OUTLOOK 2019
EXECUTIVE SUMMARY
A global and regional forecast to 2050
FOREWORD
Welcome to the third edition of our annual Energy Transition Outlook. This
publication has become the most downloaded document ever produced by
DNV GL, demonstrating the intense interest amongst our customers and
stakeholders in the ongoing energy transition.
The energy transition is shifting up the agenda, moving renewables in our detailed hourly model, and a corre-
from previously being considered important to now spondingly bigger role for natural gas.
becoming something urgent; a source of great risk, but
also of opportunity. Technology can deliver the future we However, the adjustments do not change our central
desire – including meeting the 1.5°C warming ambition finding: that we forecast a levelling off in global final energy
set out in the Paris Agreement. The critical questions are demand after 2030. At that point – due to multiple converg-
how and when that technology is to be applied, and the ing efficiencies in the system, mainly related to pervasive
strength of decarbonization policies. electrification – humanity will be using less energy to
do more work. Moreover, the world will be spending an
DNV GL predicts a rapid transition: by mid-century the ever-smaller percentage of global GDP on its energy needs
energy mix will be split almost equally between fossil and – leaving a surplus to engage, should society so choose,
non-fossil sources. This year, we surveyed thousands of our in extraordinary initiatives to mitigate climate change.
readers regarding whether they think our forecast is too
fast or too slow; the overwhelming response is that we have These insights, and much more, are now available to you
got it ‘about right’. in this publication. The data behind each chart have been
placed on our open industry platform, Veracity, for you to
Our model-based predictions are informed by the deep download.
technological expertise that has become DNV GL’s
trademark. Across the energy value chain, our customers
are planning and building the infrastructure now that will
deliver the world’s energy needs in the decades to come.
DNV GL’s role is to assess, survey, test, and verify the
technology behind all such touch-points.
2
EXECUTIVE SUMMARY
HIGHLIGHTS
1. Technology can deliver the COP 21 1.5°C target, but only with strongly enforced policies aimed
at delivering strengthened Nationally Determined Contributions (NDCs) under the Paris Agreement
2. We forecast a rapid energy transition, unfolding within the timespan of a single generation:
— The share of electricity in the final demand mix will more than double from today’s level
— Half of passenger vehicles sold worldwide will be EVs by 2032
— Oil declines steeply after 2030, but gas continues to grow before levelling off at 29% of the
energy mix by 2050
FIGURE 14.3.1
Units: EJ/yr
700
Wind
600 Solar PV
Solar thermal
500
Hydropower
400 Biomass
300 Geothermal
Nuclear fuels
200
Natural gas
100 Oil
0 Coal
1980 1990 2000 2010 2020 2030 2040 2050
Historical data source: IEA WEB (2018)
We are approaching a future where the world will need less energy, even as the global population increases and the economy
continues to grow. Large energy efficiency improvements in all sectors and accelerated electrification see primary energy
supply peaking at 638 EJ in 2030. The fossil fuel share of the energy mix will decline from 81% today to 56% by 2050.
3
DNV GL ENERGY TRANSITION OUTLOOK 2019
ACKNOWLEDGEMENTS
This study has been prepared by a dedicated Energy last page of our main report, have been part of this project.
Transition research team in DNV GL’s Group Technology & In addition, we wish to thank the many experts from industry
Research Unit, in collaboration with experts in three of our and academia, listed opposite, who have reviewed our work.
business areas: Oil & Gas, Maritime and Energy. Over 100 Their comments and suggestions have been of great value;
colleagues, whose contribution we acknowledge on the any remaining errors and deficiencies remain our own.
AN INDEPENDENT VIEW
DNV GL was founded 155 years ago to safeguard life, energy. Also, as the world’s largest ship classification
property and the environment. We are owned by a society, the seaborne transportation of energy as crude oil,
foundation and are trusted by a wide range of customers liquefied natural gas, and coal is a key business for us. Our
to advance the safety and sustainability of their businesses. Business Assurance services are also increasingly required
to investigate and advise on the carbon footprint of global
DNV GL is a world-leading provider of quality assurance supply chains.
and risk management services, with 12,000 professionals in
over 100 countries. Two of our main business areas focus, In all, more than 70% of our business is related to energy in
respectively, on oil and gas, and on power and renewables. one form or another. Understanding and forecasting the
This gives us a deep and balanced perspective on the energy transition is therefore of strategic importance to us
relationship between fossil and non-fossil sources of and our customers.
4
EXECUTIVE SUMMARY
5
2017 2020 2025 2030
2030
Peak primary
energy supply
Energy peaks
Demand peaks
Non-fossil share
2022
Oil peaks
Energy transitions
Energy milestones
2030
Nuclear
2014 peaks
Coal 2026
peaked Transport energy
19%
demand peaks
of the
energy mix
is non-fossil
2032
Half of all
passenger vehicle
sales are electric
2027 2030
Maritime energy Seaborne
demand peaks container
trade exceeds
crude oil trade
6
Percentage of
2035 2040 2045 2050 energy mix
non-fossil
2033
Peak final
energy
demand
2033
Natural gas
peaks 44%
2034
of the
Manufacturing energy energy mix
demand peaks
is non-fossil
2048
Commercial electric
vehicles start to
outnumber ICE
commercial vehicles
on the road
2035
Half of the world’s fleet of
road vehicles - passenger,
commercial, 2&3-wheeler
- is electric
2038
Non-fossil expenditures
overtake fossil expenditures
2034 2036 2046 2047
Non-fossil 95% of world PV installations Energy intensity is
capex overtakes population has 10TW halved since 2017
fossil capex electricity access
2036 2038
Seaborne gas Half of maritime energy
trade exceeds use is non-oil
coal trade
7
©DNV GL
DNV GL ENERGY TRANSITION OUTLOOK 2019
INTRODUCTION
A STRATEGY TOOL OUR BEST ESTIMATE
This annual Outlook presents the results from our inde- In contrast to scenario-based approaches, we present
pendent model of the world’s energy system. It covers the a single forecast of the energy future, which could be a
period through to 2050, and forecasts the energy transi- read as a ‘central case’. Our Outlook is our best estimate of
tion globally, and in 10 world regions. the energy future, with sensitivities discussed in relation to
our key conclusions.
The forecast data behind all the charts in this Outlook –
and its industry-focused companion reports – are availa- There are many energy ‘scenarios’ on offer; some of these
ble on DNV GL’s industry data platform, Veracity.com. are not data-informed projections, and others are
flavoured by advocacy for particular energy outcomes.
This report and associated data are offered as a strategy- ‘Back-casting’ exercises – for example, those describing
forming tool for analysts and decision-makers within the the changes required for the energy system to reach
industry and other stakeholder. global warming targets – can be misperceived by readers
as forecasts. That is not to say that scenario-planning has
The world’s energy system will undergo enormous shifts no value; when professionally executed, scenarios are
in the next three decades. Understanding and predicting powerful strategy-forming tools.
the nature and pace of these developments is a critical
exercise for ourselves and our customers. The changes However, for the sake of clarity, we produce just one, best
we forecast hold significant risks and opportunities for estimate forecast. Our customers often ask us what our
investment strategies, operating models, safety, fuel views are on how the energy transition is likely to unfold,
choice and so on. Some of these are detailed in our and how will it affect their industry. This Outlook, together
‘industry implication’ supplements: with its industry-implication supplements, is our answer to
that question. To produce this forecast we have worked
−− Oil and Gas collaboratively with our colleagues in our Maritime, Oil &
−− Maritime Gas, and Energy businesses, and with our customers and
−− Power Supply & Use a range of other external experts.
FIGURE 2
8
EXECUTIVE SUMMARY
““
and elsewhere in Asia. These changes in modelled power
Our model reflects three key characterisitics sector dynamics, and in transportation, result in a some-
of the world energy system: interconnected what lower share for electricity in 2050 compared with our
ness, inertia and non-linearity previous forecast.
FIGURE 3
7.1
Units: GtCO2/yr
35
Natural gas
30 Oil
Coal
25
World energy-related CO2 emissions
20 from fossil fuels are expected to
peak only in 2025, which will not
15 bring us into a position to meet Paris
Agreement ambitions.
10
0
1980 1990 2000 2010 2020 2030 2040 2050
9
DNV GL ENERGY TRANSITION OUTLOOK 2019
MODEL INPUTS
POPULATION ECONOMIC GROWTH
The number of people in the world is a central input to any By mid-century, today’s fast-growing emerging economies
energy forecast. The UN’s World Population Prospects is will experience significantly slower growth as they move
the resource most widely-used by energy forecasters. into the tertiary (service) economy. Indeed, we expect all
However, the UN has been criticized for not paying regions to experience a slowdown in productivity growth
enough attention to country-specific education levels through our forecast period.
– data that are relevant for future fertility trends.
The combination of slower population growth and
Consequently, this Outlook follows the approach used decelerating productivity means global GDP growth
by the International Institute for Applied Systems Analysis rates will also slacken.
(IIASA), which specifically considers how urbanization and
rising educations are linked to demographic trends. We forecast that the global economy will grow by 130%
from 2017 to 2050 (CAGR 2.6%/yr), reaching USD 300
Following the latest (2019) update from IIASA we arrive trillion. These figures are broadly in line with recent
at a global population of 9.4 billion by 2050 – some 2% projections by others, like McKinsey and PwC.
higher than our estimate last year, but still some 3.5%
lower than the recently updated UN median population Our forecast growth is a result of a 25% increase in
forecast. population and an 88% increase in average GDP per
capita, with large regional differences. Sub-Saharan Africa
Irrespective of IIASA or UN figures, the uncertainty in and the Indian Subcontinent have the strongest growth,
population figures is considered low compared with other driven by both population and productivity increases.
uncertainties in our forecast.
FIGURE 47.6
10
EXECUTIVE SUMMARY
FIGURE
FIGURE52.4.1
80%
2020
60% 2024
2028
50% Technology cost learning
curve on a logarithmic scale
2035 for solar PV, showing how
40% we expect the learning
rate of 18% to continue
2047 unaltered through to 2050
2050 as technology improve-
30% ments continue.
300 500 700 1 000 2 000 3 000 4 000 5 000 10 000 15 000
Global cumulative capacity additions (GW)
11
DNV GL ENERGY TRANSITION OUTLOOK 2019
DEMAND
BUILDINGS MANUFACTURING
Buildings consumed 29% of the world’s energy share in Total manufacturing energy demand grows from 125 EJ
2017 – or some 120 exajoules (EJ). The demand will grow today, peaking at 148 EJ in 2034 and then reduces to 134
by 0.5 – 1.0% per year, with sharper growth expected in EJ in 2050. Over the same period, base material tonnage
the early part of our forecast period. In 2050, buildings increases by roughly one quarter to 46 Gt/yr, while
account for one third of final energy demand at 145 EJ. manufactured goods almost double to 27 Gt/yr by 2050.
On a combined basis, manufacturing output therefore
Forecast growth in this sector appears flat and static, but increases by some 60% through our forecast period, while
that is not the case. A major energy efficiency shift is energy consumption creeps up by just 7.5% – a cogent
taking place, e.g., with the electrification of domestic illustration of efficiencies at work. Circular and sharing
cooking and heating – allowing for far greater utility per economy dynamics will help manufacturing output grow
kWh than, for example, traditional biomass. In fact, more slowly than the projected 130% growth in the global
biomass use declines by over a third, while electricity economy by 2050.
almost doubles.
Efficiency gains are most evident in manufactured goods,
We predict a dramatic expansion of space cooling, due where heat requirements in factories are typically under
mainly to increased prosperity, but also fuelled by the 200°C range. Ongoing improvements in industrial
temperature increase. Air conditioning use expands heat pump technology will encourage manufacturers to
10-fold in the Indian Subcontinent and four-fold in Latin shift to electricity as an energy carrier. Other, more
America and Middle East and North Africa. limited, efficiency improvements are brought by the
electrification of transport machinery, automation and
It is space cooling, along with the cumulative effect of energy-efficient lighting. We also consider gains associated
more appliances used by a growing global middle class, with the growth of circular economic activity.
that lifts total demand in the building sector, outweighing
efficiencies brought by pervasive electrification and better Heavy industry is harder to decarbonize, although we
building design and insulation. expect a modest uptake in hydrogen, particularly in the
FIGURE 6
4.1.1
Units: EJ/yr
500
Transport
Buildings
400
Manufacturing
Non-energy
300
Other
0
1980 1990 2000 2010 2020 2030 2040 2050
Historical data source: IEA WEB (2018)
12
EXECUTIVE SUMMARY
0 Coal
1980 1990 2000 2010 2020 2030 2040 2050
Historical data source: IEA WEB (2018)
13
DNV GL ENERGY TRANSITION OUTLOOK 2019
DEMAND
Road transport cont. Significant road sector energy use in the Indian Subconti-
Our analysis shows the importance of preferential treat- nent comes from two- and three-wheelers. These also
ments to initial EV uptake. Norway and China are two make up a large share of passenger vehicles in China and
examples of this, as will be the EU through its comprehen- South East Asia. In this segment, we foresee rapid electri-
sive emissions reduction plans. Incentives and industrial fication: already over a third of all Chinese two- and
support are even more critical in the case of commercial three-wheeler sales are BEVs. Across the three regions,
vehicles, where batteries are bigger and costs substantial. this share will exceed 90% by 2030.
In the longer term, cost learning rates – especially the Our overall conclusion is that, globally, there is a fast
impressive 19% cost compression in battery technology uptake of electric vehicles – passenger first, and later
per doubling of capacity – will lessen the need for govern- commercial. We expect the watershed 50% sales share for
ment support. However, while plunging costs will be the passenger EVs to occur globally in 2032. For commercial
main driver of uptake, other factors are important too, not EVs, uptake is more prolonged. Although China and
least the ability of EV technology to address range Europe are likely to see a 50/50 mix in new sales of EV/
anxiety. In some regions, average range is expected to combustion for this category in 2030, elsewhere this
triple from today’s levels owing to cost and weight occurs much later. In some markets where hydrogen will
compression per kWh. eventually become readily available, FCEV commercial
vehicles using hydrogen will make some inroads in heavy
Many factors must be considered in modelling EV uptake and long-haul commercial vehicle transport (up to 17% of
– cost and range of course, but also the nature of a region’s the commercial fleet in OECD regions and China), but not
living standard, geography, the quality of public transport, in the passenger segment.
and the robustness of its electricity infrastructure. The
““
presence (e.g. in EU/OECD) or absence
FIGURE 4.1.11 (in less-developed
countries) of government support is also important. We expect passenger EVs to reach the
World number of road vehicles by type and drivetrain
watershed 50% share of new car sales
Units: Billion vehicles globally in 2032
4.0
Two and three-wheelers
3.5 Electric
2.5 Commercial
World number of road vehicles by type and drivetrain
Electric
2.0
Units: Billion vehicles Combustion
4.0 1.5
Two and three-wheelers Passenger
3.5 1.0
Electric Electric
2.5 0 Commercial
1980 1990 2000 2010 2020 2030 2040 2050
Electric
2.0 Combustion vehicles include ICEVs and PHEVs. Electric vehicles include BEVs and FCEVs.
Combustion
Historical data source: OICA (2016), IEA GEVO (2018)
1.5
Passenger
1.0 Globally, the number of road vehicles continues
Electric
to grow, although gradual phase-in of commu-
0.5 nal (car-sharing)
Combustion and automated vehicles will
dampen the increase. The growth comes almost
0 entirely from non-OECD regions.
1980 1990 2000 2010 2020 2030 2040 2050
Combustion vehicles include ICEVs and PHEVs. Electric vehicles include BEVs and FCEVs.
Historical data source: OICA (2016), IEA GEVO (2018)
14
EXECUTIVE SUMMARY
FIGURE 9
4.1.12
Plug-in-hybrid
0.5
0
2015 2020 2025 2030 2035 2040 2045 2050
Historical data source: OICA (2016), IEA GEVO (2018)
FIGURE 10
Units: Percentages
100%
Two and three-
wheelers
Passengers
75%
Commercial
50%
Sales and uptake of EVs will vary
significantly between the regions, but
the global averages show that the
landmark 50% share of new vehicle sales
25% will be reached in 2032 for passenger
vehicles, 2037 for commercial vehicles
and as early as 2023 for two- and
three-wheelers.
0%
2017 2020 2025 2030 2035 2040 2045 2050
Historical data source: IEA GEVO (2018)
15
DNV GL ENERGY TRANSITION OUTLOOK 2019
DEMAND
Maritime Aviation
Shipping is the most energy-efficient mode of transport Like maritime, aviation consumes about 2% of the world’s
by energy/tonne-kilometre – consuming around 2% of the energy. This share will grow to 3% as GDP and population
world’s energy. We see global fleet size increase towards growth push air travel and cargo to expand by 170%
2030, thereafter levelling off, as oil and coal demand in during our forecast period. By contrast, fuel use is
particular starts to decline, while gas, container and projected to increase only by 38% due to significant and
certain bulk trades will continue to grow. ongoing efficiency gains related to higher load factors,
and engine and aerodynamics improvements. With few
Attention in the near-term will focus on meeting stricter technology alternatives, we expect that biofuels largely
limits on sulphur (SOx) emissions. The International will be reserved for the aviation sector, and in 2050, the
Maritime Organization (IMO) – supported by both ship- fuel mix will contain almost 50% biofuels, while electricity
owners and governments – has targeted a 50% CO2 – which will gain share in the short-haul subsector – will
emission reduction from 2008 to 2050, and this will be account for 3%.
crucial for shipping policy in the coming decades. Our
forecast is that a mixture of asset use and energy efficiencies The space efficiency and ease of electrification make rail
combined with a massive fuel shift to low and zero carbon a favourite in urban areas. Longer distance, high-speed
fuels (such as LNG, PNG, ammonia, electricity, and biofuel trains will increasingly compete with aviation. Global
use) will enable this goal to be met. The key challenge for passenger transport by rail will grow more than 150% by
both maritime and aviation is that they are sectors that 2050, while global rail freight will grow only in certain
cannot easily electrify. regions.
““
FIGURE 4
The key challenge for both maritime and
aviation is that theyenergy
Maritime are sectors that
demand andcannot
projected fuel mix
easily electrify
Units: EJ/yr
14 LSFO or MGO
12 LPG
FIGURE 11
4 LNG
10
Maritime energy demand and projected fuel mix Liquefied
methane
8 (bio/electro)
Units: EJ/yr Hydrogen
6
14 LSFO or MGO HFO and scrubber
4 LPG Electricity from
12
grid
2 LNG
10 Ammonia
Liquefied
0 methane Advanced
8 2020 2025 2030 2035 2040 (bio/electro)
2045 2050 biodiesel
Notes Hydrogen
6
LSFO, low-sulphur fuel oil; MGO, marine gas oil; LPG, liquefied petroleum gas;
HFO and scrubber
LNG, liquefied natural gas; HFO, heavy fuel oil;
4 To meet IMO 2050 strategy, maritime fuel
Advanced biodiesel, produced by advanced processes from non-food feedstocks Electricity
mix will changefrom
dramatically over the
griddecades, with influx of a large
coming
2 shareAmmonia
of low carbon and zero carbon fuel.
This figure shows one likely pathway with
0 focusAdvanced
on design requirements.
2020 2025 2030 2035 2040 2045 2050 biodiesel
Notes
LSFO, low-sulphur fuel oil; MGO, marine gas oil; LPG, liquefied petroleum gas;
16 LNG, liquefied natural gas; HFO, heavy fuel oil;
Advanced biodiesel, produced by advanced processes from non-food feedstocks
EXECUTIVE SUMMARY
FIGURE 12
4.1.17
Units: EJ/yr
18
Electricity
Biomass
15
Oil
12
The fuel mix of the aviation sector
will change dramatically towards
9
2050. As a sector with few other
zero-carbon options, we expect the
6 aviation sector to be a priority for
global biofuel use. Electrification
will also make an inroad in short-
3 haul flights.
0
1980 1990 2000 2010 2020 2030 2040 2050
Historical data source: IEA WEB (2018)
FIGURE 13
13
Units: EJ/yr
125
Road Maritime
Passenger vehicles, Aviation
100 two- and three-
wheelers Rail
Commercial
75 vehicles
50
17
DNV GL ENERGY TRANSITION OUTLOOK 2019
ELECTRIFICATION
ELECTRICITY globally will expand to 31 TWh, with the lion’s share of that
In 2017, only 19% of final energy demand was delivered in provided by batteries. On top of this, another 16 TWh will
the form of electricity. By 2050 that will more than double be available from the world’s EV fleet by 2050, and
to 40% and 49 PWh. While a doubling looks impressive, demand-response, behind-the-meter storage, power grid
there is also a profound shift in how that power will be expansions and power-to-gas will create additional
generated. We forecast that by mid-century, 63% of the flexibility. However, flexibility provided by the conventional
world’s electricity will be supplied by solar PV and wind; generation technologies will continue to be significant.
and with those sources comes very large efficiency gains. A high penetration of variable renewables also brings
another factor into play: weaker prices for wind and,
To put this in perspective, consider that we have already especially, solar PV, when these sources compete
seen a near-doubling in the share of electricity in final between and amongst themselves. In this year’s Outlook
energy demand over the last 30 years. Yet, over that we demonstrate this through our modelling of power
period, the average efficiency of mainly fossil-fuelled market dynamics at hourly intervals.
power plants increased only marginally from 28% to 34%.
Consequently, the energy loss in conversion in power In the preceding pages, we have already described the
plants as waste heat, and in transmission and distribution main sources of demand for all this electricity – in build-
lines, increased significantly. The rise of renewables over ings, manufacturing, and transport, with the latter experi-
the next three decades will, in contrast, see a substantial encing the most transformative lift in electricity demand
drop in heat losses. from 0.3 PWh in 2017 to 9.1 PWh in 2050. Grid investments
and transmission infrastructure to connect variable
A high share of renewables requires a considerably more renewable sources will be substantial, but affordable as
flexible system. Storage capacity, currently at 650 GWh we explain further on in this summary.
FIGURE 4.2.3
Units: PWh/yr
60
Offshore wind
Onshore wind
50
FIGURE 14
4.2.3 Solar PV
40 Solar thermal
World electricity generation by power station type
Hydropower
Units: PWh/yr
30 Biomass-fired
60 Geothermal
Offshore wind
20 Nuclear
Onshore wind
50
Solar PV Gas-fired
10
Solar thermal Oil-fired
40
0 Hydropower Coal-fired
30 1980 1990 2000 2010 2020 2030 2040 2050
Biomass-fired
Historical data source: IEA WEB (2018),Geothermal
IRENA (2019)
World electricity generation will more
20 Nuclearover the forecasting
than double
period, with dramatic changes in the
Gas-fired
10 electricity mix as solar PV and wind
take over from coal.
Oil-fired
0 Coal-fired
1980 1990 2000 2010 2020 2030 2040 2050
Historical data source: IEA WEB (2018), IRENA (2019)
18
EXECUTIVE SUMMARY
ENERGY EFFICIENCY how energy is supplied, of course, but also how it is used.
In our forecast period, energy efficiency is a key driver of On the demand side, the biggest improvement is in road
the transition. transport, with the twin effect of steadily improving
efficiency for ICEs and introduction of much more
One measure of this is the energy intensity of the global efficient EVs.
economy – expressed as units of energy per unit of GDP.
For the last two decades, energy intensity has reduced As shown in the Table 1, there are many efficiencies at
by 1.6% annually, masking a faster drop in recent years work in other demand sectors, not least from electricity
mainly due to economic growth in China being offset replacing the extremely inefficient use of biomass and
by sharply declining energy use per unit output. Over oil for heat and cooking. Consider that kerosene used
the next 30 years, energy intensity improvements will for lighting is 50 times less efficient than a solar-powered
accelerate to 2.5% per year world-wide, with the strongest LED light, a stark reminder that less affluent people
improvement in the 2030s, coinciding with our forecast spend disproportionately more for the energy they
peak in global primary energy use. use. That is one reason SDG #7 ‘Clean Energy’ empha-
sizes the need to ‘double the rate of improvement in
The cumulative effect of this is significant: whereas, in energy efficiency’. Our analysis shows that while this
2017, it took 4.6 megajoules to produce a dollar of global will not be met entirely, solid progress will be made
GDP, in 2050 it will take just 1.9 megajoules. towards 2030.
As outlined opposite, the main driver of energy intensity In the context of our full forecast period, the role played
improvements is the growing renewable share in elec- by energy efficiency is remarkable. Without efficiency
tricity and electrification of the energy system, eliminating improvements, final energy demand globally in 2050
enormous heat losses. Efficiency comes not just from would be some 70% higher than our forecast demand.
TABLE 1
Energy efficiency improvements by sector
Sectoral energy efficiency improvements will be significant in all sectors, but highest in road transport with the dual effect of the steadily
improving efficiency of combustion vehicles and the introduction of highly efficient EVs.
19
DNV GL ENERGY TRANSITION OUTLOOK 2019
EUROPE
A frontrunner in transition
policy, but its targeted 32%
of final energy consumption
from renewables by 2030
will not be met before 2036
20
EXECUTIVE SUMMARY
NORTH EAST
EURASIA
The region’s dependence
on oil and gas export
revenues will remain strong
On most decarbonization
indicators this region lags
and remains a laggard,
although there is intense
focus on energy efficiencies
OECD PACIFIC
SOUTH EAST ASIA
INDIAN GREATER CHINA Primary energy use will
SUBCONTINENT Energy demand, especially fall more rapidly than the
Undisputed leader in from space-cooling and population decline in
500 million more people the energy transition, appliances, will grow before this region
and GDP growing fourfold topping expansions in levelling off towards 2050
will see rising energy renewable power 2050 electricity mix is
demand in this region Electricity expands from dominated by wind, and at
The share of electricity in 15% to 41% of final energy 50% of final energy demand,
Despite the rapid growth final energy demand will demand during the forecast is the second-most
of renewables, fossil grow from 21% in 2017 to period, with strong electrified region in 2050
energy sources will still 52% in 2050 – the highest of contributions from solar PV after China
represent 65% of the energy all regions, over 90% from and offshore wind
mix in 2050 renewable sources Hydrogen will gain a
Manufactured goods foothold (5% of energy use),
The region’s enormous China’s energy mix, production triples to 2050, sourced initially from
two- and three-wheeler currently dominated by driving demand for natural Australia through SMR
vehicle fleet will transition coal, will reduce its coal gas and transforming this processes, but later
almost entirely to electricity share from 60% to 16% over region into a net-importer mainly via renewably-
before 2040 the forecast period of LNG powered electrolysis
21
DNV GL ENERGY TRANSITION OUTLOOK 2019
ENERGY ACCESS
Progress across five regions
2017
2 9%
facets lie on a continuum, for example in terms
3 7%
of hours per day that electricity is available.
Thus, measuring energy access is complicated. 1 6%
2030
2 6%
Nonetheless, building on the definition in the 3 5%
IEA’s Energy Access Outlook (2017), we assume
1 1%
that having electricity access means having at
2050
2 1%
least several lightbulbs, ‘task lighting’ such as a 3 1%
0 400 800
flashlight, phone charging, and a radio. Access to
Population (million)
modern cooking and water heating means
having access to natural gas, LPG, electricity, coal
and biogas, or improved biomass cook stoves.
% no
KEY SUB-SAHARAN AFRICA access
1 74%
2017
3
2 63%
Have no access 3 43%
2 31%
Have access to off-grid diesel generator 3 2%
Have access to off-grid solar 0 500 1,000 1,500 2,000
Population (million)
22
EXECUTIVE SUMMARY
% no
GREATER CHINA access
1 8%
2017
2 4%
3 0%
1 2%
2030
2 0%
3 0%
1 1%
2050
2 0%
3 0%
0 500 1,000 1,500
Population (million)
% no % no
INDIAN SUBCONTINENT access SOUTH EAST ASIA access
1 43% 1 35%
2017
2017
2 28% 2 18%
3 12% 3 5%
1 19% 1 27%
2030
2030
2 17% 2 7%
3 1% 3 0%
1 3% 1 17%
2050
2050
2 5% 2 1%
3 0% 3 0%
23
DNV GL ENERGY TRANSITION OUTLOOK 2019
SUPPLY
PEAK HYDROCARBONS Coal – demand grew rapidly to its peak in 2014 and has
Natural gas – holds a major position as an energy source since shown a negative, but bumpy, trend owing mainly
throughout the forecast period, growing from 25% to 29% to Europe and North America (giving way to gas and
of global primary energy use. From 2017 production renewables) as well as demand flattening in air-quality
levels of 4,600 Gm³/yr, natural gas peaks in 2034 at 5,500 plagued China. Over the next decade we forecast a slow
Gm³/yr thereafter slowly reducing by 5% to 2050. Produc- decline, with environmental concerns counter-balancing
tion is however relatively flat from 2025 to 2050, but with energy hunger in rising economies. In the longer term, all
a strong growth before this. Production-wise the share of regions, except Sub-Saharan Africa, will use less coal,
unconventional onshore gas will rise steadily from its which globally drops from 27% of primary energy in 2017
current level of 24% to 34% of total production in 2050. to 10% in 2050.
Conventional onshore declines in absolute terms, falling
““
from 50% production to match the one-third share held
by unconventional onshore in 2050. Natural gas holds a major position as an
energy source throughout the forecast
Oil – as a source of primary energy, declines by 44% period, but for oil the long-term decline
during our forecast period, reducing from 29% of world trend is clear
primary energy use today to 17% in 2050. The decline is
largely due to the rapid electrification of the world’s road
transportation fleet. In aviation and shipping, biofuels will
drive decarbonization. Oil peaks in 2022 (in effect a spike
in a plateauing decade) as it is particularly sensitive to the
forecast rate of EV uptake, which in turn is influenced by
our assumptions on government support and the cost
learning rate for Li-ion batteries. However, with a flat
demand projection for non-energy oil use (e.g. as feed-
stock petrochemicals), and the transformation of road
transport, the long-term decline trend is clear.
FIGURE 15
15
Units: EJ/yr
180 Oil
Natural gas
150
Coal
120
90
24
EXECUTIVE SUMMARY
FIGURE
FIGURE16
16
Units: PWh/yr
20 Solar PV
Onshore wind
15 Offshore wind
10
Solar PV and wind will dominate global
electricity in 2050, representing 63%
of the electricity mix. Solar PV will grow
5
45-fold from 2017 to 2050, onshore
wind 10-fold and offshore wind
140-fold, all of them from a low base.
0
2010 2015 2020 2025 2030 2035 2040 2045 2050
Historical data source: IRENA (2019)
25
DNV GL ENERGY TRANSITION OUTLOOK 2019
FIGURE 17
POLICY
POPULATION
Feedstock
OTHER
ENERGY SECTOR’S
OWN USE
ENERGY EFFICIENCY
26
EXECUTIVE SUMMARY
FIGURE 18
TR
AN
SP
O
Population Autonomous RO R
and communal AD
T
Battery size
driving
Tax A C T I ON
Travel distance E XTR
per vehicle Investment cost EL
FU
Government Fossil fuel
Refueling production
IL
support
speed Use of fast cost
F OS S
Range Resources
recharging
Lifetime
Operating
Vehicle Cost of cost
Fuelling Fossil fuel
and repair Vehicle utility ownership Fossil fuel
demand demand
availability supply
Unit energy use
by type
of new vehicles
and region
Retirements
Vehicle sales Fast recharging
by type density
Vehicle fleet
Energy use
Energy
of vehicle
additions prices
Cumulative EV
sales
Energy use
Aviation
of fleet
energy
Maritime Power grid
GDP per capita demand
energy Rail strength
demand energy
demand Battery price
Grid
investments
Energy demand Electricity Accumulated
by energy carrier storage
demand additions
Firm capacity Firm
demand capacity
Electricity
ILDINGS availability
BU Capacity Storage
price
Retirements additions
Available
Installed storage
Buildings Power station Profitability
capacity
energy demand additions of storage
Share of
by type
Profitability variable renewables
in capacity Variability
Levelized Accumulated in electricity
Subsidy cost of additions price
electricity
Capital cost
Generation
UFACTURI hours
AN
N
PO
Variability
M
Variable Received
G
energy demand
SU
PP
LY
27
DNV GL ENERGY TRANSITION OUTLOOK 2019
−− The DNV GL Model and our main assumptions; on Amidst electricity use increasing rapidly and production
population, productivity, technology, costs and the becoming dominated by renewables, the report details
role of governments and policy important industry implications. These include:
−− The global energy demand for transport, buildings
and manufacturing, the changing energy mix, energy −− Substantial opportunities for those parties involved
efficiency and expenditures in solar and wind generation
−− Detailed regional energy outlooks −− Massive expansion and reinforcement of transmission
−− The climate implications of our outlook and an and distribution networks
assessment of how to close the gap to well below 2°C −− Further need for implementation of energy efficiency
technology
−− Acceleration of the electric vehicle revolution
−− The energy transition is fast, but not fast enough
to meet the goals of the Paris Agreement
28
EXECUTIVE SUMMARY
29
DNV GL ENERGY TRANSITION OUTLOOK 2019
““
CCS worldwide it appears to be a particularly slender
DNV GL's Outlook points towards straw to clutch at.
a 2.4ºC warming of the planet by the
end of this century
FIGURE 19
7.7
Units: GtCO2/yr
45
AFOLU
40 Industrial
35 processes
Energy-related
30
(net of CCS)
25 Overshoot
20 1.5˚C 2˚C of 2˚C
carbon carbon until 2050
15 budget budget
30
EXECUTIVE SUMMARY
Very high carbon prices would force a faster transition, deliver the 1.5-degree target exist: if they are deployed
but as the gilets jaunes (yellow vests) in France reminded rapidly, their costs will fall quickly, setting up a self-rein-
the world in 2018, it would be a hard sell politically. forcing effect. However, this can only succeed if enabling
policies – for the Nationally Determined Contributions
There is therefore no silver bullet. If the world is to avoid (NDCs) under the Paris Agreement - are dramatically
dangerous warming, policies must be developed to strengthened and enforced nationally. Figure 20 shows
tackle at least three fronts simultaneously: higher energy how a combination of measures can lead us to 1.5 or 2
efficiency, more renewables, and industrial-scale CCS. degrees. As illustrated, getting emissions down is not
only important, but also very urgent.
The battle against climate change is not only confined to
““
energy. Policies on land use as well as mandating and
encouraging the circular and sharing economies are also Policies must be developed to tackle at
critical, as will be incentivizing behavioural change least three fronts simultaneously: higher
towards lower consumption of goods and services with a energy efficiency, more renewables, and
high carbon footprint. industrial-scale CCS
FIGURE 8.3
Units: GtCO2/yr
50
ETO 2019
Best estimate
40
Achieving 2˚C –
FIGURE 20
8.3 combination of
30 measures
Achieving 2°C or 1.5°C using a combination of measures
Achieving 1.5˚C
20 excl. net-negative
Units: GtCO2/yr emission
50
10 ETO 2019 Achieving 1.5˚C –
Best estimate combination of
40 measures and
0 Achieving 2˚C – net-negative
combination of emissions
30 measures
-10
Achieving 1.5˚C
2017 2030 2040 2050 2060 2070 2080 2090 2100
20 excl. net-negative
emission
10 Achieving 1.5˚C –
A combination
combination of of measures
is neededand
measures to close the gap from
our forecast to 2 or to 1.5 degrees.
net-negative
0 The emissions reductions to achieve
emissions
1.5 degrees are very steep, even if
allowing for temporary overshoot
-10 and net-negative emissions later
2017 2030 2040 2050 2060 2070 2080 2090 2100 in the century.
31
DNV GL ENERGY TRANSITION OUTLOOK 2019
AN AFFORDABLE TRANSITION?
The acid test of the likelihood of our forecast is its afforda- The fossil upstream share of total expenditure, currently at
bility. The future energy system we forecast is costlier than 68%, will almost halve to 38% by mid-century. Oil CAPEX
today’s: annual global energy expenditure will increase will decline by more than 10 times from its peak in the
by 22% from USD 4.5trn in 2017 to USD 5.5trn in 2050. 2020s, and with less production, operating expenditure
However, in relative terms, it becomes much more (OPEX) will also decline by a quarter. Gas OPEX will also
affordable. Measured against world GDP growing by fall by a quarter, while gas CAPEX levels fall much less
more than 130% to 2050, the energy expenditure increase sharply than oil CAPEX.
is very small.
By contrast, we forecast annual grid expenditures to more
As Figure 21 illustrates, the share of world GDP devoted to than double to USD 1.7trn, as shown in Figure 22, thus
energy is cut in half, from 3.6% in 2017, to 1.9% by mid-cen- representing one third of global energy expenditures.
tury. The backstory here is fall in spending on fossil fuels, Spending on DC grids will be the fastest growth area,
and the rise of low-cost, efficient electrification that leads while an increase in installations underground and under
to operating savings which more than offset ongoing, water/sea will raise cost levels.
substantial high capital expenditure (CAPEX) on grids.
A notable watershed occurs in 2034 when non-fossil
With this reasoning, we conclude that the forecast energy CAPEX overtakes fossil CAPEX.
transition indeed is affordable.
The rapid renewable buildup and grid expansion is
““
dependent on a successful shift in investments from fossil
Measured against world GDP growing to renewable sources.
by more than 130% to 2050, the energy
expenditures increase is very small
FIGURE 21
4.6.4
Units: Percentages
3.5% Grid
Fossil energy
2.5%
2.0%
The forecast transition is affordable as the
1.5% share of world GDP devoted to energy is
reduced from 3.6% to 1.9% over the forecast
period. There will be a massive shift of
1.0% investments from fossil to renewables
and grids.
0.5%
0%
2017 2020 2025 2030 2035 2040 2045 2050
32
EXECUTIVE SUMMARY
FIGURE 22
4.6.3
0
1980 1990 2000 2010 2020 2030 2040 2050
TECHNOLOGIES
1. Batteries. Projecting a continued learning rate of 3. Hydrogen. Focusing on hydrogen as a zero-emission
19%, battery costs in 2050 will decline to USD 25/ energy carrier, we project two major routes that will
kWh, from 125 today. This will result from – and is a compete, steam methane reforming (SMR), and
decisive factor behind – the massive uptake of EVs. electrolysis. Until mid-2030s, global growth in
Moreover, it allows otherwise inflexible wind and solar hydrogen use will be provided by SMR technologies.
PV power to afford system flexibility almost in line with By then, however, high shares of variable renewables
dispatchable electricity. Within a decade, cobalt will will afford periods of very cheap electricity and pave
face resource limitations, which we believe can be the way for electrolysis. Decarbonization through
solved – competing technologies will first supplement hydrogen will come at significant costs, not least
and then replace current lithium-chemistries as we caused by conversion losses. Thus, we forecast no
know them. V2G (vehicle-to-grid) solutions will hydrogen (FCEV) uptake in the passenger segment,
become widespread in homes, parking garages, and but limited uptake in heavy transport in OECD
street parking, thus allowing 10% of EV batteries on countries and China where decarbonization policies
average being made available to provide around 30% will be strong, and in shipping. Similarly, reuse of
of the storage capacity available to the power system refurbished gas pipelines will afford competitive
by 2050. Dedicated power system batteries, including costs and allow hydrogen uptake for heating needs
both Li-ion and redox flow batteries, will grow fast of buildings in the same regions.
after 2030, providing 62% of storage capacity by
2050, which will total 27 TWh by then. 4. LNG. Though liquefaction of natural gas has been
around for over a hundred years, a main driver for
2. PV. The fruit of decades of academic and applied strong forecast growth is the simultaneous cost
research, fuelled by maturing energy markets, PV decline and regional shifts in demand and supply.
technologies continue to surprise many. Materials Although global demand for natural gas peaks in 15
technology advances, streamlined supply chains, and years, several regions, including Greater China and
substantial breakthroughs in manufacturing have Europe, will continue to experience increasing
resulted in an 18% core technology cost learning rate. deficits. North America will show a strong gas surplus,
Projecting a continuation of that rate, global PV and, thus, LNG exports will grow. Global liquefaction
capacity will grow 30-fold from 2017 to 2050 to reach and regasification capacity will grow in tandem to
almost 12,000 GW. By then, PV system capital costs more than double current levels. As average shipping
will have dropped to about 60% of current levels. distance will also grow, LNG tankers will increase their
Utility-scale solutions will become dominant,with gas transport market share and transport in tonne-
bifacial and high-efficiency technologies becoming miles will quadruple.
widespread and contributing to the continued cost
reductions. Further materials technology develop-
ments, and the adoption of mechanical and digital
technologies, will help boost global average capacity
factors by almost 50% by 2050.
34
EXECUTIVE SUMMARY
1
1
2 3
35
DNV GL ENERGY TRANSITION OUTLOOK 2019
Primary energy supply to final energy demand, 2017 compared with 2050.
Road
Aviation
Maritime
Rail
Oil Manufacturing
Base
materials
Manufactured
goods
Feedstock
Natural gas
Buildings
Residential
Geothermal Commercial
Other
Biomass
Energy sector
own use
Solar
thermal
Solar PV
Hydropower
Nuclear
Wind
Electricity
26PWh
generation
electricity production
36
EXECUTIVE SUMMARY
The three main drivers of the energy transition — electrification, decarbonization, and energy efficiency — are evident in this
comparison of energy flows for 2017 and 2050. In 2050, less fossil fuels go directly into final demand sectors and much more
primary energy is devoted to the generation of electricity — where there is an overwhelming share of non-fossil sources.
This creates a more efficient energy system with less energy lost as heat in power generation and in final demand sectors.
With ongoing efficiency gains in end use application (linked mainly to digitalization) the result is less energy used overall.
Road
Oil
Aviation
Maritime
Rail
Manufacturing
Base
Natural gas
materials
Manufactured
goods
Feedstock
Geothermal
Buildings
Biomass Hydrogen
production
Residential
Solar
thermal
Commercial
Solar PV Other
Energy sector
own use
Hydropower
Nuclear
Wind
Electricity
58PWh
generation electricity production
Flows smaller than 500 PJ are not shown.
37
DNV GL ENERGY TRANSITION OUTLOOK 2019
eto.dnvgl.com/forecast-data
38
EXECUTIVE SUMMARY
Published by DNV GL AS. Design SDG/Drive McCann/Fasett/Infogr8. Print 07 Media AS. Paper Arctic volume white 115/250.
Images Getty Images; Cover, p. 35. Sturlason; p.2. Holger Martens; p.4. Tesla; p. 35. Shutterstock; p. 35.
Nikola Motor company; p.35. DNV GL; p.38. #1209
39
SAFER, SMARTER, GREENER
dnvgl.com/eto
The trademarks DNV GL®, DNV® and Det Norske Veritas® are the properties
of companies in the Det Norske Veritas group. All rights reserved.