AI could reduce global fuel production costs by over $300 billion annually by 2050: Study
Artificial intelligence (AI) and digital technologies have the potential to significantly reduce global fuel production costs while improving energy supply, strengthening energy security and making energy more affordable, according to a new report jointly released by Honeywell and the MIT Centre for Sustainability Science and Strategy, titled “Accelerating Energy Expansion”. The report estimates that AI-enabled technologies could reduce annual global production costs for traditional oil-based fuels by up to $225 billion and for liquefied natural gas (LNG) by up to $80 billion by 2050, unlocking total annual savings of as much as $305 billion across both sectors.
The report was unveiled during Honeywell’s 2026 Future of Energy Summit, where industry leaders, policymakers and technology experts gathered to discuss strategies for strengthening global energy security, affordability and competitiveness amid rapidly rising energy demand. According to the report, future energy security will depend on three key priorities: increasing energy supply, managing energy demand more efficiently while improving resilience and diversifying energy resources and feedstocks through alternative fuels and regional infrastructure development.
AI Expected to Deliver Massive Cost Savings Across Energy Production
Honeywell and MIT note that the world is entering an era of unprecedented energy demand. Global population is projected to increase by 17% to approximately 9.6 billion by 2050, while worldwide electricity consumption is expected to more than double as economies continue to electrify and power-intensive technologies such as artificial intelligence and data centres expand rapidly. The report argues that no single technology will be sufficient to meet this growing demand and instead advocates a combination of digital innovation, alternative fuels, improved infrastructure and supportive public policy.
A major finding of the study is the growing impact of AI-enabled technologies on improving operational efficiency across existing energy infrastructure. According to Honeywell’s analysis and modelling by the MIT Centre for Sustainability Science and Strategy, AI-driven technologies can reduce global annual production costs for traditional oil-based fuels by as much as $55 billion within five years of implementation. As adoption expands globally, those annual savings could reach $225 billion by 2050. Within the United States alone, MIT estimates that AI-enabled solutions could lower annual oil-based fuel production costs by approximately $4 billion within five years, increasing to around $14 billion annually by 2050.
The report further highlights the significant economic opportunity for the LNG sector. It estimates that AI-enabled technologies could reduce global LNG production costs by approximately $15 billion annually after five years of deployment, increasing to as much as $80 billion per year by 2050. If AI technologies are adopted only by US LNG producers, global LNG prices could decline by 0.3% by 2035 and 1.1% by 2050. Wider global adoption could reduce LNG prices by 1.3% in 2035 and 4.5% by 2050, improving affordability while supporting greater energy security worldwide.
The report emphasises that AI creates value beyond direct production cost reductions. Technologies such as predictive maintenance, digital twins, real-time quality control and advanced automation can improve plant reliability, increase throughput, shorten project construction timelines and reduce downtime, enabling existing infrastructure to produce more energy without requiring equivalent investments in new facilities.
Honeywell Executives Highlight Need for Smarter Energy Infrastructure
Ken West, President and CEO of Honeywell Process Technology, said meeting the world’s growing energy needs will require both investment in new technologies and better utilisation of existing infrastructure. He said Honeywell is helping customers deploy AI, automation, digital and connected technologies to improve reliability, throughput and operational performance while extracting greater value from existing assets. According to West, the MIT analysis demonstrates the significant cost-reduction opportunities AI-enabled technologies can create in fuel production, an issue that has become increasingly important for both consumers and policymakers amid growing geopolitical uncertainty.
Jim Masso, President and CEO of Honeywell Process Automation, said many organisations are searching for practical ways to expand electricity supply without waiting years for new generating capacity to become operational. He noted that on-site power generation and energy storage systems allow operators to add capacity where it is needed most, improving reliability, supporting the rapid expansion of AI infrastructure and reducing dependence on increasingly constrained electricity grids.
LNG Expansion Remains Central to Future Energy Security
The report identifies LNG as one of the most critical components of future global energy security. The United States currently remains the world’s largest LNG exporter, shipping approximately 4.2 trillion cubic feet (tcf) of LNG to more than 40 countries in 2024, while MIT projects US LNG exports could increase to approximately 9 tcf by 2050. To sustain this leadership position, the report recommends streamlined permitting processes, long-term regulatory certainty, investments in workforce development and broader deployment of modular LNG technologies that simplify construction, reduce project risks and enable capacity to come online more quickly. Honeywell also points to labour shortages in specialised trades such as welding, pipe fitting, plant operations and process controls as a growing challenge that requires expanded apprenticeship and employer-led training programmes.
Data Centres Drive Need for On-Site Power Generation
Another key theme of the report is the rapid rise in electricity demand driven by artificial intelligence and data centres. Global electricity consumption by data centres is projected to increase from approximately 415 terawatt-hours in 2024 to 945 terawatt-hours by 2030. According to the report, a single large data centre campus can consume as much electricity as five million households, creating enormous pressure on existing power infrastructure. Honeywell argues that behind-the-meter on-site power generation will become increasingly important in meeting this demand because it reduces dependence on public grids while allowing operators to deploy additional capacity more quickly.
The report cites projections from the International Energy Agency showing that on-site gas-fired generation supporting data centres could grow from roughly 5 gigawatts in 2025 to between 15 and 27 gigawatts by 2030, primarily within the United States. During the same period, on-site battery storage capacity is expected to increase by 300% to 400%, reaching 20 to 25 gigawatts. While conventional gas turbine projects continue to face equipment shortages, permitting delays and rising costs, Honeywell identifies emerging fuel-cell technologies as an attractive alternative because they can be deployed faster while producing lower carbon emissions and generating high-concentration carbon dioxide streams that simplify carbon capture.
Energy Storage Emerging as Key Solution for Grid Resilience
The report also highlights intelligent energy storage as one of the fastest and most cost-effective methods for improving grid resilience and flexibility. By shifting electricity to periods of peak demand, battery storage systems can reduce the need for expensive investments in additional power generation and transmission infrastructure. Honeywell cites the example of a recent Texas winter storm during which battery storage systems generated approximately $750 million in electricity market savings while freeing up 3 gigawatts of gas-fired generation capacity to help meet demand.
Battery deployment timelines continue to improve significantly. According to the report, utility-scale battery energy storage projects can typically be deployed within 18 to 24 months, compared with 48 to 60 months required for conventional combined-cycle gas turbine projects. At the same time, costs for utility-scale four-hour lithium iron phosphate battery systems are projected to decline by more than 25% over the next decade and by over 40% by 2050, making battery storage increasingly competitive with traditional power generation technologies. The report also argues that expanding domestic battery manufacturing would strengthen energy security while reducing dependence on overseas supply chains.
Cybersecurity Becomes Critical as Energy Systems Digitalise
While AI and digital technologies offer enormous opportunities, the report stresses that cybersecurity has become equally important. As energy infrastructure becomes more interconnected and automated, operational technology systems controlling refineries, pipelines, LNG terminals and power plants become increasingly exposed to cyber threats. Honeywell notes that ransomware groups targeting operational technology environments increased 49% during 2025, making industrial cybersecurity, continuous monitoring and resilient system design essential components of future energy infrastructure.
Alternative Fuels Can Strengthen Regional Energy Independence
Beyond conventional fuels, the report calls for faster deployment of alternative fuels such as sustainable aviation fuel (SAF) to strengthen regional energy security. Technologies including ethanol-to-jet, methanol-to-jet, Fischer-Tropsch conversion and biocrude upgrading allow producers to convert locally available biomass, waste oils and non-edible crops into transportation fuels, reducing dependence on imported fossil fuels while creating new economic opportunities. MIT modelling indicates that production costs for sugarcane alcohol-to-jet fuel could decline from $2.51 per litre to $1.11 per litre, while corn-based alcohol-to-jet pathways could fall from $3.19 per litre to $1.41 per litre as technologies mature and production scales. The report also notes that elevated jet fuel prices during 2026 have already improved the competitiveness of several mature sustainable aviation fuel pathways.
Regional Infrastructure Investment to Improve Energy Security
Honeywell further argues that greater regional energy infrastructure investment is necessary to reduce dependence on geopolitically sensitive supply routes. Recent geopolitical events have exposed vulnerabilities within the global energy system, contributing to approximately 45% increases in Brent crude prices, nearly doubling jet fuel costs and disrupting global supply chains. The report highlights Africa as one of the regions with significant long-term growth potential. Although the continent possesses substantial oil resources, limited refining capacity continues to expose many countries to fuel price volatility. By 2050, Africa’s population is expected to approach 2.4 billion, while refined fuel demand is projected to exceed 6 million barrels per day, creating significant opportunities for downstream investments, industrial development and deployment of advanced energy technologies.
Policy Reforms Essential to Accelerate Energy Expansion
The report concludes that governments should establish stable regulatory frameworks for LNG exports and on-site power generation, accelerate permitting reforms, strengthen workforce development, expand deployment of energy storage, support domestic battery manufacturing, promote AI adoption alongside industrial cybersecurity standards, maintain incentives for alternative fuels and hydrogen production, and encourage wider global deployment of US-developed energy technologies. According to Honeywell and MIT, combining digital technologies, automation, alternative fuels, energy storage and supportive public policies will enable countries to expand energy production more efficiently, improve affordability and strengthen long-term global energy security while meeting rapidly growing energy demand.
