Welcome to our power supply and use forecast to 2050
Ditlev Engel, DNV GL - Energy CEO
The transition from fossil-based to zero-carbon is happening fast but not quickly enough to meet the Paris Agreement’s objectives to limit global warming to ‘well below 2°C’, let alone 1.5°C.
The third edition of our Energy Transition Outlook (ETO) confirms that available technologies and systems have the potential to close the ‘emissions gap’, the difference between the current rate of decarbonizing energy and the pace needed for global warming of 1.5°C. We believe that a combination of measures can get us there. Our checklist for the next decade includes growth of 1000% in solar power to 5 terawatts (TW), and 500% in wind power to 3 TW. Fifty million electrical vehicles (EVs) per year will be needed by 2030, requiring a 50-fold increase in batteries, and large-scale charging infrastructure. Other items on the list include more ultra-high voltage transmission networks; annual improvements in global energy intensity (the energy use per unit of output) by 3.5%; and low- and zero-carbon hydrogen to heat buildings and industry, fuel transport and capture value from surplus renewables.
However, time is against us and we are moving in the wrong direction. Higher energy demand in 2018 drove a 1.7% rise in global energy-related carbon dioxide (CO2) to a record 33.1 gigatonnes (Gt), according to the International Energy Agency. This was the fastest growth since 2013. Emissions from all fossil fuels increased, with the power sector accounting for nearly two thirds of this growth.
We forecast that CO2 emissions will not fall sufficiently by mid-century: the 2°C carbon budget will be exhausted in 2049, and energyrelated emissions in 2050 are still 19 Gt CO2/year. Alarmingly, for a 1.5°C warming limit, the remaining carbon budget will be exhausted as early as 2028, with an overshoot of 770 Gt CO2 in 2050.
Our modelling is based on the lowest cost of the technologies and systems that we cover. Despite this, our forecast indicates a world that will be 2.4°C warmer at the end of this century than in the immediate pre-industrial period. We must act now to prevent climate change bringing even stronger storms; more frequent floods and droughts; ever-higher sea levels; and disruption to food supply.
We need extraordinary policy action: policies that advance renewables, new decarbonization technologies and systems, EVs and energy efficiency. Beyond this, we need to change the prevailing mindset from ‘business-as-usual’ to ‘business-as-unusual’. Only by challenging how businesses and societies operate and behave can we start to close the emissions gap between where we are headed on global warming and where humanity has agreed through the Paris Agreement and the Sustainable Development Goals.
All parties to the Paris Agreement must raise and realize increased ambitions for their updated Nationally Determined Contributions (NDCs) and move to faster implementation of these. In a snapshot of the first NDCs submitted to the United Nations Framework Convention on Climate Change secretariat, 75% currently refer to renewable energy, and 58% to energy efficiency. Our view is that both these percentages need to be 100% in the second NDCs.
Government and business leaders need to make immediate and concerted efforts to accelerate action. They must determine which energy sources need to be scaled up and down, and how fast. IEA et al. (2019) estimate that an annual average investment of about USD 1.4 trillion is required between 2018 and 2030 to achieve all related UN Sustainable Development Goal 7 targets: i.e. ensuring access to affordable, reliable, sustainable and modern energy for all.1 Yet this is nothing compared with the expected price of dealing with the impacts of climate change: the cost of doing nothing. Private sector capital is central to meeting this investment challenge.
Our ETO, based on DNV GL’s independent model of the world energy system, can help nations create and implement their NDC plans. It also aids energysector analysts and decision makers to develop strategic options to speed up the transition. This year’s edition of the ETO again confirms that the transition is affordable. The world will spend an ever-smaller share of GDP on energy, allowing for greater investment to accelerate the transition. This is critical for mitigating climate change, and makes economic sense for all of us, even though it will change and challenge the dynamics of the current business environment.
We need extraordinary policy action: policies that advance renewables, new decarbonization technologies and systems, EVs and energy efficiency.
At DNV GL, with our 12,000 independent experts, we are optimistic about the role technologies and systems can play for a sustainable future, and about their future expected cost. We are, however, concerned about the speed of implementation of these technologies and systems. We hope that the ETO can help to steer the conversations, decisions and investment needed to ensure a transition that will meet the goals of the Paris Agreement.
Engagement and cooperation between governments, businesses and citizens is vital for fast-tracking the energy transition. DNV GL stands ready to support the power and renewables industries and other sectors.