For the Norway-based independent expert in risk management and quality assurance, DNV GL, the decarbonisation is not happening fast enough.
According to its latest outlook, Energy Transition 2020, although carbon emissions have peaked in 2019, they will not fall sufficiently by 2050 to reach the Paris Agreement goal of 2°C global warming, let alone 1.5°C. In fact, DNV GL estimates a rise in average global temperatures of 2.3°C above pre-industrial levels.
“There is no silver bullet,” said Remi Eriksen, Group President and CEO of DNV GL, during the online launch of the outlook. “But a combination of measures, which include an increase in renewable energy sources (RES) and in energy efficiency. The technology already exists. What is more complicated is the decarbonisation of hard-to-abate sectors and carbon capture and storage.”
Speaking of hard-to-abate sectors, the shipping industry has still a long way to go.
Andreas Sohmen-Pao, Chairman of BW Group, one of the world’s leading global maritime companies involved in shipping, floating gas infrastructure and deepwater oil and gas production, mentioned how the coronavirus pandemic helped to bring down emissions in the short term, but the real challenge is how to find zero-emissions fuels in the long run.
Indeed, due to the pandemic, carbon dioxide emissions are set to fall 8 per cent this year. However, we will still blow past the carbon budget for a 1.5-degree future in 2028 and, if we are to meet this target, we must repeat the 2020 emissions saving every year until the middle of the century.
“COVID-19 has changed the global energy outlook, yet the global climate crisis remains as urgent as before the pandemic,” pointed out Mr Eriksen. “Early optimism about decreased air pollution has been replaced by the cold reality that it is not because of a more decarbonised energy mix but because of short term changes unique to the pandemic. We can transition faster with the technology at hand, but now more than ever before, we require national and sectorial policy incentives to bring us to the ambitions of Paris.”
In this regard, all the players matter. Asia, in particular, is going to have a key role in the decarbonisation.
“If China and India won’t decarbonise their industries, then it doesn’t matter what the rest of the world is doing,” Mr Eriksen said.
For Liv Hovem, CEO of DNV GL Oil and Gas, the priority is to cut emissions in the oil and gas sector. It could start from the production phase which already accounts for 25 per cent of the industry, through automation and digitalisation.
“But it is consumption that we have to change and carbon capture and storage,” she said during the launch of the Outlook.
“Pressure is increasing on the oil and gas industry to decarbonise and this is coming from all sides: from society and governments, from investors and also from people within the industry itself,” she underlined. “We see the sector increasingly putting the energy transition at the centre of its agenda, but climate change and ambitions to reduce it are outpacing action. The industry needs to prepare for an energy system that does not accept the release of carbon emissions.”
In particular, DNV GL’s report forecasts that renewable energy will increasingly dominate electricity generation. Solar and wind installed capacity will more than double from 1,250 gigawatts (GW) in 2019 to 2,690 GW in 2025, continuing to grow and generate 62 per cent of electricity by 2050.
Although Mrs Hovem sees a huge potential in offshore wind, the integration still represents an obstacle.
“Again, we have issues with storage and transportation,” she mentioned. “Here hydrogen could play an important role.”
However, as reminded by Steinar Eikaas, Vice President Low Carbon Solutions at Equinor, currently there are limitations when it comes to hydrogen. In order to reduce emissions, hydrogen must be produced in a clean way through electrolysis, but today there is no a viable hydrogen economy nor hydrogen infrastructure.
Hydrogen has been given a boost by policy developments in the European Union. Earlier in July, the Commission approved a long-awaited hydrogen strategy. Indeed, hydrogen can be used as a feedstock, fuel or an energy carrier and storage and has many possible applications across industry, transport, power and buildings sectors. Most importantly, it does not emit CO2. Yet, DNV GL expects hydrogen to only contribute to 6 per cent of the energy demand by 2050.
On a positive note, whilst we must transition faster to create a more sustainable future, the current pace of the energy transition is already fast. Furthermore, the transition is affordable: as a proportion of GDP, humanity will be spending less on energy in 2050 (1.6 per cent of global GDP) compared to 2018 (3 per cent of GDP).