2024 will go down as the year of peak energy emissions, according to DNV’s Energy Transition Outlook 2024, released on Oct 9.
According to the Norway-headquartered quality assurance and risk management company, energy-related emissions are “at the cusp of a prolonged period of decline” for the first time since the industrial revolution.
“Emissions are set to almost halve by 2050, but this is a long way short of requirements of the Paris Agreement,” says DNV in its 261-page report. Instead of the Paris Agreement’s goal to keep global temperature rise below 1.5°C from pre-industrial levels, DNV’s latest outlook forecasts that the planet will warm by 2.2°C by the end of the century.
That said, DNV believes emissions could peak this year due to the “plunging” costs of solar and batteries, which are accelerating the exit of coal from the energy mix and stunting the growth of oil. In the coming decade, the Indian subcontinent is the only region with expected growth in power emissions, according to DNV.
“Annual solar installations increased 80% last year as it beat coal on cost in many regions. Cheaper batteries, which dropped 14% in cost last year, are also making the 24-hour delivery of solar power and electric vehicles more affordable,” reads DNV’s report. “The uptake of oil was limited as electrical vehicles sales grew by 50%. In China, where both of these trends were especially pronounced, peak gasoline is now in the past.”
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China dominant
China is dominating much of the global action on decarbonisation at present, particularly in the production and export of clean technology, says DNV. The world’s second-largest economy accounted for 58% of global solar installations and 63% of new electrical vehicle (EV) purchases last year.
While China remains the world’s largest consumer of coal and emitter of carbon dioxide (CO2), its dependence on fossil fuels is set to fall rapidly as it continues to install solar and wind, says DNV. “China is the dominating exporter of green technologies although international tariffs are making their goods more expensive in some territories.”
See also: COP29 ends with deal on climate finance after bitter fight
Globally, EV sales increased 50% last year and are on track towards a 50% global passenger EV sales share in 2031, says DNV. “Already in 2025, we expect EVs to take a 25% share of new passenger vehicles sales globally.”
Solar PV and batteries are driving the energy transition, growing even faster than previously forecast, says Remi Eriksen, group president and CEO of DNV. “Emissions peaking is a milestone for humanity. But we must now focus on how quickly emissions decline and use the available tools to accelerate the energy transition.”
Stubborn sectors
The success of solar and batteries is not replicated in the hard-to-abate sectors, where essential technologies are scaling slowly.
Eriksen says the forecast emissions decline is “very far” from the trajectory required to meet the Paris Agreement targets. “In particular, the hard-to-electrify sectors need a renewed policy push.”
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The slow scaling of decarbonisation solutions in “hard-to-electrify” sectors like heavy industry, maritime and aviation is an ongoing challenge, says DNV. “Moreover, we expect a strong increase in global aviation travel demand.”
Overall, DNV expects renewables to grow 2.2 times from now to 2030, well behind the COP28 goal of tripling to 2030.
Within electricity, offshore wind — down 18% in 2050 versus last year’s forecast — and small modular nuclear reactors are running behind earlier promises, says DNV.
That said, wind remains an important driver of the energy transition, contributing to 28% of electricity generation by 2050, says DNV. In the same timeframe, offshore wind will experience a 12% annual growth rate although the current headwinds impacting the industry are weighing on growth.
Despite the promise that hydrogen holds, DNV has revised the long-term forecast for hydrogen and its derivatives down by 20% — from 5% to 4% of final energy demand in 2050 — compared to last year’s forecast.
Carbon capture and storage (CCS) is gaining some momentum, but overall volumes remain “modest”, says DNV, Although DNV has revised up its CCS forecast, only 2% of global emissions will be captured by CCS in 2040 and 6% in 2050. A global carbon price would accelerate the uptake of these technologies, adds the firm.
Near-term energy efficiency improvements are also relatively slow, says DNV. Global energy intensity is expected to improve 2% per year to 2030, only half of the 4% per year target from COP28.
Fossil fuel reliance
Southeast Asia’s fossil fuel dependency is “difficult to shake”, says DNV, and this is a “major roadblock” in the region’s energy transition.
Over 80% of Southeast Asia’s primary energy consumption originates from fossil fuels today. This proportion is expected to decrease to around 58% in 2050, which is higher than all other low- and middle-income regions, except for the oil-and-gas-dominant regions of the Middle East, North Africa and North East Eurasia, according to DNV.
That said, there are plans to decrease reliance on fossil fuels across the region. Indonesia, Vietnam, the Philippines, Singapore and Brunei all aim to phase out coal power in the 2040s with a range of strategies.
In Singapore, hydrogen and hydrogen-derived fuels are seen as key technologies for reducing reliance on fossil fuels, especially in the maritime sector as Singapore is home to one of the world’s busiest ports. The Singapore government announced in 2022 that the country aims to supply up to 50% of its power needs with hydrogen by 2050.
“However, policies to support fossil-fuel phase-outs are fragmented and lack comprehensive coverage and political will,” says DNV of the region.
Southeast Asia’s coal plants are some of the youngest in the world, with an average age under 15 years. DNV cites a 2024 study, which claims phasing out the region’s coal plants early could lead to additional costs exceeding US$270 billion.
DNV says early phase-out of coal would be “particularly impactful” in Indonesia, one of the world's biggest coal producers. “Phasing out fossil fuel requires targeted policies, such as carbon-pricing mechanisms in Indonesia. Additionally, policy initiatives to support vulnerable fossil-reliant workers and communities should be considered to achieve equitable energy transition outcomes across the region.”
Asean Power Grid
Cooperation within the region is on the agenda, notes DNV. The Asean Power Grid (APG) aims to connect the power systems of member countries with the goal of sharing renewable energy, thus reducing reliance on fossil fuels in electricity generation.
Existing pilot initiatives like the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) — which transfers hydropower electricity from Laos to Singapore via Thailand and Malaysia — can inform larger, multilateral projects, such as the APG, says DNV.
“Cross-border electricity trade comes with economic and geopolitical benefits, strengthening the region’s security and integration in the global energy supply chain,” adds the firm.
Market forces ‘insufficient’
Market forces alone cannot achieve the Paris Agreement's goal of keeping the temperature rise well below 2°C, says DNV. “While markets are often effective in promoting renewable electricity and EV uptake, they fall short in addressing costly and complex technological measures in other sectors.”
In fact, market forces are distorted because externalities are not priced correctly, says DNV. “Fossil subsidies in the forms of ‘contracts’ to citizens and producer support are widespread and block decarbonisation. A cost on carbon is needed to achieve sufficiently rapid emissions reductions.”
While the US follows an incentive-based approach to promote renewables and clean energy uptake, the lack of disincentives results in persistently high emissions, says DNV.
Meanwhile, China’s carbon pricing is “evolving in scope” but started late and remains at a low level compared with Europe.
In comparison, the “virtual disappearance” of emissions in Europe by 2050 is due to the “comprehensiveness” of its decarbonisation policies, says DNV, combining incentives for renewables uptake with disincentives, including a high carbon price, for continued unabated fossil use.
Singapore has had a carbon tax since 2019 that covers 80% of national emissions, says DNV, calling the republic a “green economy policy pioneer of the region”.
The carbon tax is levied on facilities that directly emit at least 25,000 tonnes of carbon dioxide equivalent (tCO2e) of greenhouse gas emissions annually. Singapore's carbon tax was raised to $25 per tonne of carbon dioxide equivalent (tCO2e) in 2024. It will be raised to $45/tCO2e in 2026 and 2027, with a view of reaching $50–80/ tCO2e by 2030.
This is above the regional average carbon price level, which is currently expected to reach US$10/tCO2e in 2030, US$30/tCO2e in 2040 and US$50/tCO2e in 2050, according to DNV.
Shifting energy mix
Despite these challenges, the peaking of emissions is a sign that the energy transition is progressing, says DNV. “The energy mix is moving from a roughly 80/20 mix in favour of fossil fuels today, to one which is split equally between fossil and non-fossil fuels by 2050. In the same timeframe, electricity use will double, which is also the driver of energy demand only increasing 10%.”
Eriksen says there is a “growing mismatch” between short-term geopolitical and economic priorities versus the need to accelerate the energy transition. “There is a compelling green dividend on offer which should give policymakers the courage to not only double down on renewable technologies, but to tackle the expensive and difficult hard-to-electrify sectors with firm resolve.”
Infographics: DNV
