New Flagship Report
Global Energy Scenarios 2023
Tipping points - An accelerated transition is emerging
Global Energy Scenarios 2023
Global emissions peak coming soon
A peak in global carbon dioxide (CO2) emissions around 2027 is a significant marker in the ongoing energy transition. This trend reflects the growing impact of renewable energy and a global shift toward more sustainable practices. As countries and industries increasingly adopt renewable technologies and improve energy efficiency, we witness a tangible reduction in emissions.
The peak suggests that efforts to combat climate change are gaining traction, leading to a decline in reliance on fossil fuels, representing a crucial step towards meeting the Paris Agreement goals, signaling a broader transformation in how energy is produced and consumed globally.
Low-carbon investments move toward inflection point: energy investments to surpass oil and gas by 2025
The energy investment horizon is tilting toward renewables and cleantech. Sanctioning activity in the fossil fuel domain, once dominant, is now part of a broader narrative that includes substantial strides toward clean energy alternatives.
By 2025, investments in low-carbon energy solutions such as solar and wind are predicted to surpass those in oil and gas, marking a pivotal shift in the energy transition. Rocketing 50% from 2020 to 2023, low-carbon investments are expected to continue climbing fast, reaching $760 billion by 2025. Past this point, oil and gas investments are expected to decline toward 2030, following a tipping point in 2023 at approximately $700 billion.
In essence, the energy sector is recalibrating, balancing the act of fuelling today's needs with the imperative of fostering a sustainable energy system.
Solar manufacturing capacity is now more than 1200 gigawatts, 1.7x last year and ahead of 1.6 degree scenario
The current landscape of solar energy, hailed the cheapest form of energy in history, is a testament to the remarkable strides made in cost reduction and efficiency. With manufacturing capacity surging 1.7x year on year, now standing at over 1,200 gigawatt, the oversupplied sector is already 29% ahead of the approaching tall order set under the 1.5 degrees Celsius scenario.
This growth is characterized by an exponential increase in production capacity, with the cost per unit continuing to decrease as capacity doubles – a pattern that not only underscores the scalability of solar energy solutions but also its increasing affordability and role in global energy transition.
And as solar capacity growth supports the technology becoming cheaper, projects increase in size, and costs continue to plummet. This is exemplified by notable projects like Al Dahfra, a 2 GW development, offering energy at a groundbreaking $13 per MWh, and the Mohammed bin Rashid Al Maktoum Solar Park, pricing its 1.8 GW (6th phase) development at $16 per MWh.
Peak in global primary energy supply by the coming decade
A transition from fossil fuel to renewables means a revolution in energy efficiency. Primary energy supply is likely to peak soon around 630 EJ and then decline. Combusting molecules to make electricity or motion only converts 30 to 50 percent of the chemical energy to useful energy. The rest is heat losses to the environment. With renewable energy like solar or wind, 70 to 90 percent of the primary energy is available for the end user including storage and distribution. For heat generation, the difference is less, but renewables are also more efficient for heat. Of the 500 EJ of primary energy from fossil fuel today, only half is used by the end user, while about 440 EJ would have been available if the 500 EJ of primary energy came from solar, wind or hydro.
CCUS and hydrogen remain the most viable solutions for hard-to-abate sectors
To meet emission requirements in our 1.6 degree scenario, we need to see a rapid transition of hard-to-abate sectors. Foremost among them is steel production, which relies heavily on fossil fuels.
Increasing the use of scrap steel in electric arc furnaces and basic oxygen furnaces helps lower energy consumption and emissions. To reduce emissions aligned with the 1.6 degree scenario, production from blast furnaces will have to be partly phased out and retrofitted with CCUS capabilities. There is also a prominent role for steel technologies using hydrogen as a reducing agent. In 2050, about 18% of all steel globally is produced using hydrogen, in our 1.6DG scenario.
45% of global tonne mileage to be avoided as fossil fuels decline
A decline in the demand for fossil fuels, primarily due to the increasing adoption of renewable energy, would lead to a substantial reduction in the transportation of these fuels. Fossil fuels, such as coal, oil and natural gas, often require extensive transportation from extraction sites to processing facilities and end-users.
This transportation is typically done via ships, trucks or pipelines, contributing significantly to global tonne mileage. As the world transitions to renewable energy sources like solar, wind and hydro, the need to transport fossil fuels over long distances decreases.
Therefore, a 45% reduction in global tonne mileage suggests a substantial decrease in the movement of fossil fuels towards the middle of the century. This not only reduces emissions associated with transportation but also signifies a major shift in global energy infrastructures and consumption patterns.
Electric vehicle sales to overtake internal combustion within four years, accounting for 22% of global sales this year
Electric vehicles (EVs) are set to constitute 22% of global vehicle sales in 2023, a clear indicator of the rapid evolution and growing prominence of the ongoing energy transition in road transport.
This trend is indicative of a deeper societal and economic transformation that is paving the way for EVs to outpace internal combustion engine vehicles. This will be a pivotal stride in the global effort to reduce carbon emissions and transition toward cleaner energy sources. In our 1.6 degree scenario, electric vehicle sales continue on their exponential trajectory, reaching an inflection point in 2025, overtaking the incumbent internal combustion market in size.
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