DNV report shows emissions likely to peak this year but net zero by 2050 impossible

Advisory firm DNV GL has released the Energy Transitions Outlook 2024, which shows that although the renewable energy boom is unstoppable and emissions will likely peak this year, net zero by 2050 is simply not possible.

The report's findings were highlighted in a press briefing hosted by DNV.

David Cairns, vice president of Equinor, spoke at the briefing and described the findings as an "emotional rollercoaster," with 2024 likely to see peak energy emissions, but the slow decline of post-peak emissions keeping key climate goals out of reach.

One of the report's stand-out findings is that new power systems, where most of the electricity is generated by renewables, are set to become the new energy reality for almost all countries in the next three decades.

However, while the massive shift to renewables gains momentum, it's too slow to meet global climate goals.

Remi Eriksen, group president and CEO of DNV, commented in a statement: "Emissions from energy peaking is, of course, good news, and a milestone for humanity. But since emissions are cumulative, we must now focus on how quickly emissions decline. Worryingly, the decline we forecast is very far from the trajectory required to meet the Paris Agreement targets. Our ‘most likely’ energy transition leads to warming of 2.2°C by the close of this century. If we want a faster transition, we must understand what is working and what is not."

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What is not working

DNV's report shows remarkably slow progress in hydrogen and CCS markets.

Hydrogen and its derivatives are likely to account for only 4% of final energy demand in 2050 – while DNVs original forecast last year was 5%.

The report is slightly more optimistic than last year about CCS, although forecasts are that only 2% of global emissions will be captured by CCS in 2040 and 6% in 2050.

Eriksen stated that there are still challenges caused by nimbyism and permitting delays impacting the rollout of these projects and causing the "decarbonisation can to be kicked down the road".

Also, he pointed to the fact that regulations are not yet reflecting the urgency of climate change, especially as energy security and inflationary pressures take priority.

Nick Cooper, CEO of Storegga, stated that regulation is key to driving the energy transition and creating a framework where hydrogen and CCS projects can flourish.

More specifically, he said that consistent policy ensures investor confidence, adding that "many of the leading countries have been flipping between 2nd and 5th gear...it's damaging consistency. You need consistent policy and policy rollout."

Where is all the hydrogen?

After attracting a great deal of attention, hydrogen appears to have fallen off the wagon after suffering a number of setbacks.

According to Duncan Clark, head of Ørsted in the UK and Ireland, hydrogen can recover from this. However, real projects are needed to get onto the maturity curve, supported by the right commercial and regulatory frameworks.

Said Clark: "Right now we see some gaps in how those frameworks are coming together...in particular we are seeing a lag in willingness to pay to get on that physical learning curve."

Clark highlights the importance of sharing risk, ensuring simple frameworks that provide line of sight on revenues and not moving too quickly without these necessary mechanisms being in place.

Jake Tudge, Corporate Affairs director at National Gas, suggested that hydrogen's reputation can and will be repaired. "Reputation is built by doing," he said, referring to the successful blending projects taking place in the UK.

Many countries are looking at hydrogen blending, which, stated Tudge, will be a key enabler to scaling the market, providing producers with confidence that there will be sufficient offtakers.

DNV's Eriksen made it clear that hydrogen is necessary to meet Paris Agreement goals. However, he stated: "Without a meaningful carbon price and/or direct market-stimulating support, hydrogen will struggle to scale and move down a cost-learning curve."

The role of China and geopolitics

China's role in the global energy transition can't be understated, according to the DNV report.

China accounted for 58% of global solar installations and 63% of new EV purchases last year and while it remains the world’s largest emitter of CO2, China’s dependence on fossil fuels is set to fall rapidly as it continues to install solar and wind.

According to the report, Chinese clean tech is directly responsible for speeding up the energy transition, but the country faces a global tariff backlash. Eriksen emphasised the importance of minimising the impact of this backlash and ensuring a balance between national security and reaching Paris Agreement goals.

Cairns added that China can be viewed as a threat and an enabler, however, the issue requiring more urgent attention is the US presidential election and how the US will deal with the Ukraine issue. According to Cairns, the outcome of who wins Ukraine could determine the future global order.

The report further showed that in many countries, there is a heightened security focus and diversion of national budgets towards military spending and away from government support for the transition. This has been brought about due to war in the Middle East, tensions between China and Taiwan and the Russia-Ukraine war.

A greener energy mix

The report highlights some good news around greening of the energy mix.

It shows that the primary energy supply mix will change significantly through to 2050 with fossil fuel’s share falling from 80% today to 50% in mid-century.

The rapid growth of solar PV and batteries will continue to drive the exit from coal and decarbonisation of the energy mix.

Annual solar installations increased 80% last year as it beat coal on cost in many regions and battery prices are plunging making 24-hour solar more accessible.

Wind is set to contribute 28% of electricity generation by 2050, with offshore wind growing 12% annually.

Finally, EV sales increased 50% last year and are on track towards a 50% global passenger EV sales share in 2031.