The energy transition is progressing, but it is not enough to save the climate

Renewables are advancing, electrification is accelerating and primary energy demand is approaching stabilisation. Yet, in 2050 global CO2 emissions linked to energy and industrial processes will still be 22 billion tonnes per year, compared to the current 39 billion. A 44% reduction that would leave the world on a warming trajectory of 2.3 degrees by the end of the century, far from the goals of the Paris Agreement. DNV's Energy Transition Outlook 2026, now in its tenth edition, outlines a global energy system in profound transformation, but still far from climate neutrality.

Above all, energy security is reshaping the balance. The wars in Ukraine and Iran push importing countries to reduce their dependence on fossil fuels through renewables, nuclear power and efficiency. Exporting economies, on the other hand, defend oil and gas production. In the last five years, the share of non-fossil sources in primary energy has increased by 2.2 percentage points in the main importing regions considered by DNV, compared to 0.7 points in the exporting ones.

The relationship between economic growth and energy consumption is also changing. After two centuries of parallel increases, global demand for primary energy is destined to stabilize: from the current 657 exajoules it would rise to around 694 in 2040, before falling to 666 in 2060. In the same period, global GDP could almost double. What will make this separation possible will above all be electrification, which reduces energy losses compared to combustion-based technologies.

The share of electricity in final consumption will go from 21% currently to 33% in 2045, with a growth rate more than double compared to the previous twenty years. Building cooling, electric vehicles and data centers will drive demand, respectively responsible for 22%, 21% and 18% of the increase expected by 2040.

Meanwhile, the energy mix is changing. Oil, gas and coal today represent around 80% of the world's primary energy, a share that has remained stable for over sixty years. By 2060 it will fall below 40%, while non-fossil sources will surpass fossil ones in the 2050s. The contribution of solar will increase tenfold and that of wind eight. Coal will suffer a contraction of more than 80%, followed by oil, while gas will maintain an important role in the flexibility of electricity systems.

However, the expansion of renewables will require adequate infrastructure. We will need more resilient networks, storage, demand flexibility and electricity markets capable of integrating a growing share of intermittent production. Installed battery capacity has increased fourteen-fold in the last five years, but transmission networks and consumption flexibility are not growing as rapidly.

Investments confirm the advantage of mature technologies. In the period 2026-2035 DNV expects an average annual expenditure of 600 billion dollars in photovoltaics, compared to 240 billion in the previous decade. In wind energy it will go from 160 to 300 billion. The situation is different for renewable hydrogen and CO2 capture, still held back by costs and dependence on incentives. Compared to the previous report, DNV has reduced its 2060 forecasts for hydrogen and carbon capture and storage by 29% and 15%, respectively.

In Europe, increased production from non-fossil sources will reduce the share of primary energy imported from around half to a third by 2050. But the increase in variable renewables will require ten times the energy storage capacity than currently. Industrial competitiveness will increasingly depend on the availability of reliable and affordable electricity.