Policy changes in US will have marginal impact on global energy transition

Policy changes in the United States introduced by the administration of President Donald Trump will have only a marginal impact on the global energy transition, according to the latest Energy Transition Outlook, produced by DNV.

Norwegian consulting firm DNV pointed out in a report that energy use by artificial intelligence may seem alarming, but that it is projected to stay below booming sectors like electric vehicle (EV) charging and cooling of buildings.

“DNV’s annual Energy Transition Outlook has consistently forecast a shift from today’s 80/20 fossil/non-fossil primary energy mix to a 50/50 mix by 2050. That is still our prediction this year. Although some aspects of the transition are supercharged and progressing rapidly, other aspects have hit turbulence and are delayed. This leads to a marginally slower transition than our forecast last year,” CEO Remi Eriksen said.

According to the report, in the US, fossil fuel promotion and the reversal of clean energy support policies are slowing the nation’s transition.

However, China continues to set renewables buildout records with 390 GW of solar PV (56% share of new global capacity) and 86 GW of wind (60% share) expected to be installed this year. The country is also fueling the transition in the rest of the world with its cleantech exports.

In the meantime, Europe is seeking to balance climate action with competitiveness, the report reads.

The continent is having a slow success with harder-to-decarbonize sectors, but renewable energy buildout remains relatively strong.

In the rest of the world, most countries are embracing competitive Chinese technologies, with year-on-year growth in installations at around 25%, data showed.

Eriksen said cheap renewable electrons stored when necessary in ever-cheaper batteries are already an unstoppable force.

“We forecast that solar – both with and without storage – and wind will be 32% of the global power mix by 2030. We expect a resurgence in offshore wind by 2030, such that variable renewables will provide more than 50% of all electricity by 2040,” he stated.

Solar power is 10% of all power produced worldwide today, and DNV projected it will be 20% in 2029 and 40% in 2045. Renewables would reach 65% in the global electricity mix by 2040, the firm added.

AI’s energy demand would be lowered by efficiency effects

According to Eriksen, soaring power demand from AI data centers is placing additional strain on already congested grids, particularly in North America.

DNV ‘s analysis finds that AI’s energy demand growth is likely to become more linear over time, outpaced, for instance, by EV charging and cooling demand, even as the cognitive services of AI expand exponentially. The main reason is growing efficiency.

AI’s energy use is forecasted at only 3% of global electricity by 2040. Data center energy use will quintuple by 2040, equalling 5% of all global electricity. AI’s share would be 3%, with the remaining 2% for general purpose data centers.

The report highlighted large regional variations – AI is the biggest driver of electricity consumption growth in North America, compared to EV charging in Europe and EVs and cooling in China and India.

For the first time, this year’s analysis extends to 2060

The report noted that this year, the world reached the milestone of more than 50 million EVs on the road. Most of them, 60%, are in China, with Europe at 21%, and North America at 13%.

The point of inflection — EVs at 50% of global new passenger vehicle sales — will be reached in 2032, the report projected.

For the first time, this year’s analysis extends to 2060 to reflect the continued transformation of the energy system after 2050. The report recalled that it is now widely acknowledged that the world will not achieve net zero emissions by 2050, meaning warming would exceed 1.5 degrees Celsius.

A decarbonization of energy mix is unstoppable but too slow, setting up grave risks for future generations, Eriksen concluded.