Electricity will be almost entirely non-fossil by 2060.
3
%
Global AI electricity demand in 2040
Initial exponential AI growth will become more linear over time, reaching 11% electricity demand by 2060.
43
%
Reduction in emissions from today to 2050
By 2060 emissions will reduce 63%.
2.2
°C
Warming by 2100
DNV’s annual Energy Transition Outlook has consistently forecast a shift from today’s 80/20 fossil/non-fossil primary energy mix to a 50/50 mix by 2050. That is still our prediction this year. Although some aspects of the transition are supercharged and progressing rapidly, other aspects have hit turbulence and are delayed.
Remi Eriksen
Group President and CEO
DNV
About the report
Now in its 9th edition, the Energy Transition Outlook is DNV’s flagship report, presenting our forecast on how the world’s energy system will evolve through to 2060 both globally and in 10 world regions.
For the first time, this year’s full forecast extends to 2060 to reflect the continued transformation of the energy system after 2050. Our projection shows that while the energy system will have changed significantly by mid-century, in many areas the transition will still be in mid-stride. The transition we forecast remains too slow to meet the goals of the Paris Agreement – net zero emissions is not achieved until the latter part of the century, with dangerous warming of 2.2°C by 2100.
Each year, we refine the ETO Model to better capture the dynamics that will shape the transition. The 2025 edition incorporates significant updates to both our model and research scope, reflecting the evolving energy landscape and policy environment. We’ve enhanced modelling of behind-the-meter solar and storage, grid constraints, carbon capture and storage, and AI energy demand. We have also incorporated the impact of energy security-driven policy shifts, and revised our GDP outlook to reflect slower near-term growth.
Highlights
We project an energy transition that is slightly slower than the one we forecast last year, in terms of both emissions and fossil share of primary energy.
In the US, policy reversals are markedly slowing that nation’s transition, with, for example, emissions reductions delayed by 5 years relative to our previous forecast.
China continues to set renewables buildout records and its clean tech exports continue to propel the transition in the rest of the world.
Europe is seeking to balance climate action and competitiveness. Harder-to-decarbonize sectors are progressing slowly. The renewable energy buildout remains relatively strong but undershoots the EU’s 2030 renewable energy targets.
In the rest of the world, most countries are embracing competitive Chinese green technologies, with year-on-year growth in installations at around 25%. Fossil energy use is also rising, but not as quickly.
Energy security priorities promoting domestic energy sources result in a decrease in emissions among energy-importing countries, while energy exporting countries tend to see an increase in emissions. This trend endures even with the increased emphasis on domestic coal production in China and India.
We find energy security actions taken together lower global emissions by a percent or two depending on year. For Europe, the effect is marked: emissions 9% lower in 2050.
Nuclear power will account for almost a tenth of electricity supply in 2060. Without the energy security boost, nuclear would have been a third lower.
There are varying degrees of willingness to import cheap Chinese technologies; building effective domestic production and alternative supply chains is invariably expensive.
This year, there are more than 50 million EVs on the road. Most of them (60%) are in China, with Europe at 21%, and North America at 13%. EVs will be 50% of global new vehicle sales by 2032.
By the end of 2025, global solar PV capacity will exceed 3,000 GW, with 47% installed in China and 20% in Europe as the two leading regions.
Due to plunging costs, behind-the-meter (BTM) solar/battery solutions have become attractive for a range of households and business. BTM will represent 13% of all power generated by 2060.
Globally, electricity will expand 120% from today to 2060, shifting from a 21% share of global energy demand to 43%. The fossil share of electricity supply over the same period falls from 59% to just 4%.
Over the last three years, our forecast for the hydrogen share of the 2050 energy mix has shrunk from 4.8% to 3.5%.
We find that AI’s initial exponential growth in power demand will give way to a more linear pattern over time.
Data centre energy use will quintuple to 2040, becoming 5% of all global electricity (3% AI and 2% for general-purpose data centres). There are large regional variations; in North America the 2040 share is 16% of all electricity, with 12% being AI.
AI is the biggest driver of electricity consumption the next five years in North America. In Europe, EV charging growth far exceeds AI’s demand growth, as do both EV charging and the cooling of buildings in China and India.
Global CO2 emissions reduce 43% from today to 2050 and 63% to 2060 – reaching net zero only after 2090. Emissions reduction is strongest in the power sector (88%), followed by the transport (58%).
CCS and net-negative emission technologies remove 35 Gt of emissions from today to 2060, equalling 4% of cumulative emissions in the period.
The carbon budget for 1.5°C is exhausted in 2029 and 2°C in 2052; limiting global warming to 1.5°C without a temporary overshoot is no longer possible.
Emissions in our forecast are associated with a temperature rise of 2.2°C above pre-industrial levels by 2100.
Limiting global warming to ‘well below 2°C’ is still possible and urgent actions in all sectors and in all countries and regions are crucial to ensure this.
Investment transition
Energy expenditures are the costs related to producing energy and transporting it to the user, including operational expenditure (OPEX) and capital expenditure (CAPEX). While global energy expenditures have grown 50% since 2010 in line with global GDP, that correlation is now starting to unravel. While progressively less is expended each year in the fossil-fuel energy system and more is spent on building and running non-fossil power and grids, overall energy expenditure does not rise dramatically. Indeed, the average annual expenditure on energy around 2050 will be USD 6.5trn, no larger than today’s levels, while GDP will have almost doubled.
That energy expenditures become an ever-smaller proportion of global GDP during our forecast period is testament to the very low OPEX of the dominant technologies in the mid-century energy mix and the vast efficiencies enabled by electrification. This pattern will likely be mirrored at a micro level in most households. As prosperity increases and efficient electrification of end uses deepens, we expect energy costs to comprise an ever-smaller proportion of household outgoings.
The rise and fall of fossil investments Fossil fuel demand has grown steadily since the 19th century. The prospect of falling demand setting in before 2030 – a high likelihood given the ongoing electrification of transport and heating and rising carbon costs – is new territory for investors. The implication for the fossil fuel industry is reduced investments in new fields, geographic concentration of production, and falling operational expenditures from the early 2030s.
Energy supply and demand
Supply
Renewables replace fossil energy
Renewable uptake will be driven by solar and wind. From 3% today, they will provide more than a third of primary energy supply by 2060.
The growth in solar and wind, combined with other sources like nuclear or hydropower, will lead to non-fossil energy dominating from the 2050s.
Fossil energy has provided a constant 80% share of primary energy for the past few decades. That pattern is now breaking. Primary energy supply will start to level off from the 2030s, while non-fossil steadily displaces fossil energy in the primary energy mix.
Rapid electrification
Decarbonization goals, spurred by cheap renewable electricity, will see electricity demand more than double by 2060.
As final energy demand plateaus, electricity will pushfossil fuels out of the mix.
Electricity will also be used to produce hydrogen and its derivatives for the indirect electrification of hard-to-decarbonize sectors like high-heat applications and heavy transport. Hydrogen and its derivatives will cover 1% of demand by 2040 and 6% by 2060.
More efficient energy systems
The actual need for energy, or useful energy, increases in the three main demand sectors: trasnport, manufacturing, and buildings.
However, electrification leads to massive efficiency gains, with ever lower losses. This is a key reason for energy plateauing in spite of GDP growth.
Demand
Transport
Demand for transportation services will grow. However, EV uptake in road transport, the most energy-demanding sector, means that energy demand levels off and then falls from the mid 2030s. Hard-to-electrify aviation and maritime sectors will also move away from oil dominance to a more diversified and decarbonized fuel mix.
Buildings
Energy demand will continue to grow, driven by a more affluent population using more appliances and an increased demand for space cooling. The only end-use category that will decline is space heating, as efficient electrical heat pumps progressively replace traditional gas boilers.
Manufacturing
Energy demand will see slow transformation compared with other sectors. Due to electrification challenges and cost-driven global competition, heavy industries will rely on fossil fuels for high-temperature processes for the next few decades. Meanwhile, the faster pace of cost-competitive electrification of goods manufacturing will create global competition for the future location of high-tech industries.
