The heightened focus on energy security and rising prices is reinforcing decarbonisation difference between Europe and the rest of the world, according to the sixth edition of DNV’s Energy Transition Outlook.
The report forecasts renewables will account for 83% of electricity production by 2050.
For the first time, DNV’s forecast sees non-fossil energy nudge slightly above 50% of the global energy mix by 2050, mainly because of the growing and greening of electricity production.
Electricity production will more than double and its share will grow from 19% to 36% of the global energy mix over the next 30 years.
Solar PV and wind are already the cheapest form of electricity in most locations and by 2050 they will grow 20-fold and 10-fold respectively and will dominate electricity production with 38% and 31% shares, respectively.
Renewables expenditure is expected to double over the next 10 years to more than $1300bn per year, and grid expenditure is likely to exceed $1000bn per year in 2030.
Energy security concerns are leading to renewed interest in nuclear, and the forecast this year reflects a modest uptick, growing by 13% from today’s levels to 2050.
The report stated: “Europe, which can be regarded as the leader of the energy transition, will double down on renewables and energy efficiency to increase its energy independence.”
European gas consumption will fall dramatically as a result of the war in Ukraine, it predicted.
Compared to last year’s forecast, DNV forecasts the continent consuming almost half the amount of natural gas in 2050 so that it will meet just 10% of Europe’s energy demand in 2050 compared with 25% today.
Lower-income countries, where cost is the main driver of energy policy, are seeing a different trend.
High energy and food prices are reversing the coal-to-gas switch and putting a dampener on decarbonization investments.
For example, the share of gas in the Indian subcontinent’s energy mix will reduce from 11% to 7% in the next five years, while the share of coal will increase.
More broadly, inflationary pressures and supply chain disruption pose a short-term challenge to renewable growth.
According to DNV’s Outlook, the global electric vehicle (EV) milestone, which is when the EV share of new vehicle sales surpasses 50%, has been delayed by one year to 2033.
However, the impact of the current crisis on the overall energy transition is outweighed by the “plunging costs of renewables and increased carbon costs in the longer term”.
“The turbulence in the energy market does not dramatically alter the decarbonization pathway towards midcentury,” said Remi Eriksen, Group President and CEO of DNV.
“The strongest engine of the global energy transition is the rapidly reducing costs of solar and wind energy, which will outweigh the present short-term shocks to the energy system.”
However, its share of the electricity mix will still reduce from 10% today to 5% by 2050.