A new DNV forecast regarding the energy transition warns that even if all electricity was ‘green’ from this day forward, the world will still fall a long way short of achieving the 2050 net-zero emissions ambitions of the COP21 Paris Agreement.
The 2021 Energy Transition Outlook (ETO) highlights the global pandemic as a “lost opportunity” for speeding up the energy transition, as COVID-19 recovery packages have largely focused on protecting rather than transforming existing industries. Electrification is on course to double in size within a generation and renewables are already the most competitive source of new power. But DNV’s forecast shows global emissions will be only 9% lower by 2030, insufficient to meet the 1.5° C. limit targeted in the Paris Agreement.
COP21 was intended to keep global warming “well below 2° C.” and strive to limit its increase to 1.5° C. DNV has been consistent in forecasting a rapid transition to a decarbonized energy system by mid-century. As rapid as that transition might be, however, DNV says it remains definitively not fast enough for the world to achieve the ambitions of the Paris Agreement and warns the planet will most likely reach global warming of 2.3˚C. by end of the century.
Remi Eriksen, chief executive officer of DNV, said: “We’ve seen governments around the world take extraordinary steps to manage the effects of the pandemic and stimulate a recovery. However, I am deeply concerned about what it will take for governments to apply the resolution and urgency they have shown in the face of the pandemic to our climate. We must now see the same sense of urgency to avoid a climate catastrophe.”
“Many of the pandemic recovery packages have largely focused on protecting, rather than transforming, existing industries. A lot of ‘building back’ as opposed to ‘building better’ and although this is a lost opportunity, it is not the last we have for transitioning faster to a deeply decarbonized energy system.”
Energy efficiency remains the biggest opportunity to tackling climate change as the world drifts further away from achieving Paris, DNV said. Securing significant improvement in this vital area is viewed as the most significant lever for the transition. Achieving greater efficiency is what will allow global energy demand to level off, even as the population and economy grow.
Reductions in the use of fossil fuels have been remarkably quick. DNV forecasts, however, that these sources, especially gas, will still constitute 50% of the global energy mix by 2050, making the need to invest in hydrogen and carbon capture and storage (CCS) all the more important. Oil demand looks set to halve, with coal use reduced to a third by mid-century, DNV forecast.
ETO 2021 also reveals that while 69% of grid-connected power will be generated by wind and solar in 2050, and indirect electrification (hydrogen and e-fuels) and biofuels remain critical, none of these sources are scaling rapidly enough.
Hydrogen is the energy carrier that holds the highest potential to tackle hard to abate emissions. But DNV’s forecast indicates hydrogen only starting to scale from the mid-2030s and, even then, making up just 5% of the energy mix by 2050.
DNV says that hard-to-decarbonize sectors such as heavy industry, shipping, trucking, and aviation, need significant and immediate investment in research and development.
Nearly 3% of the world’s final energy demand, and 7% of the world’s oil is consumed by ships, mainly in international cargo shipping, according to DNV. By 2050 low- or zero-carbon fuels like hydrogen, ammonia, and e-methanol will make up 42% of the shipping fuels market, with LNG claiming a 39% market share. Oil currently meets nearly all maritime fuel demand.
The International Maritime Organization has targeted a 50% absolute reduction in greenhouse gas (GHG) emissions from 2008 to 2050. DNV’s forecast assumes that “a mixture of improved utilization and energy efficiencies, combined with a massive fuel decarbonization, will see this goal being met.” But it also cautions that “in a world with GDP doubling, cargo transportation needs will outweigh efficiency improvements, and tonne-miles will increase by 32%.”
“Extraordinary action will be needed to bring the hydrogen economy into full force earlier, but these are extraordinary times. The window to avoid catastrophic climate change is closing soon, and the costs of not doing so unimaginable,” said Eriksen.
DNV’s ETO forecasts developments in the global energy system to 2050. ETO is now in its fifth year and the 2021 edition is released 2 months before COP26 in Glasgow.
