Group President & CEO Remi Eriksen
Welcome to the third edition of our annual Energy Transition Outlook
This publication has become the most downloaded document ever produced by DNV GL, demonstrating the intense interest amongst our customers and stakeholders in the ongoing energy transition.
The energy transition is shifting up the agenda, moving from previously being considered important to now becoming something urgent; a source of great risk, but also of opportunity. Technology can deliver the future we desire – including meeting the 1.5°C warming ambition set out in the Paris Agreement. The critical questions are how and when that technology is to be applied, and the strength of decarbonization policies.
DNV GL predicts a rapid transition: by mid-century the energy mix will be split almost equally between fossil and non-fossil sources. This year, we surveyed thousands of our readers regarding whether they think our forecast is too fast or too slow; the overwhelming response is that we have got it ‘about right’.
Our model-based predictions are informed by the deep technological expertise that has become DNV GL’s trademark. Across the energy value chain, our customers are planning and building the infrastructure now that will deliver the world’s energy needs in the decades to come. DNV GL’s role is to assess, survey, test, and verify the technology behind all such touch-points.
While we predict a staggering growth in electrification, with wind and solar sources providing most of that electricity by 2050, the future that we forecast will not bring us in line with the ambitions of the Paris Agreement. Global emissions from energy use will peak only in 2025 and will still be far from net zero by 2050. Limiting global warming to well below 2°C needs extraordinary policy actions to advance energy efficiency, renewables, and carbon capture beyond our ‘best estimate’ future.
This year we have made important adjustments to our model, including now modelling power sector dynamics at hourly intervals. That has resulted in a slightly lower forecast share of solar PV and wind in the energy mix in the 2040s, due to lower average prices for variable renewables in our detailed hourly model, and a correspondingly bigger role for natural gas.
However, the adjustments do not change our central finding: that we forecast a levelling off in global final energy demand after 2030. At that point – due to multiple converging efficiencies in the system, mainly related to pervasive electrification – humanity will be using less energy to do more work. Moreover, the world will be spending an ever-smaller percentage of global GDP on its energy needs – leaving a surplus to engage, should society so choose, in extraordinary initiatives to mitigate climate change.
These insights, and much more, are now available to you in this publication. The data behind each chart have been placed on our open industry platform, Veracity, for you to download.