According to DNV’s latest Energy Transition Outlook, fossil fuels have met only half of the new demand for energy globally over the past five years despite a rapid buildout of renewable capacity. The report also finds that between 2017-2022, renewables met 51% of new energy demand while fossil fuels supplied the remaining demand.
Renewables are still just meeting increased demand rather than replacing fossil fuels. In absolute terms, fossil fuel supply is still growing.
In order to reach the goal set in the 2015 Paris Agreement of limiting global warming to 1.5°C, CO2 emissions would need to halve by 2030. However, DNV forecasts that this will not even happen by 2050. Instead, CO2 emissions will be only 4% lower than today in 2030 and 46% lower by 2050. Energy-related CO2 emissions are still hitting record highs and are only likely to peak in 2024.
“Globally, the energy transition has not started, if by transition we mean that clean energy replaces fossil energy in absolute terms,” said Remi Eriksen, Group President and CEO of DNV. “Clearly, the energy transition has begun at a sector, national, and community level but globally, record emissions from fossil energy are on course to move even higher next year.”
Even if the transition is yet to get out of the starting blocks, once it starts renewables will outsprint fossil fuels. From now on, most energy additions are wind and solar, which are set to grow nine-fold and 13-fold respectively between 2022 and 2050. Electricity production will more than double between now and 2050, bringing efficiencies to the energy system. The fossil-to-non-fossil split of the energy mix is currently 80/20 but will move toward a more even split of 48/52 by 2050.
In the near term, transmission and distribution grid constraints are emerging as a key bottleneck for renewable electricity expansion and related distributed energy assets such as grid-connected storage and EV charging points in many regions, including in North America and Europe.
“There are short-term set-backs due to increasing interest rates, supply chain challenges and energy trade shifts due to the war in Ukraine, but the long-term trend for the energy transition remains clear: the world energy system will move from an energy mix that is 80% fossil-based to one that is about 50% non-fossil based in the space of a single generation. This is fast, but not fast enough to meet the Paris goals,” added Mr Eriksen.