S06 ORME 7 2022 Analysis and features_Layout 1 21/10/2022 12:43 Page 30
Energy Transition
Prospects for the
energy transition The heightened focus on energy security and the rising cost of energy are reinforcing the difference in decarbonisation speed between Europe and the rest of the world, according to DNV’s recently released Energy Transition Outlook. UROPE WILL PRIORITISE renewables and energy efficiency to increase its energy independence. European gas consumption will fall dramatically as a result of the war in Ukraine. Compared to last year’s forecast, DNV sees the continent consuming almost half the amount of natural gas in 2050. Lower-income countries see a different trend, as cost mainly drives energy policy. High energy and food prices are reversing the coal-to-gas switch, thus putting a dampener on decarbonisation investments. Moreover, inflationary pressures and supply chain disruption pose a slight challenge to renewable growth. DNV’s Outlook states the global electric vehicle (EV) ‘milestone’ has been delayed by one year to 2033. However, the devaluing of renewables and increased carbon costs in the longer term take precedence over the current crisis on the overall energy transition. “The turbulence in the energy market does not dramatically alter the decarbonisation pathway towards mid-century,” said Remi Eriksen, group president and CEO of DNV. “The strongest engine of the global energy transition is the rapidly reducing costs of solar and wind energy, which will outweigh the present short-term shocks to the energy system.” For the first time, DNV’s forecast sees nonfossil energy account for more than 50% of the global energy mix by 2050, owing to the growing and greening of electricity production. Solar PV and wind are already the cheapest form of electricity in most locations, expecting to see substantial growth, dominating electricity production with 38% and 31% shares, respectively. Renewables expenditure is anticipated to double over the next 10 years to more than US$1,300bn per year, and grid expenditure is likely to exceed US$1,000bn per year in 2030. Energy security concerns are leading to renewed interest in nuclear, and the forecast this year reflects a modest uptick, growing by 13% from today’s levels to 2050. However, its share of the
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MEA countries are taking serious steps to realise their vast renewables potential.
electricity mix will still reduce to 5% by 2050 compared with 25% today.
The turbulence in the energy market does not dramatically alter the decarbonisation pathway towards mid-century.” The short-term increase of coal consumption will not prevent it from rapidly exiting the energy mix, peaking in 2014. Oil has been approaching a plateau for some
years, and is expected to decline sharply from 2030 onwards. Before the war in Ukraine, DNV forecast natural gas would be the single largest energy source by the end of this decade, but this has been delayed to 2048.
Pathway to Net Zero The Outlook this year also includes the Pathway to Net Zero, which is DNV’s most feasible route to being on target and limiting global warming to 1.5°C. Global CO2 emissions reduction of 8% every year is required to reach net zero by 2050. In 2021, emissions were rising steeply, approaching pre-pandemic all-time highs, and 2022 may only show a 1% decline in global emissions. That makes for two ‘lost’ years in the battle against emissions.
