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Gas, renewables, CCS necessary for energy transition: DNV GL

Energy Transition Outlook says oil and gas must be decarbonised for countries to meet climate change mitigation targets

A combination of gas, renewable energies and carbon capture and storage (CCS) can secure a rapid energy transition as “there is no single pathway to a decarbonised energy mix”, according to a new forecast by DNV GL.

DNV GL’s 2019 Energy Transition Outlook forecasts that gas and renewables will be the only energy sources for which demand is expected to be higher in 2050 compared to levels today.

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“A combination of energy sources – primarily gas and renewables – will be the quickest route to delivering a supply of affordable, decarbonised energy in the lead-up to mid-century,” the report said.

“Gas will increasingly complement variable renewables, meeting demand in peak periods such as winter in colder climates,” it said, adding that by 2050, gas will account for nearly 30% of the global energy supply.

Renewable energy sources are on track to account for over 80% of total electricity output by 2050 as the build-out of wind and solar plant expands 20-fold.

However, as there is no single pathway to a decarbonised economy, the outlook forecasts a need for CCS, since currently, it is the only technology available to decarbonise hydrocarbon use. DNV GL warned that CCS will not be employed at-scale until the 2040s “unless governments develop and enact more definitive policies on its use”.

“All major routes to successfully decarbonising gas rely on the large-scale uptake of CCS. The future of CCS largely lies in the hands of policy-makers setting a higher carbon price than the cost of the technology. Industry can also play a role in stimulating quicker adoption by focusing on finding ways to reduce the cost of CCS technology,” DNV GL – Oil & Gas chief executive Liv Hovem said.

“Large-scale uptake of CCS technology will unlock significant opportunities for hydrocarbon and renewable energy technologies to work together to decarbonise the energy mix. The energy industry must however also shift its mindset from ‘gas vs renewables’ to ‘gas and renewables’ for success,” Hovem said.

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DNV GL outlook forecasts global oil demand will peak in the mid-2020s, while gas demand will keep rising, however, it warns that “significant investment will be required to ensure production meets demand”.

According to the forecast, global upstream gas capital expenditure will need to reach $737 billion in 2025, and $587 billion in 2050.

DNV GL also forecasts the global PV fleet to be producing some 36,000TWh a year by 2050, and wind farms 17,000TWh, together accounting for nearly two-thirds of all electricity production globally.

However, Ditlev Energy, chief executive of DNV GL Energy, speaking to Recharge before the publication of the report, warned that as unprecedented as the build-out of wind and solar plants continues to be, it still falls “well short” of any climate-steadying effect, with the two resources having to reach installed capacities of 3TW and 5TW, respectively, by mid-century, according to DNV GL calculations, to “close the gap” on the 1.5 degrees Celsius target.

“If we let technology ‘do its thing’ there is still another 1 degree Celsius that regulation has to fix,” he said, pointing to modelling that suggests the world is currently heading for a 2.4 degrees Celsius temperature rise by 2100.

“Right now we are on a road to a place nobody wants to go. And the wind and solar technology – much as we are predicting a phenomenal uptake – it is still not enough [at current build-out rates].

The report calls on international governments and business leaders to make “immediate and concerted efforts to accelerate action” on the energy transition. “It’s the elephant in the room,” said Engel. “They need to determine which energy sources need to be scaled-up and down, and how fast.”

Upstream's sister publication Recharge has contributed to this story.

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