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Global energy demand may well have peaked last year, and the same may be true for carbon dioxide emissions, Norwegian energy consultancy DNV GL said in a new report.
According to the consultancy, over the next three decades, the world’s energy demand will actually decline, and in 2050 demand will be on a level with what it was in 2018. The reasons for this would be the lasting effect of the coronavirus pandemic and significant improvements in energy intensity, the report’s authors, Sverre Alvik and Mark Irvine, wrote.
“The lingering effects of the pandemic will take the wind out of the sails of the world economy for many years – reducing World GDP in 2050 by 9%, relative to pre-pandemic forecasts,” the consultants said. “Even with slower growth, however, by mid-century the world economy will still be twice its size today. In contrast, energy demand will not grow.”
The effects of these trends on oil will be negative as a whole, with natural gas taking over from it as the most used energy source in the next decade. What’s more, investors may start paying even more attention to renewables, thanks to their low operating costs and fast turnaround times. As a result, DNV GL said, spending on renewables will recover more quickly than spending on oil and gas.
As regards emissions, the good news is that they probably peaked last year. The bad news is that further declines in emissions will not be large enough to be in line with the Paris Agreement goals.
“Even with peak emissions behind us, and flat energy demand through to 2050, the energy transition we forecast is still nowhere near fast enough to deliver the Paris ambition of keep global warming well below 2°C above pre-industrial levels,” Alvik and Irvine wrote. “To reach 1.5-degree target, we would need to repeat the decline we’re experiencing in 2020 every year from now on.”
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.