Energy Transition Outlook 2017: a global and regional forecast of the energy transition to 2050
The world is in constant evolution. In particular, the energy sector is exposed to disruptive changes that affect us all. It is therefore critical that we understand the nature and pace of these changes. In order to identify these changes, DNV GL carried out a forecast of the future of the energy sector through a cross-disciplinary exercise between three of DNV GL’s business areas: Oil & Gas, Maritime and Energy. Other multiple external partners were also included. The results of such study are reported in our first ‘Energy Transition Outlook’ report, launched in September 2017.
DNV GL’s ETO report forecasts that world primary energy supply will peak around 2025 and thereafter declining gradually, mainly owing to efficiencies in the generation and use of energy. This moment will be very important in human history, not only because we will need progressively less primary energy to satisfy our final energy demand but also because it represents a decoupling between population and economic growth with energy growth. The decoupling between economic and energy growth also results in energy-related CO2 emissions declining after this date.
This peak on energy demand is largely due to the rapid electrification of the energy mix. The electric vehicle (EV) and the increased share of renewables are key drivers for that change but energy efficiency, Internet of Things (IoT) and improvements on energy storage technology will also play an important role. In 2033, half of the new passenger cars sold globally should be electric (in Europe, this figure is expected to be reached eight years earlier, in 2025).
Coal and oil will be phased out by more efficient forms of energy and the energy itself will be cheaper. The future energy system will require a smaller share of Gross World Product (GWP) than at present which means that money can be free up and be spent elsewhere in other goods or services. Additionally, in 2050, the energy-related CO2 emissions will be half of today’s level.
So, will all this affordable, abundant and cleaner energy hold back global warming we are already watching happening across the world? Unfortunately, the answer is no.
Despite the gradual reduction of CO2 emissions after 2025, oil and gas will still play an important role in the energy mix in 2050. This CO2 emissions reduction will not be sufficient to bring the planet within the so-called 2ºC target, the maximum level of warming above pre-industrial levels agreed upon in the COP 21 Paris Agreement. Effectively, the 1.5ºC temperature raise, the maximum level aimed by the overwhelming scientific community, will be reached as soon as 2021, only 3 years from now. CO2 emissions will continue to be emitted to the atmosphere long after 2050, with gas and oil consumption being responsible for an overshoot of some 700 Gt CO2 per year. This 2017 ETO forecast report points to a 2.5 ºC planetary warming by the end of the century. The consequence of such global warming may pose serious changes to our lives as we know them today. Thus, to close the gap between our forecast and the Paris Agreement limit will require extraordinary measures working in synchrony, because no single solution will be sufficient to deal with this scenario we must face today.
The ETO report divides the world into ten regions. Portugal is included in the European region although significant differences are acquainted between north and south, east and west in Europe. Overall, Europe has a tradition of being among the leading regions when it comes to efficient and environmental friendly use of energy and Portugal has been a good example of a high penetration level of renewables in the energy market. It is expected that coal and oil will continue declining fast and that gas use remains stable for, at least, 15 years. Photovoltaic (PV) and both onshore and offshore wind energy will keep raising, providing almost half of the Europe’s electricity in 2050.
It is up to all of us in society, industry, financing sectors and governments, to address these issues so important for our future, enhancing positive actions towards a sustainable world and finding alternatives to overcome the barriers that separate us from the Paris agreement targets. As previously said, our models predict many positive actions and good results over the next decades but even so, that will not be sufficient to meet our global CO2 emissions targets and avoid significant changes in the world we live today due to global warming. It is on our hands to collectively work towards on more environmental friendly energy policies – let’s do it!
This text is drawn from “DNV GL’s Energy Transition Outlook 2017, a forecast to 2050”. The main publication, and supplementary publications on the industry implications of our forecast, are available for download here.
Nuno Jorge, Senior Engineer, AO&M