The renewables rollout is hitting record highs but a report by consultancy DNV has found that they are still just meeting new energy demand rather than replacing fossil fuels, which are only likely to peak next year.
“Globally, the energy transition has not started, if, by transition, we mean that clean energy replaces fossil energy in absolute terms,” said Remi Eriksen, CEO of Norway's DNV, which will publish its latest Energy Transition Outlook on Wednesday.
“Clearly, the energy transition has begun at a sector, national, and community level, but globally, record emissions from fossil energy are on course to move even higher next year.”
Electric vehicle sales and solar and battery installations hit record highs last year, said DNV. But between 2017 and 2022, it said fossil fuels still met 51% of new energy demand.
To reach the Paris Agreement goal of capping global warming at 1.5°C, it said CO2 emissions would need to halve by 2030. However, it found that such emissions will only be 4% lower than today in 2030 and 46% lower by 2050.
DNV said that meeting the Paris target is therefore now “less likely than ever.”
DNV said that geopolitical events such as the war in Ukraine and resulting energy crisis in Europe had been one of a “confluence of factors” that had prompted a “considerable bounce-back” in coal globally last year.
China also used more coal amid high gas prices and a drought affecting hydropower, while there is also rising coal use in India and South East Asian countries.
Once the energy transition does “get out of the starting blocks,” DNV said that renewables will “outsprint fossil fuels.”
Most new energy additions from now will be wind and solar, which DNV said will grow nine-fold and 17-fold respectively by 2050. Electricity production will “more than double” in that same period, “bringing efficiencies to the energy system.”
The fossil to non-fossil split of the energy mix is currently 80/20 but this will move to a 48/52 split by mid-century, it said.
Solar installations reached a record 250GW in 2022, while wind power is expected to double by 2030, “despite inflationary and supply chain headwinds.”
In the near term, DNV said that transmission and distribution grid constraints are “emerging as a key bottleneck” for the rollout of renewables.
“There are short term set-backs due to increasing interest rates, supply chain challenges, and energy trade shifts due to the war in Ukraine,” said Eriksen.
“But the long-term trend for the energy transition remains clear: the world energy system will move from an energy mix that is 80% fossil based to one that is about 50% non-fossil based in the space of a single generation.”
“This is fast," he said, "but not fast enough to meet the Paris goals.”
Ahead of COP28 in the United Arab Emirates, DNV will publish its ‘Pathway to Net Zero’ report.
Eriksen said this will show that “technology is not the main challenge” but rather a lack of incentives to drive even faster renewables rollout and dis-incentives to drive down emissions from fossil fuels.
Sverre Alvik, director of the energy transition research program at DNV, said there was a question of whether governments should only use the “carrot” – such as the Inflation Reduction Act in the United States – or the “carrot and the stick,” such as in Europe, which alongside green subsidies makes companies pay for their emissions through carbon credits.
Currently, DNV predicts planet Earth is on a path to reaching 2.2°C of global warming by the end of the century, which Alviksaid would be a “disaster” for large parts of the world.