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World primary energy supply to peak by 2030, says DNV GL

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Energy efficiency and electrification will be the key drivers that lead to global primary energy supply peaking by 2030, according to a wide-ranging forecast from DNV GL.

The Norwegian classification and advisory organisation is the latest to throw its hat into the ring of long-term energy forecasting, with its inaugural Energy Transition Outlook (ETO 2017) predicting that renewable energy will make up around half of global energy supply by 2050.

But the organisation warns that the world is not on a track to meet the Paris Agreement goal of a maximum 2°C rise on pre-industrial temperatures. The forecast sees energy-related carbon emissions dropping by 50% by 2050, with the 2°C carbon budget exhausted by 2041 and a resulting 2.5°C of warming.

Launching the Outlook in London on Monday, DNV GL’s President and CEO Remi Eriksen said that the company set out to ‘avoid wishful thinking’ when outlining ETO 2017 – and that the predicted failure to meet the Paris target should focus the minds of policymakers. ‘This should be a wake-up call to governments and decision-makers within the energy industry,’ he said. ‘The industry has taken bold steps before, but now needs to take even bigger strides.’

The peaking of primary energy supply is part of the Outlook’s wider story in which energy use continues to decouple from global population rises, carbon emissions and especially GDP growth. This is due to the rate of energy efficiency improving faster than the rate of global economic growth in the forecast.

In the Outlook the world’s energy intensity (units of energy used per unit of GDP growth) will drop to decline by a rate of 2.5% per year, almost double the 1.4% per year decline seen today.

As well as a move in China and India to more service-oriented economies, electrification and a growing share of renewables is a large part of this decoupling picture. Eriksen pointed out that the shift to renewable technologies will aid efficiency by avoiding thermal losses from coal and gas-fired power generation.

DNV GL predicts that wind and solar power will each account for 36% of the global electricity mix in 2050, and by 2050 both fossil fuels and renewables will have an equal share of the total energy mix.

Elsewhere the report predicts that gas demand will peak in 2035 (while also becoming the single biggest source of energy) and oil demand will peak somewhere between 2020 and 2028 – with electric vehicle (EV) uptake being a big factor in the exact date. ‘EVs will reach cost parity with conventional vehicles by 2022,’ said Eriksen. After this date the report predicts a rapid increase in EV sales with half of all cars sold in Europe being EVs by 2025.

Finally, the report also says that the energy transition will be affordable. As the energy system shifts from one that is dominated by operating costs (opex) and fossil fuels to one that is dominated by capital costs (capex) and renewables, the overall yearly expenditure on energy will remain relatively constant, it says. With a projected 130% increase in global GDP by 2050, the proportion of energy expenditure will drop to 2% of global GDP in 2050 from 5% today, says the report.

DNV GL describes ETO 2017 as a ‘central forecast’, using an in-house model and the company’s experience of both the fossil fuel and renewable energy worlds to come up with a single energy future – rather than range of scenarios.

Speaking at the report’s launch former Shell Chairman Lord Oxburgh said the forecast had some ‘optimistic assumptions’, and that a future world may have to rely more on carbon capture and storage and nuclear power should some of these not materialise.

John Knight, Head of Global Strategy at Statoil said that the decline of energy intensity to 2.5% per year was ‘a heroic step change’ that would require ‘a big change in policy.’

‘Decarbonisation is not just an engineering challenge, it is a governance one,’ said Ditlev Engel, CEO of DNV GL’s energy business. ‘Bold policies are needed to enable the transition.’

 

 Photo: DNV GL’s President and CEO Remi Eriksen launches ETO 2017 in London

 

 

 

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