2025 Energy Outlook: Surging primary demand to outpace clean energy growth

Global primary energy demand is set to rise by over 8 million barrels of oil equivalent per day in 2025, outstripping clean energy growth and increasing greenhouse gas emissions, S&P Global Commodity Insights forecasts in a 2025 Energy Outlook published Dec. 11.

The outlook identifies 10 key themes to track, leading with the re-election of Donald Trump as US President and ranging from the impact of data centers on power demand to the possible peaking of global gasoline demand.

"There are emerging technological and fundamental trends that will clearly have an impact on markets over the coming year, although how significant their impact will be is uncertain," said Dave Ernsberger, Co-President, Commodity Insights.

An anticipated surge in primary demand is not matched by clean energy supply, leading to an expected rise in fossil fuel consumption by over 3 million boe/d, the outlook says.

This imbalance will likely push CO2 emissions to new heights, albeit at the smallest increase rate since the pandemic, it says.

"While the supply of clean energy is growing faster than it ever has in history (over 5 million boe/d), it is not yet fast enough to curtail the growth in fossil fuel demand, let alone displace existing fossil fuel consumption," it says.

Volatile geopolitics

Meanwhile, the re-election of Donald Trump promises a dramatic shift in trade, energy, and climate policies, with his administration expected to withdraw from the Paris Agreement, revise emission regulations, and reduce support for electric vehicles.

"Furthermore, we expect the Trump administration to grant export approvals to all pending LNG export projects which could support final investment decisions (FIDs) in the second half of 2025," the Outlook says.

Then there are US foreign policy impacts on energy markets, specifically the ongoing conflicts in Russia/Ukraine and the Middle East, as well as the implementation of sanctions on Iranian oil exports.

The rapid growth of artificial intelligence, meanwhile, could see consumption for data centers grow 10%-15% annually to 2030, syphoning clean power away from grids and potentially requiring additional gas-fired generation capacity.

Nuclear may also benefit, particularly in North America. Big tech companies Microsoft, Google, and Amazon have signed power purchase agreements for nuclear capacity to meet growing data center demand.

This interest extends to small modular reactors, with projects like China's Linglong-1 and the X-energy SMR at Dow Chemical's site in Texas being watched closely.

Gasoline demand peak

The report anticipates global gasoline demand to peak in 2025, driven by EV adoption and efficiency gains.

"At odds with this demand peak is notable refining capacity additions, including the high gasoline yielding Dangote refinery in Nigeria that is projected to fully stream in 2025," it says.

Meanwhile OPEC+ faces a challenging year as it attempts to balance production increases with price stability.

Despite plans to unwind production cuts, the group has repeatedly delayed these actions, reflecting the difficulty of increasing supply without affecting prices.

"In our view, OPEC+ will find it difficult to increase supply at all in 2025 without notably weighing on prices since non-OPEC production growth is expected to be greater than total global oil demand growth," according to Commodity Insights.

US LNG strain

Of the 27 million mt of new LNG supply expected in 2025, meanwhile, nearly 90% is from North America.

Feedgas demand is expected to grow by 5.2 Bcf/day, nearly 39%, from October 2024 to December 2025, putting strain on the domestic US market heading into winter 2025-26.

"Henry Hub is expected to average more than $4/MMBtu in 2025 after two years averaging below $3/MMBtu. However, the impact of the LNG surge is not expected to put downward pressure on global gas prices until 2026," the report says.

Global coal consumption is seen resilient, with demand continuing to grow despite record renewable installations.

In China, coal-fired generation is expected to reach new highs, while the US may see a rebound in coal demand due to higher natural gas prices.

COP changing of the guard

Finally, the 2025 Conference of Parties in Brazil marks a critical moment for global climate negotiations with many developed economies, including the US, likely to miss emissions pledges.

Conversely, China's GHG emissions are expected to peak around 2025, so a new and challenging national plan "cutting emissions in absolute terms could position the country as a climate leader," the report says(opens in a new tab).