- Green energy will dominate global electricity generation by 2038, and make up 62% of the power mix by 2050
- Hydrocarbons will remain part of the energy mix for longer, so will need to decarbonize
- Annual investments of US$4.1 trillion in low-carbon transition technologies will be needed by 2050 – four times current levels
LONDON, Dec. 5, 2023 /PRNewswire/ -- Changes to the energy system have reached critical momentum and will continue to accelerate over the next decade, but several handbrakes pose a serious risk and could stall progress, according to the new EY report, If every energy transition is different, which course will accelerate yours?
EY modeling of four key levers – technology advancement, commodity supply, consumer engagement, and government policy – and their impact on 52 technologies, highlights the complexity and diversity of the changes ahead. There is not one energy transition, but multiple, unfolding at different paces and in different ways across the world. The transition to renewables is also happening at a much faster pace than anticipated; the EY report predicts that, globally, green energy will dominate electricity generation by 2038, and make up 62% of the power mix by 2050. However, the current speed of change is still not enough to keep global warming to the 1.5 degree celsius target and further acceleration is required.
Fossil fuel use will peak around the end of the decade; however, hydrocarbons will remain part of the energy mix for longer than anticipated as a result of hard-to-abate sectors. Policies that improve the investor appeal of low-carbon alternatives are therefore required. And with oil and gas around for longer, it will be essential to decarbonize it.
Serge Colle, EY Global Energy & Resources Leader, says:
"While change is accelerating, it could easily stall due to the sheer complexity of the challenge ahead. What we've achieved so far in building out renewables and electrifying transport has been relatively simple compared with what comes next. Decarbonizing a largely hydrocarbon-powered industrial sector is far more difficult, and our ability to tackle it will determine the ultimate success of the world's transition to clean energy. Every market will need to activate a range of accelerators to overcome the inertia of the status quo, keep up the momentum of change, and meet climate targets."
The EY report forecasts that an estimated US$4.1 trillion of annual investment in low-carbon transition technologies and enabling energy infrastructure will be needed by 2050 – four times current levels.
Andy Brogan, EY-Parthenon Global Energy Leader, says:
"We're trying to rewire the global economy to meet an urgent environmental imperative and we can't risk delay. Current returns don't adequately incentivize investment where it's needed, which makes it challenging for energy and resources companies to secure and allocate capital with confidence. To go faster, we need to release the handbrakes and ensure the economic fundamentals for decarbonization are in place, whilst protecting the supply of affordable energy."
To view the eight implications of a changing energy system, the handbrakes and the opportunities for energy and resources companies, visit ey.com/energy.