Highlights from this year’s report:
1. The transition is still in the starting blocks
- Global energy-related emissions are still climbing and are only likely to peak in 2024.
- Over the last five years renewables have met 51% of new energy demand and fossil sources 49%. In absolute terms, fossil-fuel use is still growing.
- The ‘grab for gas’ in the wake of Russia’s invasion of Ukraine, and the disruption of the oil market, has led to a surge in new oil and gas projects.
2. From the mid-2020s renewables outsprint fossil
- Coal use will fall dramatically in the next 30 years from 26% of the primary energy mix today to 10% in 2050
- From 2030 and going forward near all energy additions are wind and solar, which grow 9-fold and 13-fold, respectively between now and 2050
- It will take the next 27 years of adding renewables and removing fossil to move the energy mix, increasing renewables’ share from 20% to 52% by 2050.
3. Energy security is moving to the top of the agenda
- Worldwide, energy produced locally is being prioritized over energy imports.
- This trend is favouring renewables and nuclear energy in all regions and coal in some regions.
- Governments are willing to pay a premium of between 6% and 15% for locally-sourced energy.
- This is adding to supply-chain complexities and costs already strained by inflation in the short term
- In the long term, energy security and sustainability will pull in the same direction
4. Progressive policy is making an impact
- Big decarbonization policy packages rolled out in the last year are supercharging the transition regionally and nudging it forward globally.
- The Inflation Reduction Act is accelerating the transition in the US and the EU Green Deal, REPowerEU, and Fit-for-55 policy packages make Europe’s net-zero goal more realistic.
- Shipping is set for a faster transition due to the inclusion in EU’s emission Trading System and the IMO’s ambitious new decarbonization strategy.
- The ‘race to the top’ in clean technology amongst the advanced economies will drive global learning benefits in e.g. hydrogen and carbon capture and storage technologies.
- De-risked financing is needed to accelerate the pace of the transition beyond leading regions.
5. Gridlock slows the transition
- The global grid — transmission and distribution lines combined — will double in length from by 2050 to facilitate the fast and efficient transfer of electricity.
- In the near term, transmission and distribution grid constraints are emerging as the key bottleneck for renewable electricity expansion and related distributed energy assets such as grid-connected storage and EV charging points in many regions.
- A faster uptake of hydrogen is dependent on more robust demand-side measures to incentivize offtake and encourage upstream investment in production.
6. Global emissions will fall, but not fast enough
- We forecast global energy-related CO2 emissions in 2050 to be 46% lower than today, and by 2030, emissions are only 4% lower than they are today
- The pace of the transition is far from fast enough for a net-zero energy system by 2050.
- Limiting global warming to 1.5°C is therefore less likely than ever
DNV was founded in 1864 to safeguard life, property, and the environment. We are owned by a foundation and are trusted by a wide range of customers to advance the safety and sustainability of their businesses. 70% of our business is related to the production, generation, transmission, and transport of energy. Developing an independent understanding of, and forecasting, the energy transition is of strategic importance to both us and our customers.
This Outlook draws on the expertise of over 100 experts in DNV and many external experts.
More details on our methodology and model can be found in the report.