Europe and North America’s Widening Transition Trajectory
High energy prices and a greater focus on energy security will not slow the world’s long-term ambition for a low‑carbon future. However, annual analysis by DNV believes unprecedented pressure is reinforcing a two‑speed energy transition.
Despite the turbulence across energy markets and the crisis in Ukraine, the company’s latest Energy Transition Outlook states that the cost of solar and wind energy and rising carbon costs, hitting EUR 100 ($109) in Europe, will outweigh the present short‑term shocks to the energy system. For the first time, the forecast sees non-fossil energy nudge slightly above 50% of the global energy mix by 2050, largely due to the growth and “greening” of electricity production.
While global intentions to abate carbon emissions and curtail global warming are aligned, lower-income regions, where cost is the main driver of energy policy, are seeing a totally different trend.
Europe—The Leader of the Decarbonization Pack
Europe is the clear frontrunner as it looks to double down on renewables and energy efficiency to achieve net zero and strengthen its energy security to attain energy independence in the longer term.
Final energy demand will change profoundly in the next 3 decades and will decrease by 21%, influenced by energy-efficiency gains and rapid electrification. For instance, due to the COVID-19 pandemic and supply shock emanating from the invasion of Ukraine, gas consumption will fall dramatically in the short term to almost half the amount in 2050. Gas will meet just 10% of Europe’s energy demand in 2050 compared with 25% today (Fig.