The energy transition is gaining momentum and the industry is accelerating towards fundamental and widespread global change. Rystad Energy is proud to release its flagship annual report – Global energy scenarios 2024 – which concludes that the goal of limiting global warming to 1.6 degrees Celsius above pre-industrial levels is a monumental task, but still achievable.

The global energy system is set to experience transformational changes in the coming decades. Solar, wind and battery costs continue to fall at an unprecedented rate, and capacity is coming online at a record pace, with solar installations increasing 60% to 360 gigawatt hours of alternating current (GWac) in 2023. Electric vehicles (EVs) are expected to reach 23% of new passenger car sales this year, up from 3% just four years ago, while annual investments in new energy infrastructure renewables surpassed oil and gas spending for the first time in 2023.

The unprecedented transformation of the global energy landscape requires three clear steps:

1. Clean up and develop the electricity sector, primarily by rapidly increasing solar, wind and battery energy storage capacity.
2. Electrify almost anything you can
3. Combat residual emissions from hard-to-reduce sectors such as heavy industry, aviation, steel and cement

The global energy transition is no longer a distant goal: it has been underway for years and we are now in the acceleration phase. As solar power, batteries and electric vehicles continue to pass key tipping points, the transition of the global energy system will eventually reach sustainable cruising speed. The industry will then focus on maintaining momentum toward a cleaner, more resilient energy future.

Jarand Rystad, CEO and Founder, Rystad Energy

Download your copy of Global energy scenarios 2024.

Limiting global warming to 1.6 degrees requires a rapid acceleration of the energy transition. So this is not the only possible future for the global energy system. In the new report, we examine three main global warming possibilities: scenarios that would result in global warming of 1.6, 1.9 or 2.2 degrees Celsius. Rystad Energy’s research and analysis shows that if global warming were to reach 2.2 degrees, the current pace of clean technology deployment is expected to slow significantly and the global urgency behind decarbonization is expected to ease. To achieve the 1.9 degree scenario, which best fits our bottom-up analysis of the current near-term trajectory, recent progress would need to continue on a similar trajectory. However, for the 1.6 degree scenario to become a reality, we need to see technological developments follow a steep S-curve.

The report examines clean technology adoption rates and examines how quickly renewable energy is deployed, comparing its adoption to other disruptive technologies like automobiles, the internet and cell phones. Figures show that the acceptance of solar, wind and electric vehicles in some countries far exceeds previous disruptive technologies.

Today, renewable energies are already responsible for more than a third of global electricity production. To meet demand in our 1.6 degree scenario, solar and wind will need to reach 44% of primary energy supply by 2050. This is a much larger share of the total supply than is needed in the 1.9 degree scenario. which would require a 25% supply from these sources. However, supply chains for solar, wind, electric vehicles and batteries have grown at a rapid pace, proving that they can meet the 1.6 degree requirement, and many of them they now outperform even alternatives to fossil fuels on purely economic and subsidy-free grounds. For example, the solar module supply chain will reach an annual capacity of approximately 1.65 terawatts of direct current (TWdc) by the end of 2024, an increase of 63% in just one year. This economic advantage will only grow as capacity increases and supply becomes cheaper.

Achieving the goals of the Paris Agreement requires deep decarbonization across all sectors of the economy and across a wide range of technologies. While the road ahead may seem complex, the report outlines the three aforementioned tasks essential to reaching net zero: cleaning up and growing the electricity sector, electrifying almost everything, and tackling residual emissions.

Renewable energy is the main tool used to accomplish the first task. Electricity generation alone contributed 15 gigatons of carbon dioxide (GtCO2) emissions in 2023, or 39% of annual global emissions. This requires rapid expansion of solar and wind operational capacity and supply chain capabilities, as well as phasing out coal-fired power plants.

The second task is to electrify almost everything, including the transport, industrial and building sectors, which currently rely heavily on fossil fuels. Maximizing the potential for economically viable electrification in these sectors would result in 43% of the total emissions reduction required to achieve the 1.6 degree scenario.

The third task is to clean up residual emissions, i.e. emissions that cannot be eliminated by electrification. This requires the development and deployment of new technologies, such as carbon capture, utilization and storage (CCUS), direct air carbon capture (DACC), hydrogen-based alternative fuels and biofuels. However, many of these technologies are still in the early stages of development, and significant technical, economic and regulatory progress must be made to reduce the risks associated with project investments.

Task three benefits from a domino effect of tasks one and two: greater energy efficiency will naturally reduce residual emissions from fossil fuels. The future global energy system will not only be cleaner but also more efficient, providing cheaper and more “useful” energy with minimal losses compared to traditional fossil fuels. Currently, almost half of all primary energy is lost due to emissions, transportation or production inefficiency. For example, coal-fired power generation wastes 60% of its energy potential, while gas-fired power generation loses 50%. In contrast, electric vehicles are 70% more energy efficient than diesel cars when in use.

Although the three main tasks have the potential to unlock the 1.6 degree global warming scenario, achieving an even lower global warming scenario is extremely difficult. There are, however, some benefits that could take emissions reductions to another level. One such benefit is the accelerated reduction of methane emissions, given methane’s high potency as a short-term greenhouse gas. Technologies such as precision fermentation in agriculture are becoming highly competitive and can produce up to 97% less methane emissions than traditional animal agriculture, while using only 10% of land and 4% of l water, providing a dramatic path to reducing emissions.

Another benefit is more efficient land use, which allows for faster deployment of renewable energy. For example, co-locating solar energy on agricultural land through agrivoltaics could meet the highest energy demand in a 1.6 degree scenario using only 3.8% of agricultural land. Together, these strategies offer a promising path to achieving more ambitious climate goals, including with supporting policies to unlock their potential.

By Rystad Energy

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