Norway-based consultancy DNV has said that fossil fuels will still constitute 50 per cent of the global energy mix by 2050, compared to 80 per cent held for decades, warning that the energy transition is not fast enough for the world to achieve the net-zero target by 2050.
DNV also warned in its latest energy transition report 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 target of the COP21 Paris Agreement. The agreement was intended to keep global warming to “well below 2°C” and strive to limit its increase to 1.5°C.
DNV’s fifth Energy Transition Outlook, launched two months before COP26 takes place in Glasgow, 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.
According to DNV, electrification is on course to double in size within a generation and renewables are already the most competitive source of new power, however, DNV’s forecast shows global emissions will reduce only 9 per cent by 2030, with the 1.5˚C carbon budget agreed by global economies emptied by then.
DNV also said that electrification of final energy demand will grow from 19 per cent to a 38 per cent share by 2050, powered mainly by solar and wind.
DNV has been consistent in forecasting a rapid transition to a decarbonized energy system by mid-century. As rapid as that transition is, DNV’s forecast is that despite every effort being made, 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. DNV emphasised that there is a short window of opportunity to close the gap.
Remi Eriksen, Group President and CEO of DNV, is 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”, Eriksen said.
“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. Securing significant improvement in this vital area is viewed as the most significant lever for the transition – achieving greater efficiency is the reason why global energy demand will level off, even as the global population and economy grow.
Fossil fuels to hold half of energy mix in 2050
Reductions in the use of fossil fuels have been remarkably quick, however, these sources, especially gas, will still constitute 50 per cent of the global energy mix by 2050 – making the need to invest in and scale hydrogen, and carbon capture and storage all the more important. It is worth mentioning here that fossil fuels have held an 80 per cent share of the global energy mix for decades.
Looking ahead, coal use will fall fastest, down 62 per cent by 2050. Oil use stays relatively flat until 2025 when it starts a steady decline, to just above half of current levels by mid-century. Gas use will grow over the coming decade, then levels off for a 15-year period before starting to reduce in the 2040s. Gas will surpass oil as the largest energy source and will represent 24 per cent of the global energy supply in 2050.
DNV also pointed out that CCS deployment is too slow and only 3.6 per cent of fossil CO2 emissions are abated in 2050.
ETO 2021 also reveals that while 69 per cent 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, however, DNV’s forecast indicates hydrogen only starting to scale from the mid-2030s and, even then, only building to 5 per cent of the energy mix by 2050.
Most hydrogen will be produced from dedicated renewables-based electrolysers by 2050. Green hydrogen will dominate over time, with 18 per cent of hydrogen supply produced via electrolysis from cheap grid electricity and 43 per cent from electrolysis using dedicated off-grid renewables. Blue hydrogen will lose its cost advantage, providing only 19 per cent of hydrogen supply for energy purposes by 2050.
“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.