THE world’s energy system will become substantially cleaner, more affordable, and more reliable over the next three decades, according to quality assurance and risk management group DNV GL.

In its Energy Transition Outlook for 2018, the Norway-based company said rapid energy-efficiency gains would see the world needing less energy from 2035 onwards.

Demand for oil will peak in the 2020s and, in 2026, natural gas will take over as the biggest energy source, the report predicts.

Although the group said new oil fields would be required through to 2040, existing fields will deplete at a faster rate than the decrease in oil demand.

Electricity consumption, meanwhile, will more than double by the middle of the century to meet 45% of world energy demand, and more than two-thirds of this will be generated by solar and wind.

DNV GL said the energy transition is affordable and that global expenditure on energy, as a percentage of world gross domestic product (GDP), will be lower in 2050 than it is today.

The group also expects big shifts in investment with more capital expenditure (capex) going into grids and renewables than into fossil projects from 2029.

However, it added that the rapid transition would not be sufficient to achieve the 2% global temperature target.

“A combination of more energy efficiency, more renewables and more carbon capture and storage (CCS) is needed to meet the ambitions of the Paris Agreement,” it said.

Remi Eriksen, DNV GL president and chief executive, said that despite some notable exceptions, global policy developments tended to favour renewables.

He said: “Last year, new renewable power capacity additions were more than double the new power capacity additions from fossil fuels.

“In capital markets, a reallocation of funds towards cleaner technology is under way.”

Eriksen said they could be “reasonably certain” with some anticipated trends: “One of these has to do with cost, which, like water, constantly seeks lower levels.

“An important feature is cost-learning curves associated with key energy sources – in other words, the rate at which costs decline with each doubling of installed capacity. For renewables and battery storage, this rate is in the high teens, and that will force a profound change in the world’s energy mix in the coming decades.

“But greater changes yet will emanate from advances in energy efficiency. Driven by pervasive electrification, especially of transport, and by ongoing efficiency gains in other sectors, linked in many instances to digitalisation, we expect energy intensity (energy use per unit GDP) to decrease more quickly than the global economy will grow in the long run.

“The net result of that will be a peaking of energy demand worldwide in the 2030s. An energy market becoming smaller in less than two decades from now makes the quest for efficiency so much more strategic and urgent. But the future we forecast is not the future humankind desires.”

Eriksen said the energy future was unlikely to play out exactly in line with the group’s forecasts and, although they had been subject to many sensitivity tests, none significantly changed the main conclusion – that we have a rapid energy transition ahead of us.

He added: “However the future we forecast is not the future humankind desires.

“Even with a peaking of energy demand, and fast uptake of renewables and electric vehicles, the energy transition trajectory is not fast enough for the world to meet the ambitions of the Paris Agreement.”

“Indeed, even if all electricity was generated using renewable sources from this day forward, we would still exceed the 20C carbon budget.

Erikson added: “A mix of solutions is required, including higher uptake of cleaner technology, more carbon capture and further improvement of energy efficiency.

“In those respects, our collective energy future enters the hard-to-forecast realm of political will and policy.”