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The present turbulence in energy markets is not inconsequential, however. Europe will transition to a renewables- dominated power system more rapidly, but higher energy prices may dampen investment in clean energy elsewhere. These two effects tend to offset each other globally over time. Supply chain disruptions will continue in the shorter term, delaying the global EV ‘milestone’ (when the EV share of new vehicle sales surpasses 50%) by one year in our forecast — to 2033.
But here too there are compensatory developments, where high prices will encourage energy-saving behaviour among power consumers. For aviation, we also forecast a permanent reduction of 7% in annual passenger trips due to pandemic-related changes in work habits.
This year, our forecast sees non-fossil energy nudge slightly above 50% of the global energy mix by 2050. The principal underlying dynamic is rapid electrification, with supply climbing from 27 PWh/yr now to 62 PWh/yr in 2050. We detail how this leads to enormous energy- efficiency gains in power generation and end-use.
We are entering a prolonged period where efficiency gains in our energy system outstrip the rate of economic growth. Over the long term this means the world will spend significantly less on energy as a proportion of GDP.
In theory, that should provide policymakers with confidence to accelerate the transition. Bold and brave policy choices are critical in the face of climate change.
This year, for the first time, we include our ‘Pathway to Net Zero’ alongside our ‘best estimate’ forecast for the energy transition. Put another way, we compare a forecast that we think will unfold with a pathway that we hope the world will embrace. Even under a net zero pathway we think it infeasible for the world to completely discontinue fossil-fuel use, which is why you will find a 13% fossil share in the energy mix in our Pathway to Net Zero in 2050. That overshoot in fossil use will require huge expenditure on carbon capture and removal efforts in the 2040s – running to USD 1 trillion per year.
Deglobalization is much talked about. However, the energy transition is likely to see unprecedented regional and cross-industry cooperation — for example within hydrogen ecosystems or the creation of green shipping corridors. DNV will, as an independent provider of technical expertise, strive to catalyse such cooperation wherever we can.
I hope you find this Outlook a useful strategy and planning tool, and, as ever, I look forward to your feedback.
Remi Eriksen, Group President and CEO, DNV
This annual Energy Transition Outlook presents the results from our independent model of the world’s energy system. It covers the period through to 2050 and forecasts the energy transition globally and in 10 world regions.
DNV presents a single ‘best estimate’ forecast of the energy future, with sensitivities considered in relation to our main conclusions. However, this year, we also include our ‘Pathway to Net Zero Emissions’ scenario.
Our forecast focuses on long term dynamics, not short-term imbalances. However, given the scale of the impact on energy supply and demand of both COVID-19 and Russia’s invasion of Ukraine, we describe how we take these developments into consideration.
DNV was founded in 1864 to safeguard life, property, and the environment. We are owned by a foundation and are trusted by a wide range of customers to advance the safety and sustainability of their businesses. 70% of our business is related to the production, generation, transmission, and transport of energy. Developing an independent understanding of, and forecasting, the energy transition is of strategic importance to both us and our customers.
This Outlook draws on the expertise of over 100 experts in DNV and many external experts.
More details on our methodology and model can be found in the report.
In addition to the main Energy Transition Outlook report, we also publish separate reports, where we deep-dive into a sector, technology or topic.
Explore our companion reports: