Within 20 years, oil use will have long since peaked, renewables and natural gas will account for about half of energy supply and the cost of keeping the lights on will plummet. But that still won’t be enough to meet climate goals, according to a forecast from energy and maritime services company DNV GL Group AS.
Even with crude oil demand expected to fall from 2023 and total energy consumption over the globe to peak 12 years after that, the world probably will warm 2.6 degrees Celsius, DNV said. That’s 0.6 degrees above the level a consensus of scientists say the world will need to stay beneath to avoid catastrophic climate change, which could impact the earth’s habitability.
To achieve climate targets, regional and national governments would need to implement programs that make greenhouse gas pollution more expensive, among other measures. That would improve the profitability of ventures such as carbon capture and storage and hasten the uptake of renewables, Remi Eriksen, CEP of DNV GL, said in an interview.
“Even with this rapid transition with quite a rapid pace, some would say, it’s not enough,” Erikson said from the company’s headquarters in Hovik, Norway. “So more is needed.”
It’s not all bleak. The electrification of the energy system is happening faster than DNV previously forecast. Power use is set to more than double by the middle of the century, meeting 45% of global energy demand. Most of that power will be generated by wind and solar energy, where technological advances are rapidly reducing installation costs.
Additionally, energy spending will shrink as a percentage of gross domestic product over the same period. In 2050, only 3.1% of GDP will be spent on energy, down from 5.5% in 2016. Gains in efficiency will account for most of the decline as an electricity-based system inherently has less waste than ones built on coal or wood.
Efficiency is improving at such a rapid rate, even billions of additional people won’t keep overall energy usage from peaking in 2035. The DNV model assumes there will be 9.2 billion people on the planet in 2050, up from 7.2 billion now.
While no sector will be left unaffected by the shift, there still is opportunity for even the most-polluting industries to profit in the new system. Big oil companies, which make up the sector that sends the most carbon into the atmosphere, will benefit from the near-term dominance of natural gas.
Gas is likely to become the largest source of energy from 2026 and will account for a large portion of demand for at least another three decades. Integrated oil companies also could apply their ability to manage large, complex projects to offshore wind farms.
“These are competencies that are very good in the oil companies,” Eriksen said. “And this muscle I think is needed to actually make the energy transition.”
One of the largest obstacles in the way of reducing carbon emissions more aggressively is “short-term thinking,” such as governments implementing populist policies or companies focusing on quarterly results. Eriksen said there is no solution to that, but as the effects of climate change, such as extreme weather, become more visible, demands on governments to reduce pollution will intensify.
DNV forecasts that 2090 will be the world’s first year free of carbon emissions, 102 years after climate scientist James Hansen first warned a U.S. congressional panel about man-made global warming.