Transitioning faster to a deeply decarbonized energy system
The world needs to transition faster to a deeply decarbonized energy system, reducing emissions by around 8% each year to ensure an energy future compliant with the 1.5-degree ambition set under the Paris Agreement. This urgent and complex challenge requires full energy system thinking: understanding the timeline and interdependencies of technologies, policies, and difficult decisions.
This new technology report from DNV, a supplement to our main Energy Transition Outlook (ETO), is a contribution to such an understanding. Here, we concentrate on the technologies at the forefront of the energy transition and share some of the insights we have on expected near-term developments that we factor into our long-term forecast of the world’s energy system.
The technologies that have the potential to deeply decarbonize the world’s energy system are well known. They are those that can help to scale renewable power generation and extend its reach through the electrification of new sectors, and which can remove carbon from fossil fuel energy sources, before or at the point of combustion.
The challenge lies in navigating how and when to implement these technologies, which are at different stages of maturity, and in managing how they interact and rely on one another. Understanding this will enable industry, governments, and those financing the transition to effectively prioritize their efforts, to achieve the emissions reductions required this year, next year, and every year through to mid-century.
At issue is how quickly, cost effectively and efficiently these technologies can scale, which will be determined by technological developments in tandem with enabling policy frameworks.
A lot can change in five years. It wasn’t that long ago that electric vehicles (EVs) were a novelty for early adopters. Now, the EV revolution is becoming visible, and by 2025 there will be 13 million EVs on the roads in Europe alone. In 2016, the variability of renewable sources of power was widely seen as a barrier to the transition; now, with rapid advances in battery technologies, and with other digitally-enabled demand response and networked storage options, variability is increasingly seen as solvable. Less than five years ago, hydrogen was not really on the radar as a key energy carrier; now, many roads to decarbonizing hard-to-abate sectors lead to hydrogen.
As I have stated before in previous editions of our ETO, there is no silver bullet for reaching net zero emissions by mid-century. The world needs to act urgently on multiple fronts – a great deal more renewables, further improvement in energy efficiency, and carbon capture and storage (CCS). Existing competitive technologies, such as solar and wind power, need to take full advantage of the virtuous circle where cost decline both causes and is caused by the growing number of unit installations. For less-mature technologies, like green hydrogen, scaling from prototype to worldwide commercial ubiquity is critical.
Crucially, these technologies are interconnected. For example, one cannot model green hydrogen uptake without understanding developments in renewable sources of power; and an understanding of CCS is not complete without considering technical requirements for pipelines transporting enormous quantities of CO2.
In this UN Decade of Action for delivering the Sustainable Development Goals, policymakers and industry leaders are more focused than ever on the climate challenge. To meet it, they will need forward-thinking policies, huge innovation and investment, and technology and behavioural revolutions. They also need full energy system thinking to connect these aspects, and this starts with an objective, realistic understanding of the technologies involved. This is what we aim to provide in this report, as we explore the outlook for 10 key technologies in the transition, with a focus on developments over the next five years.
- Remi Eriksen
Group President and CEO, DNV