Is the green transition underway? According to a recent report by DNV, it has not started yet.
The short version
Countries around the world have built a record amount of renewable energy in recent years. But we built more fossil energy.
Despite record investments, global emissions have continued to rise.
That’s the main conclusion in this year’s edition of the Energy Transition Outlook report, reached by global certification company DNV (Det Norske Veritas) on Tuesday.
In the report, DNV tries to say something about how the global energy mix will evolve in the coming years. And when – or whether – we will reach climate targets.
– It is unlikely that we will ever reach the Paris targets, concluded CEO Remi Eriksen.
He believes the summit has been reached
When the pandemic shut down the entire world, Eriksen and many other experts believed that peak emissions had been reached. Greenhouse gas emissions have fallen like a stone, and many had hoped they would remain low.
– It was assumed that the world would learn a little. Eriksen says that in the future, one will travel less, have more meetings around teams and the like.
But this did not happen.
Instead, emissions have not only returned to pre-pandemic levels, but have also risen above them.
Eriksen and DNV now believe emissions will continue to rise until next year, before the situation reverses.
There are two reasons for this in particular: invasion and inflation.
War in Ukraine
The Russian invasion of Ukraine sent gas prices skyrocketing in February 2022. Countries that had switched from coal to gas at the time suddenly could no longer afford gas. Meanwhile, the world had recently opened up after a paralyzing pandemic, and the wheels of the world were about to start again.
As a result, many countries in the world have returned to using coal as an energy source. Among others, emissions giant India and China.
This has led to increased global emissions, despite record development in solar and wind energy.
On the other hand, the war led Europe and the USA to accelerate their transition to renewable energy.
– Transformation is happening in some areas. This happens, for example, in Europe, the United States and Canada. But he says the transformation of the global energy system has not yet begun.
More expensive to invest in renewable energy sources
In addition, war, inflation, and problems in supply chains have made investing in green energy more expensive.
In Norway, large renewable energy projects have been postponed due to high costs.
At the same time, rising oil and gas prices led to a race to invest in fossil industries. In Norway alone, an estimated NOK 420 billion will be invested in the oil and gas sector in 2023 and 2024 combined.
– You reduced the request
Another dilemma that makes change difficult is which comes first – the chicken or the egg – supply or demand.
-No one wants to produce green energy unless you know someone will buy it. In the same way you wouldn’t want to invest in, say, ammonia-powered ships until you’re reasonably sure you can store ammonia at an acceptable price, Eriksen says.
He believes that more purchase and sale agreements must be concluded to ensure progress.
Meanwhile, the Norwegian government tends to put demand first. No later than September 28, Oil and Energy Minister Terje Aasland said To NRK “which”The key element of climate policy is demand reduction» After oil and gas.
Eriksen believes that Norway has underestimated the scale of demand, even in its own country.
– We may now be heading towards an energy deficit in Norway because we want more electricity. Here, not enough has been developed to actually cover the upcoming demand, in the form of electric cars or green ammonia in shipping, for example, at any cost.
Globally, DNV estimates that demand for oil and gas will decline by 38 and 10 percent by 2050.
You will not reach your goals
Despite the challenges we face today, DNV believes that up to 52 percent of the world’s energy will come from renewable sources in 2050, compared to 20 percent today.
In 2050, the world will receive thirteen times more energy from solar energy than it does today, and nine times more energy from wind energy. These will be the two main sources of renewable energy.
“It’s a huge change we’re going through,” Eriksen says.
DNV estimates that packages of measures such as the US Inflation Act and the EU’s RePowerEU program will ensure rapid adjustment in the West.
However, countries around the world are in a weak position to achieve climate goals. If they want to do that, 15 to 20 percent of our energy would have to come from fossil sources in 2050, DNV writes.
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