A recent report by DNV highlights that, even with the remarkable growth of renewable energy, fossil fuels still meet 51% of the new global energy demand from 2017 to 2022. This insight emerges despite the boom in renewable capacity, including solar installations hitting an unprecedented 250GW in 2022.
While wind power is projected to account for 7% of the world’s grid-connected electricity, and its installed capacity is anticipated to double by 2030, challenges like inflation and supply chain disruptions are headwinds the industry must contend with. Moreover, transmission and distribution grid bottlenecks have surfaced as significant obstacles for the proliferation of renewable electricity and associated distributed energy assets, particularly in regions like North America and Europe.
Remi Eriksen, DNV’s group president and chief executive, commented on the global scenario, stating, “While there’s evidence of an energy transition at sectoral, national, and community scales, on a global level, we are yet to see clean energy replace fossil fuels in absolute terms. In fact, emissions from fossil fuels are set to rise even further in the coming year.”
The geopolitical landscape, with its shift, has fortified the role of energy security in shaping energy policies. As a consequence, governments are displaying a readiness to pay more for locally produced energy. Such dynamics have influenced DNV’s outlook, evident in predictions like a slower energy transition in the Indian Subcontinent with a continued reliance on coal.
Conversely, Europe is witnessing an accelerated transition, buoyed by the convergence of climate concerns, industrial goals, and energy security objectives.
Eriksen remains optimistic about the future trajectory of the energy transition, noting, “Although we’ve seen setbacks due to rising interest rates, supply chain issues, and geopolitical events like the Ukraine conflict, the long-term trend is unmistakable. Within a single generation, we’re looking at an energy mix moving from being 80% reliant on fossil fuels to approximately 50% non-fossil based.”
However, Eriksen voiced concerns about the pace, emphasizing that the rate of transition might fall short of meeting the Paris Agreement targets. He revealed that DNV is slated to release its ‘Pathway to Net Zero’ report ahead of COP 28, emphasizing that the primary challenge isn’t technological but rather lies in creating the right incentives for renewable energy deployment and curbing emissions from fossil fuels.
