By 2034, natural gas will overtake oil as the main source of energy, and by 2050 it will be the single largest such source globally, satisfying 27 percent of demand. That's according to the first Energy Transition Outlook by DNV GL, a global quality assurance and risk management services provider for the oil and gas, maritime, and power industries. Gas supply, however, will peak in 2035.
In crude oil, DNV's report forecasts, supply will plateau between 2020 and 2028, after which it will begin declining steadily. That's bad news for pure-play oil producers, especially given that the company's report is conservative, but it would be welcomed by gas suppliers and those like BP and Shell, which are already moving away from oil, investing much more in gas and renewables.
Renewables will be the culprit behind fossil fuels' decline: by 2050, fossil fuels and renewables will have an even share in global energy supply. This will happen thanks to the quickly falling costs of renewable energy installations, especially solar and wind, which means that the transition from fossil fuels to renewables will take place without any significant hikes in annual energy expenditure.
As solar PV and wind capacity doubles, the costs for each of the two energy sources will fall by 18 percent and 16 percent respectively. DNV says this will bring down the overall cost for global energy from the current 5 percent of the world's GDP to less than 3 percent. Related: How Long Can U.S. Refineries Remain Offline?
Oil's biggest enemy is the electric vehicle. Increased adoption of electric cars will be the driver of oil's demise after 2028. By 2022, DNV estimates, EVs will "achieve cost parity" with internal combustion engines as their cost performance will improve at a much faster pace than the cost performance of ICE vehicles. By 2033, 50 percent of new car sales globally will be EVs.
Although these trends sound optimistic, they won't be fast enough to help hit the Paris Agreement target of reducing the rate of global warming to 2.5 degrees Celsius by the end of the century.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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