The energy transition is easily affordable but all hope of 1.5C warming will vanish in 2028

Just over a week ahead of the Fridays for Future global climate strike, which will seek to unite voices young and old, technical consultancy DNV GL has published its Energy Transition Outlook 2019. If any further motivation were needed to hit the streets in protest, the report’s sobering conclusion is that on our current path, climate change targets are going to be missed by some distance.

Choosing not to examine various scenarios, DNV GL instead drew conclusions from its “best guess” on what will happen in a world based on current policy trajectories and price development projections.

Extrapolating data from the ten global regions into which DNV GL sectioned the world, researchers predicted 2.4 degrees Celsius warming is more likely than other outcome. The researchers predict fossil fuel emissions will peak in 2025 but just three years later the world will have exhausted the carbon budget that would have permitted it to stay within a 1.5 degrees Celsius warming scenario.

The point of no return for achieving a maximum 2 degrees Celsius of warming will be passed by 2049, the report predicts. Thereafter, the researchers say, the world will continue to emit carbon into the atmosphere for a few more decades, resulting in an overshoot of the 2 degrees Celsius carbon budget by 770,000 gigatons.

In terms of PV deployment, the team at DNV GL predict significant ramp-up from today’s installation figures. As early as 2023 the authors believe cumulative solar installations will hit the 1 TW mark and by 2046 that figure will have grown tenfold. To reach that goal, the industry would need to install 450 GW per year from 2023. By 2050, the report’s ‘greater China’ region will have a 40% share of the world’s PV capacity, followed by the ‘Indian subcontinent’.

Graph: DNV GL

That growth rate will be driven mainly by cost reductions of around 60% compared to today’s solar prices, by 2050. The team at DNV GL also predicted solar will attract considerably less opposition from society and environmentalists than hydropower, wind and nuclear, further fueling adoption. “Once adjusted for capacity factors, installed capacity will be some 12 TW [in] 2050, generating 33%, or 19 PWh, of the world’s electricity,” the report predicts.

An uptake in demand-side response, grid flexibility and cheap battery storage will enable solar to overcome its variability limitations, according to the study. “However, solar will receive the lowest market price of all generation technologies owning to its variability and that price squeeze will intensify as the share of solar grows and it starts to compete with itself,” DNV GL added.

Graph: DNV GL

Other renewables will continue to proliferate, especially wind power. Solar and wind combined will provide 63% of global electricity production by mid-century, according to the study, and that total production figure is set to be considerably higher than today. Electrification of industrial sectors, heating and transport will mean the 19% of global energy demand taken up by electricity in 2017 will become 40% by 2050.

The outlook predicts energy storage capacity will multiply from 650 GWh to 31 TWh by mid-century, largely supplied by batteries. The world’s electric vehicle (EV) fleet will supply an additional 16 TWh on top of that.

The proliferation of EVs will have a peculiar effect on transport related energy consumption, said DNV GL. Despite a 75% increase in the number of personal vehicles, the sector will use less energy than today. The authors attribute that effect mainly to electric engines being more efficient than traditional combustion engines. Energy demand from road transport stood at 91 exajoules in 2017 and will peak in 2025 at a figure around 10% higher than today before falling to 84% of the 2017 level in 2050. The transport sector supplies 28% of global energy demand and 80% of that figure comes from road transport.

The DNV GL study also provides perspective on ‘flight shaming’ as a means of achieving climate goals. According to the report, aviation related energy demand accounts for 2% of the global total, versus more than 20% from road transport.

Graph: DNV GL

Annual global energy expenditure will increase by 22%, from $4.5 trillion in 2017 to $5.5 trillion in 2050, according to the report. However, DNV GL expects global GDP to rise 130%. If correct, that would mean the world would spend 1.9% of GDP on energy in 2050, down from 3.6% two years ago. “The backstory here falls in spending on fossil fuels and the rise of low-cost, efficient electrification that leads to operating savings which more than offset ongoing, substantial high-capital expenditure on the grid,” stated the report.

The conclusion made by the authors is that the energy transition is easily affordable.

This year’s edition of the report added, the battle against climate change is not confined to energy use and should also guide policy on land use regulation and circular and sharing economy ambitions.