DNV: Energy efficiency and hydrogen – biggest opportunities to combat climate change

In its latest Energy Transition Outlook, DNV reports the most likely outlook is global warming exceeding 2°C by 2100.

Despite the many and considerable efforts of governments, organisations and individuals, the pace of the energy transition is not moving fast enough to meet the net-zero ambitions of the Paris Agreement, according to DNV in its Energy Transition Outlook 2021.

And the window of opportunity is narrowing by the year as CO2 emissions continue to accumulate, the company states, in what is likely to be a number of such publications emerging in the run-up to the COP26 meeting in November when thousands of individuals from across the world will fly into Glasgow, Scotland, to discuss and strategise on this issue.

DNV’s analysis indicates emissions likely peaked in 2019 with a 9% decline from that level projected by 2030 and 45% by 2050, rather than the net zero which should limit global warming to 1.5°C.

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Notably absolute emissions are expected to increase in the Indian subcontinent and Sub-Saharan Africa to 2050. The highest emitting region, Greater China, should reach peak emissions before 2030, while all other regions will reduce their emissions, with OECD Pacific together with Europe experiencing the biggest relative change.

Some other top-level findings are that electrification is surging ahead with the growth of renewables and its share in final global demand is set to double to 38% by 2050. By then solar and wind should represent 69% of grid-connected power generation and fossil power just 13%.

However, fossil fuels, primarily natural gas and oil, are expected to still hold a 50% share of the energy mix in 2050. While decarbonisation is possible with carbon capture and storage, its uptake is likely to be limited until the 2040s mainly due to the costs and by 2050 to amount to just 6% of all annual energy-related emissions.

Technical solutions such as connectivity, storage and demand response will be essential to integrating renewables. For example, DNV anticipates that one-third of all solar production will be built with direct storage, and by 2050 solar PV + storage will produce 12% of all grid-connected electricity.

Climate solutions

The big question is the potential solutions and DNV offers two key ones, citing energy efficiency as “the unsung hero” and saying it should be the number one priority for companies and governments.

Efficiency gains should lead to a levelling off of global energy demand from about 2035, despite the population increase and growth in the global economy, DNV’s modelling shows.

Many efficiency measures have marginal or even negative costs, but due to split incentives and/or a lack of long-term thinking, industry standards and regulations are needed to ensure implementation.

The second is green hydrogen and the spin-off e-fuels, which have the potential to decarbonise hard-to-abate sectors such as aviation, shipping and heavy transport and industry.

Current production is negligible with scaling expected to start in the late 2030s and build to only 5% of the energy mix by 2050. Government incentives, similar to those given to renewables, are needed to stimulate technology development and accelerate the uptake of hydrogen and e-fuels.

DNV also notes that most hydrogen production should be from dedicated off-grid renewables powered electrolysers. Currently, at least electrolysis powered by grid electricity is disadvantaged by the limited number of hours of low-priced electricity.

“The verdict is clear: the world needs vastly more green electricity, both direct and indirect, more biofuel, and more carbon capture and storage on a dramatically accelerated timescale,” says Remi Eriksen, CEO of DNV.

“Extraordinary action will be needed to bring the hydrogen economy into full force earlier – but these are extraordinary times.”