New report: The world’s energy consumption will decline from 2035 – largely due to increased electrification

State of Green
By State of Green, September 20, 2018

According to the report ‘Energy Transition Outlook 2018’, the world will use less energy from the mid-2030s as electrification will play a bigger role in the changing energy mix. Especially electric cars will have a significant influence on this transition.

The Norwegian consulting company DNV GL recently published the report ‘Energy Transition Outlook 2018’, in which they look at the global energy consumption and analyse the future development of the energy market.

According to DNV GL, the global energy consumption will peak in 2035 – and afterwards, decline. The reason for this development is energy efficiency, which is largely due to the increased electrification of society.

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Electric cars and other electrically powered means of transportation play a major part of this electrification. According to DNV GL, the sale of electric cars will take off in a few years.

China are front-runners in terms of electric busses

“The reason why we believe the demand for energy will decrease is due to the energy efficiency that will be achieved through electrification. For example, by using LED-bulbs instead of paraffin lamps, which are still widely used in India; by using electricity to prepare our food and not a traditional stove; and by driving electric cars instead of diesel-powered cars”, said Liv Hovem, CEO of Oil and Gas at DNV GL.

In terms of the latter, DNV GL points to their discovery of how far China has come in terms of electric busses. With hundreds of thousands of busses already up and running and the development enhancing rapidly.

“This development makes it visible to us that the electrification is already taking place in public transportation, at least on shorter distances. Therefore, we believe more in the electrification of public transport than we did just a year ago. It will go faster”, said Liv Hovem.

The report concludes that before 2050, electric vehicles, combined with a number of other improvements, will have contributed to a significantly lower need for energy within the transportation sector than today. Today, the world utilises around 27 percent of the total amount of energy on transportation. In 2050, it is expected that this number will be reduced to around 20 percent.

Electric cars will represent 50 percent of all new cars in Europe in 2027

Liv Hovem points out, that DNV GL is a bit more optimistic than others in terms of how fast the transition to electrified transportation will go. At the same time, she points out, that it is easy to view the situation from only a European point of view.

“The increased electrification comes down to people actually switching from diesel or petrol to electric cars. In Europe, people usually have their cars for many years, so this transition is going to take some time. However, if you, for example, look at China, many people are buying their first car and going directly to an electric motor. So here the transition will go a lot quicker,” she said.

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DNV GL’s projections indicate that half of all cars sold in Europe in 2027 will be electric cars. In China, India and North America, this will happen only a few years later – in 2032.

The reason that DNV GL believes it will go this quick lies in their point of departure for the entire report, namely models based on the assumption that the development will be controlled by cost. They believe that the price of an electric car will be low enough for people to choose it over a diesel car.

Finally, Liv Hovem emphasises legislative changes such as diesel bans in a number of major cities. This will also cause more people to choose electric cars. When more people choose an electric car, prices will go down. DNV GL believes that the lifetime costs of an electric car and a diesel car will cross each other by 2024. After that, it will be cheaper to produce electric cars, which will accelerate the proportion of electric cars significantly, DNV GL estimates.

However, despite increased electrification, both in the transport sector and elsewhere, with a subsequent drop in energy demand, the consulting company does not believe that the world will reach the Paris Agreement’s two-degree target. This is in line with the conclusions of most similar reports.

Source: Ingeniøren (in Danish)

Download the report here

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