2023 Energy Trends Report Deep Dive: Global Energy Demand Continues to Rise

Electricity Lines in front of setting sun

As the population has surged, so too has the global demand for energy. In many places, energy consumption is rising even faster than the population.

While this is an expected — and even positive — outcome of progress, there are meaningful consequences for the energy industry, as well as for consumers.

What’s causing this increase, how does it affect energy prices, and what can consumers expect as a result? Here, we highlight the reasons behind our rising energy demand, even as efficiency practices grow more common, as well as the impact of this growth.

Economic growth and growing energy demand

Over the last 200 years, industrial and technological innovation — made possible in large part by access to and consumption of energy sources that include fossil fuels — has allowed for significant advancement. Across the world, quality of life has improved, leading to lower poverty and longer lifespans. In turn, the globe’s population has increased seven times in the last 200 years.

This improved quality of life requires a great deal of energy, demand of which will continue to outpace supply as developing nations grow.

And although energy consumption isn’t expected to increase as quickly in 2023 as it did in 2021 and 2022 — when the U.S. recorded a 2.6% year-over-year demand increase, driven in part by heating and cooling needs during extreme weather events — overall demand is still expected to increase rapidly in the coming years.

By 2050, global energy consumption will increase by nearly 50 percent, driven by economic growth in developing countries that are navigating the energy- and emissions-intensive period of urbanization and industrialization that the U.S. experienced more than 100 years ago. Today, these developing nations account for more than 100 percent of the growth in global energy demand. Electricity generation is the largest and fastest-growing sector, due in part to expanded access to reliable electricity in these developing countries. The increased demand is partially offset by efficiency gains in developed countries: The combined share of energy consumed in Europe and the U.S., in particular, is expected to decline from about 30 percent in 2021 to about 20 percent by 2050.

Demand’s impact on energy prices

As the demand for commodities like coal and natural gas increases, the price typically rises, too, as producers are challenged with meeting ever-growing consumption by leveraging additional generation sources. Other factors, especially when paired with rising demand, can lead to higher energy bills:

  • Power generation availability
  • Extreme weather
  • Grid infrastructure challenges

Throughout the warmer months, the Energy Information Administration (EIA) expects that electricity prices will be slightly higher — about 2 percent, on average — than in recent years.

What’s next?

Even as the U.S. begins the transition to cleaner energy sources — and renewable energy becomes more cost-competitive — fossil fuels will continue to play a significant role in meeting our growing energy needs. In the U.S., a significant majority of our energy — about 80 percent — is currently derived from fossil fuel sources.

Overall, energy demand will continue to climb, even as prices do, challenging producers to keep up and possibly resulting in greater market volatility.

How energy trends affect consumers

Market trends impact consumers and businesses, so it’s helpful to be aware of what’s going on in the energy industry. To learn more about energy trends you can expect to see this year, read our 2023 Energy Trends Report.

Energy Trends