Falling Fertility Threatens Energy Demand, WoodMac Warns
Falling fertility rates threaten long term energy demand, Wood Mackenzie warned in a statement sent to Rigzone recently.
In this statement, Wood Mackenzie highlighted that a low birth rate scenario in the United Nations’ (UN) World Population Prospects 2024 report, which provides population projections up to 2100, placed peak global population at 8.9 billion in 2053. Under the low birth rate scenario in the UN’s report, the global population figure falls to 7.0 billion in 2100, Wood Mackenzie pointed out.
The report, which was accessed by Rigzone, placed the global population at 9.7 billion in 2053 and 10.1 billion in 2100 under a medium birth rate scenario, and at 10.5 billion in 2053 and 14.3 billion in 2100 under a high birth rate scenario. Under the medium birth rate scenario, peak global population is seen in 2084, at 10.2 billion, and under the high birth rate scenario, peak global population comes in 2100, the report showed.
Wood Mackenzie outlined in its statement that, according to its analysis, the global fertility rate fell to 2.2 births per woman in 2025, “perilously close to the 2.1 replacement ratio needed to keep the population stable”. Wood Mackenzie noted that its analysis identifies demographic decline as a structural risk for long-term energy demand.
“The research finds that plummeting fertility rates could materially reshape energy and commodity demand to 2060 and beyond,” Wood Mackenzie said in the statement, adding that “the trend joins the war in Iran as a risk factor that strategic planners must now weigh”.
“Since 2007, when the rate stood at 2.6 births per woman, the decline has been swift. The United Nations currently projects global population will rise from 8.2 billion in 2025 to 10.0 billion in 2060. Observed fertility trends suggest that figure may prove too high,” it added.
In its statement, Wood Mackenzie pointed out that a new UN World Population Prospects report is expected to be released this month. Wood Mackenzie said it “does not anticipate a revision as extreme as the low-birth-rate scenario” but added that “any downward adjustment will carry economic consequences”.
“Ageing populations and shrinking working-age cohorts will exert downward pressure on global GDP forecasts,” Wood Mackenzie warned.
Wood Mackenzie projected in its statement that global primary energy consumption will increase by eight percent from current levels, “peaking at 717 exajoules (EJ) in 2035 before declining to 672 EJ by 2060”.
“Electricity consumption is projected to double to 71 petawatt-hours over the same period,” it said.
“Even under a pessimistic demographic scenario, global population would still increase by around 700 million people by 2060,” it continued.
“Vast unmet energy needs across Asia and Africa, combined with rising incomes and the rapid scale-up of electrification, renewables and AI adoption, mean most drivers of energy demand remain robust. Those forces also reinforce the decoupling of economic growth from hydrocarbons,” it went on to state.
Wood Mackenzie warned, however, that a lower population trajectory would exacerbate existing pressures.
“Shrinking workforces increase the incentive to invest in AI-driven automation, embedding upside for electricity and critical minerals while creating a structural headwind for molecules,” it said.
“There is also a distributional risk: automation could concentrate wealth among capital owners at the expense of labor, limiting consumer demand,” it added.
Wood Mackenzie warned that pressures on public finances and living costs are likely to intensify progressively and said governments need to act decisively to secure private and public capital, ensuring energy systems adapt before the demographic profile shifts dramatically after 2060.
“AI-driven productivity gains could offset the drag on economic growth, and public finances could prove more resilient post-2060 if investment in smart, clean energy infrastructure is made while capital is available,” it said.
“An earlier and lower global population peak is now viable. Whether it proves a headwind or a catalyst for the next commodity super-cycle will depend on how the world manages the relationship between demographics, economic growth, and technology,” it added.
Wood Mackenzie highlighted in its statement that population growth has long underpinned energy demand projections and warned that the release of the 2026 UN World Population Prospects report is likely to prompt a reassessment of long-range demand projections across the energy industry.
Peter Martin, Head of Economics at Wood Mackenzie, emphasized in the statement that “demographics dictate destiny”.
“The fertility rate has fallen from 2.6 births per woman in 2007 to 2.2 today, and China's population is already 9.6 million below the UN’s 2024 forecast,” he added.
“Shrinking workforces mean slower GDP growth, with direct consequences for energy demand. This is not a tail risk. It belongs in the core scenario of every long-range model the industry relies on,” he continued.
The 2024 Revision of World Population Prospects is the 28th edition of official United Nations population estimates and projections that have been prepared by the Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, the UN’s website noted.
The report presents population estimates from 1950 to the present for 237 countries or areas, underpinned by analyses of historical demographic trends, the site stated, adding that the latest assessment considers the results of 1,910 national population censuses conducted between 1950 and 2023, as well as information from vital registration systems and from 3,189 nationally representative sample surveys.
Wood Mackenzie pointed out in its statement that the Wood Mackenzie forecast horizon runs to 2060, “by which point the demographic profile is expected to have shifted materially”.
To contact the author, email andreas.exarheas@rigzone.com
What do you think? We’d love to hear from you, join the conversation on the
Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.