By William Mathis and Jeremy Hodges
That’s the latest analysis from BloombergNEF in its annual New Energy Outlook report. It’s further evidence of how cheap renewable power sources will continue to push aside fossil fuels in the energy mix.
Despite the massive sum, BNEF said the pace of building out new renewables will need to increase further to limit global warming to less than 2 degrees Celsius by the end of the century.
The projected increases in renewable energy and battery technology — wind and solar will grow to 56% of global electricity in 2050 — are set to cause emissions to peak in 2027 and then fall 0.7% annually until 2050, BNEF said.
That would lead to a warming of 3.3 degrees Celsius by 2100, well short of the 6% annual emissions reduction needed to keep warming below 2 degrees and the 10% reduction required to achieve 1.5 degrees of warming.
“The next ten years will be crucial for the energy transition,” Jon Moore, BNEF’s chief executive officer, said citing accelerated deployment of wind and solar and faster consumer uptake in electric vehicles as some of the crucial areas over that period.
Below are four key takeaways from this year’s report:
The only fossil fuel to increase its share of demand over the coming years will be gas. That’s largely driven by its use in heavy industry and to heat buildings. A key reason for the growth of gas to warm buildings is the weak economic argument for using heat pumps. BNEF doesn’t see cost parity with gas boilers until 2040. In the U.S., an abundance of cheap gas will delay the energy transition, but renewable power will still overtake the fuel by 2041.
The future of oil demand will be shaped by the uptake of electric vehicles. BNEF sees primary oil consumption peaking in 2035 and then gradually declining.
Meanwhile, the thirst for oil in road transport tops out in 2031, according to BNEF. The fall will be sped up by EVs reaching price parity with traditional engines before 2025, at which point people will start buying plug-in cars at a faster rate, offsetting oil’s growth from aviation, shipping and petrochemicals.
By 2050, some 65% of all passenger-vehicle kilometers will be made in electric vehicles. The current fleet of EVs is displacing 1 million barrels of oil a day.
Governments, energy companies and lobbyists have been touting hydrogen as a way to decarbonize vast swathes of the world’s economy.
If that is realized with hydrogen made by machines powered by renewable energy, the world will need a lot more of it. For so-called green hydrogen to provide just under a quarter of energy in 2050, it would require 38% more power than is currently produced globally. Making all that hydrogen with wind and solar farms would require a land area the size of India.
Air travel will continue to be one of the most difficult sectors to decarbonize. Aviation emissions are up 80% since 1990 and they’ll double again by 2050. It’s one of the few sectors, along with shipping, that struggles to electrify. Heavy planes and ships that need to travel long distances would require batteries to significantly improve in order to make them commercially viable for the sector. Sustainable fuel alternatives and ammonia would need more government support than currently expected to make them cost competitive with fossil fuels in the coming decades.