Peak energy emissions: A historic moment overshadowed by the endurance of fossil fuels

This year is likely to be the year of peak energy emissions. Since the coke-fired blast furnaces of the Industrial Revolution, energy emissions have been on an upward trend. Yet the build-out of renewables has reached such a level that emissions are peaking.

Energy-related emissions are on the cusp of a prolonged period of decline for the first time since the Industrial Revolution. It is a historic moment.

But the transition towards a sustainable energy future remains alarmingly slow. In other words, the energy transition is on the right track — but it is traveling at the wrong speed.

This year’s edition of DNV’s Energy Transition Outlook helps us understand how we reached peak energy emissions, but also the barriers to faster decarbonization.

2024 is poised to be a pivotal year, marking the peak of global energy-related CO2 emissions. DNV’s forecast indicates that by 2050, global CO2 emissions will be halved from current levels, but this trajectory falls significant short of the targets set by the Paris Agreement, requiring us to reach net zero in 2050. The consequential anticipated warming of 2.2°C by the end of the century therefore also starkly contrasts with the goal of limiting temperature rise to well below 2°C.

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One of the bright spots in our energy transition is the rapid growth of solar photovoltaic (PV) installations and battery technology. In 2023, global solar installations surged by 80%, reaching 400 GW, meeting the large share of the increasing electricity demand and curbing coal power growth. On top of this, the plummeting costs of batteries, which fell by 14% last year, are making 24-hour solar+storage power more accessible and affordable. The proliferation of electric vehicles (EVs), particularly in China, is also contributing to a decline in petroleum demand, signaling a shift towards cleaner energy sources.

Despite these advancements, the transition faces significant hurdles in decarbonizing hard-to-electrify sectors such as heavy industry, maritime and aviation. Technologies like hydrogen and carbon capture and storage (CCS) are essential for achieving a Paris Agreement-aligned transition. However, these technologies are struggling to scale due to high costs and market uncertainties. DNV’s long-term forecast for hydrogen and its derivatives has been revised down by 20% since last year, highlighting the need for stronger policy support and meaningful carbon pricing to drive adoption. We see that in sectors where hydrogen competes with electricity, it is losing out. But in sectors where electricity is not an option, the transition is further delayed.

Market forces alone are insufficient to achieve the necessary emissions reductions. While they have been effective in promoting renewable electricity and EV uptake, they fall short in addressing the complexities of other sectors. Carbon emissions are not sufficiently priced and fossil fuel subsidies continue to distort the market. Europe’s comprehensive decarbonization policies, which combine incentives for renewables with a price on carbon disincentivizing emissions, serve as a model for other regions.

The transition is further complicated by national and economic security priorities, which are leading to the construction of new and alternative supply chains with more national control of resources and manufacturing. These priorities will often increase costs and divert resources away from clean energy investments. High borrowing costs for all stakeholders, including households, have also acted as a barrier. Policymakers are having to balance these competing priorities.

The 1.5°C target can only be achieved with a significant temporary temperature overshoot. But we cannot give up, and the importance of achieving the ‘well below 2°C’ ambition of the Paris Agreement is more important than ever. It should inspire us towards continued efforts; even more so now that peak energy emissions finally looks to be achieved.