Guest Editorial: Europe and North America’s Widening Transition Trajectory

Abstract

_ 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. 1). Fossil fuel use will be more confined to a few sectors representing only 28% of the primary energy mix by 2050. Oil demand will decrease from 19 exajoule (EJ) in 2020 to 8 EJ in 2050 and will mainly come from nonenergy use in the petrochemical industry (40%) and transport (37%). The strong decrease in demand will mean that total imports will decrease by 61% for oil and 64% for natural gas from 2020 to 2050. Meanwhile, the share of renewable energy will rise from 40 to 45%. EU targets include: - 320 GW of solar PV capacity by 2025 and almost 600 GW by 2030 - Half of electricity to come from wind by 2050. This will see onshore wind expand from 173 GW today to 1,000 GW. Offshore wind will rise fivefold from 60 GW wind by 2030 to 300 GW by mid‑century. The REPowerEU strategy explicitly ties energy independence from Russia with increasing clean power and energy efficiency. With a host of initiatives aimed at ending the dependence on imported Russian fossil fuels by 2027, around EUR 210 billion ($229 billion) additional investment is needed over the next 4 years. The plan builds on the full implementation of the Fit for 55 proposals and suggests going further with higher renewable energy targets, including hydrogen and nuclear, and more meaningful energy efficiency efforts.