Previously, the US played a leading role in global promoting climate action, particularly through propping up global finance,” BMI said. “In 2022, US bilateral climate aid more than tripled with the Biden Administration, but this trend is now reversing.
“US domestic policy is increasingly focused on boosting oil and gas production, while federal support for renewables is wavering. This will slow emissions declines over the coming decade, while also undermining the US’ global leadership in climate action.”
BMI said India, Russia, Iran and Saudi Arabia were also not on track to make significant emissions reductions.
Saudi Arabia, for example, is set to grow its emissions by 33.2 per cent from 2024 to reach 766.2Mt CO2 by 2034 amidst increased economic growth and fossil fuel dependency.
Despite the bleak emissions forecasts, BMI said the Asia-Pacific (APAC) region, led by China and India, was now the “dominant force” in clean energy.
“APAC will contribute two-thirds of new global non-hydropower renewables capacity this decade,” BMI said.
Subscribe to Energy and discover all you need to know about the energy transition.
