Covid-19 will weaken energy demand for decades—but world still losing climate fight, warns report

The coronavirus may dampen energy demand for decades, while the share of renewables grows and transport is increasingly electrified. Even so, the world is on track to heat up by 2.3 degrees Celsius by 2100, a new report predicts.

Wind farm, energy transition outlook
By mid-century, power systems in most regions will be dominated by solar and wind. Image: WDG Photo via Shutterstock

The coronavirus crisis and the economic slump and behavioural changes it has triggered will leave a permanent imprint on consumers, markets, and industries, dampening energy demand for decades to come.

And yet, the world is not on track to win the battle against global warming, according to a new report by multinational certification firm DNV GL.

Although renewables are expected to revolutionise the global energy landscape and transport will be increasingly electrified, DNV predicts the world is heading for a rise in average global temperatures of 2.3 degrees Celsius above pre-industrial levels by 2100, an increase considered dangerous by the scientific community.

To cap global heating at 1.5 degrees Celsius, the world needs carbon cuts equivalent to those triggered by the pandemic to happen every single year for the next three decades, finds the study.

The Energy Transition Outlook—Power Supply and Use report paints a sobering picture of nations’ endeavours to tackle climate change.

It finds there is a tremendous gap between the warming trajectory that the world is on and the goals of the Paris Agreement, throwing into stark relief the enormity of the global decarbonisation challenge.

Covid-19 has led to an 8 per cent drop in energy demand this year and, with economic growth delayed and remote working and reduced travel here to stay, consumption levels are expected to remain at least 6 per cent below levels forecast prior to the outbreak through to 2050.

The cumulative, pandemic-linked reduction in energy-related carbon dioxide emissions—which make up more than 70 per cent of total man-made greenhouse gas emissions—until 2050 represent about two years’ worth of present emissions.

Even after the worst has passed, total energy demand will only see modest growth, owing to continuous energy efficiency gains. “We will do a lot more with a lot less energy in the future,” Remi Eriksen, group president and chief executive officer at DNV GL, and one of the authors of the report, said at a virtual press conference on Monday.

Wind and solar are expected to dominate global power generation by mid-century, with coal use poised to be less than one-third of current levels.

Half of all passenger vehicle sales are set to be electric in 2032, and DNV also projected that global energy-related carbon dioxide emissions may have peaked, and oil demand may never exceed 2019 levels again.

There is substantial scope for regulatory frameworks to bring down emissions and ramp up energy efficiency further, states the report. Covid-19 recovery programmes that nations are launching around the world are a golden opportunity to pass greener policies, it adds.

Ditlev Engel, chief executive officer of DNV GL – Energy, said: “It is encouraging to see increasing generation from renewables, but we know that it’s simply not enough to meet climate goals and urgent action is required now to transition faster.”

“We desperately need governments around the world to dare to commit to post-pandemic economic stimulus packages, bold policies and regulations that will drive the uptake of low or zero carbon solutions,” he said.

Electrification on the march

The study finds that over the next 30 years, the share of electricity in the world’s energy mix will more than double from today’s level, from 19 per cent in 2018 to 41 per cent by mid-century.

Solar photovoltaic capacity is forecast to grow 20-fold, reaching 10 terawatts (TW) just before 2050. Installed wind capacity will increase 10-fold to 4.9 TW for onshore, 1 TW for fixed offshore, and 260 gigawatts (GW) for floating offshore wind.

This means solar and wind will generate 24 per cent of the world’s electricity in 2030, and 62 per cent by mid-century, with fossil fuels accounting for only 17 per cent of power needs, and nuclear for a mere 5 per cent.

Aside from plunging costs, emerging and improved technologies are driving such rapid growth.

Solar tracking, bifacial photovoltaic panels and floating as well as larger wind turbines will make renewable power production more efficient, while ever-cheaper energy storage and smart, digitalised supergrids capable of transmitting green electricity over vast distances will enable countries to better handle fluctuating clean energy supply.

Greater China—the global powerhouse for the energy transition—will see the share of electricity in energy demand grow from 23 per cent in 2018 to 52 per cent in 2050, beating every other region. Meanwhile, coal will reduce its dominant share in the region’s electricity mix to 12 per cent, down from 60 per cent currently.

And although demand for coal—the word’s dirtiest fossil fuel—is still rising in India and Southeast Asia, its contribution to the global energy mix is diminishing.

Electrification is also transforming the transportation sector. As of 2018, oil fuelled over 90 per cent of the road, aviation and maritime subsectors, with biofuels and natural gas accounting for some 3 per cent of the mix each.

But the picture will look dramatically different in a few decades. In the road transport sector—which is responsible for 80 per cent of transport-related energy use—the uptake of electric vehicles (EV) is set to occur rapidly after technology costs begin to plummet in 2025, standing at some 15 per cent of today’s levels in 2050.

Aviation, however, will be dependent on oil for much longer, maintaining 61 per cent of current consumption by mid-century, while the shipping industry is facing major barriers on its quest to halve its emissions by 2050.

Meanwhile, natural gas is forecast to take over as the largest energy source this decade and remain so until 2050.

Is Paris out of reach?

Over the next 30 years, absolute carbon dioxide emissions will rise steadily in the Indian Subcontinent and Sub-Saharan Africa, with Greater China—currently the largest emitter by far—expected to reach peak emissions before 2030.

Energy demand in Southeast Asia, especially from space-cooling, is predicted to grow significantly, although the increasing use of natural gas and renewables, as well as transport electrification, will cause the importance of oil and coal to shrink.

All other regions will reduce their emissions, with Europe, Australia and New Zealand experiencing the biggest relative change.

By 2050, global energy-related emissions will halve, standing at 17 gigatonnes annually, and be in steep decline.

But climate scientists estimate such levels of emissions cuts need to be achieved two decades earlier—in 2030—to cap global heating at 2 degrees Celsius. “We’re not even close,” Sverre Alvik, DNV GL’s energy transition outlook project director, said at the press conference.

The other problem is that other emissions will be increasingly difficult to eliminate. The report forecasts that the world will reach net-zero emissions by the end of the century.

That doesn’t mean the temperature goals laid out in the Paris climate deal are unattainable, said Alvik. “The Paris climate goals are not out of reach. But it is certain that we are currently not on track to reach them.”

What needs to happen?

The report states that governments must accelerate the deployment of proven solutions. That means investment in renewables and the electrification of road transport will need to pick up speed.

But nations also need to strengthen support for research and development to scale up technologies that are not yet market-ready, including hydrogen and carbon capture and storage processes, which snatch carbon dioxide from the air at source before it can enter the atmosphere.

Hard-to-abate sectors, such as heavy industry, shipping and aviation, won’t be fixed by market forces alone. They will require governments to use carbon pricing, air quality regulations, efficiency standards and other policy levers at their disposal to drive change.

Energy efficiency measures—the cheapest way of slashing emissions—are especially important and should be pushed up policymakers’ priority lists, observed Eriksen at the conference.

In the absence of any efficiency gains, global energy demand in 2050 would be some 65 per cent higher than today, in contrast to the almost flat demand predicted, states the report.

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