Deep decarbonization of the world’s energy system is still 15 years away, with carbon emissions set to remain stubbornly high until the mid-2030s, as forecasted by DNV GL.
According to a new forecast of the energy transition by DNV GL, carbon dioxide emissions from energy use will fall just 15 per cent to 2035, before then dropping 40 per cent to 2050. The oil and gas industry will account for over 80 per cent of world energy-related carbon emissions in 2050.
DNV GL’s Energy Transition Outlook 2020 provides an independent forecast of developments in the world energy mix to 2050. In a dedicated oil and gas report, it presents the demand, supply, and investment forecast for hydrocarbons and decarbonized and green gases to 2050, and focuses on the outlook for decarbonizing the oil and gas industry.
The energy transition forecasts is still nowhere near fast enough to deliver on the COP 21 Paris Agreement – which aims to keep global warming to ‘well below 2°C’ and to limit the increase to 1.5°C. This forecast shows that the world will exhaust the 1.5°C carbon budget under the Agreement in 2028 and the 2°C budget in 2051.
Commenting on the report outcomes, Liv A. Hovem, CEO, DNV GL – Oil & Gas, said that “pressure is increasing on the oil and gas industry to decarbonize, and this is coming from all sides: from society and governments, from investors, and also from people within the industry itself. We see the sector increasingly putting the energy transition at the centre of its agenda, but climate change and ambitions to reduce it are outpacing action. The industry needs to prepare for an energy system that does not accept the release of carbon emissions.”
Commitments made by oil and gas companies indicate that emissions reductions in the short term will come largely from efforts to decarbonize oil and gas production. Solutions include electrifying oil and gas assets, reducing flaring and venting of gas during production, increased efforts to detect and stem methane leaks, and efficiency gains through digitalization, added the report.
However, oil and gas production and distribution accounts for only a quarter of the industry’s carbon emissions; the majority occurs during the combustion of oil and gas, it further said.
DNV GL notes that while there are limited options to reduce emissions from oil consumption, other than shifting to another energy source, natural gas consumption can be decarbonized through deploying CCS technology.
The report further suggested that, hydrogen and carbon capture and storage (CCS) have the potential to decarbonize fossil fuels more deeply. These technologies could transform the oil and gas industry’s ability to remove significant amounts of carbon emissions.
“The transition to renewables and efforts to cut carbon intensity will significantly reduce emissions, but they will not deeply decarbonize natural gas, which the world’s energy system will depend upon for years to come. It is only by removing the carbon from natural gas – before or after combustion – that the oil and gas industry can deeply decarbonize, reaching hard-to-abate sectors throughout the value chain,” said Hovem.
The report further added that, decarbonized and green gasses could have a bright future following the transformation, enabled by hydrogen and CCS complementing increased use of renewable electricity, battery technology and alternative low-carbon fuels such as ammonia to provide societies with a secure, affordable supply of clean energy.
“Forming partnerships among government, industry, and associations will be crucial in scaling innovation and new technologies for decarbonization. Collaboration on frameworks for making hydrogen and CCS safe, effective, and commercially viable will give the oil and gas industry the certainty it needs to manage new risks and accelerate its transformation towards a low-carbon future,” said Hovem.
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