The path that the global energy sector has taken will lead to the investments in renewable energy tripling by 2050, with fossil fuel spending expected to drop by around a third, according to DNV GL.
According to DNV GL’s Energy Transition Outlook, published on September 10, the decarbonization of the energy mix will be reflected in investment trends. Nevertheless, overall, the rate of energy expenditure will slow to such a degree that by mid-century, as a percentage of GDP, the world will be spending 44% less than today.
Namely, global spending on energy, as proportion of economic output, is set to slow sharply because the world’s energy demand will decline from 2035 onwards, DNV GL writes, adding that the historically significant change in energy needs is largely down to rapid electrification and its inherent efficiency.
Since the Industrial Age, economic growth and energy usage have grown hand in hand but that relationship is set to decouple definitively in 2035 when energy demand will start to drop and GDP continues to rise, DNV GL states.
When it comes to the energy mix itself, it is rapidly decarbonizing and renewables and fossil fuels will equally share supply by mid-century, according to the outlook.
Fossil fuels will play an important if reduced role in our energy future with its share of the energy mix set to drop from around 80% today to 50% by the middle of the century, with the other half provided by renewables. Natural gas will become the single largest source in 2026 and it will meet 25% of the world’s energy needs by 2050. Oil will peak in 2023 and coal has already peaked. Solar PV (16% of world energy supply) and wind (12%) will grow to become the most significant players amongst the renewable sources with both set to meet the majority of new electricity demand.
“The attention of boardrooms and cabinets should be fixed on the dramatic energy transition that is unfolding. As money and policy increasingly favour gas and renewables, the rapidly electrifying energy system will deliver efficiency gains that outpace GDP and population growth. This will result in a world needing less energy within half a generation from now,” said Remi Eriksen, Group President and CEO of DNV GL.
“The transition is undeniable. Last year, more gigawatts of renewable energy were added than those from fossil fuels and this is reflected in where lenders are putting their money,” Eriksen said.
However, the rapid transition will not be fast enough to meet the sub-2 ⁰C climate goal and only a strong combination of several measures will lead the world to meeting the ambitions of the Paris Agreement, DNV GL says.
“We need to capitalize on the affordability of the energy transition and take extraordinary measures to create a sustainable future. We have a window of opportunity to increase energy efficiency, renewable energy and carbon capture and storage to meet the Paris Agreement but we must act now,” Remi Eriksen said.
Source: DNV GL