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Europe’s energy transition ambitions on track

ALTERNATIVES TO GAS FIGURE 1 IMPACT OF THE UKRAINE WAR ON EUROPEAN PRIMARY ENERGY MIX IN 2024
To account for a gradual independence
of Russian gas in the coming few years,
the model reduced Russian gas export
to Europe by 40 per cent as an average
figure for 2022, 80 per cent in 2023, 90
per cent in 2024 and 100 per cent from
2025 onwards.
As illustrated in Figure 1, by 2024,
Europe, including Norway and
UK, manage to increase domestic
production with 550 petajoules (PJ),
while the import, mainly LNG from
Middle East and US, increase with
4,400PJ. That leaves a gas deficit of
1,740PJ. Most of that will be replaced Hydrogen is an(other) important 2053. Predictions point to warming of
by other energy sources, but there will pillar in securing both Europe’s energy 2.3°C above pre-industrial levels by the
also be some net reduction – meaning independence and the sustainability of end of the century.
overall decline in Energy use – due to its energy mix. But its main challenge Motivation to decarbonise is still
GDP decline, higher energy prices and remains affordability. gaining momentum. As demonstrated in
increased energy efficiency. Ease and DNV’s latest Industry Insights report for
means of gas replacement depend on SEEKING CLARITY IN A CRISIS the energy sector, 80 per cent of more
which sector is it used. The emphasis of the research is than 1,000 senior energy professionals
on the consequences of unfolding surveyed believe the pace of the energy
A bigger and faster renewable developments in Ukraine and not on transition is accelerating. Nearly
energy buildout has a much making policy recommendations. The three quarters of respondents (72 per
cent) stated that the energy transition
greatest unknown is the war itself – its
slower initial effect. It will take duration and possible escalation, and presents more commercial opportunities
two years, for example, to make whether strengthened countermeasures than risks. Published one day before war
up 10 per cent of the shortfall bring the export of Russian oil and gas broke out in the Ukraine, The Power of
to Europe to a complete stop.
Optimism: Managing scale and complexity
resulting from an absence of While it is likely that Europe’s as the energy transition accelerates⁵,
Russian gas. However, while there commitment to its Fit for 55 climate concludes that the industry must do
may be a small impact in 2023, plan will endure, public reaction to much more to transition faster to a
4
it becomes more meaningful energy affordability may challenge its deeply decarbonised energy system.
While the results from DNV’s latest
momentum in the short term. There are
with each passing year many other imponderables, like whether energy transition model underpin
the war will give rise to a new cold war, the conclusions presented, there is
While growth and greening of or end in a calmer détente. With all uncertainty in the quantification. Most
electricity are the most important these uncertainties in mind, DNV has notably, an acknowledgement that the
means to decarbonise European energy chosen to model a scenario where the small acceleration of progress towards
use, renewables and nuclear have European energy system discontinues the Paris Agreement in a geographically
low operating costs and are at the top the importation of Russian gas, with zero limited part of the world, comes at the
of a cost merit order in the analysis, Russian gas imported from 2025 onwards. cost of a profound humanitarian crisis.
producing whatever quantities
available. These quantities are not MAINTAINING CLIMATE COMMITMENTS DNV’s annual Energy Transition
sufficient in the short term to cope The need to transition faster and deeply Outlook presents the results from its
with the entire shortfall in gas. That is decarbonise energy systems has turned independent model of the world’s energy
when gas needs to be replaced by coal, on its head as Europe is caught in the system. It covers the period through to
which also has higher costs as a result stranglehold of war. 2050 and forecasts the energy mix, supply
of the war. This switch is temporary, While there is likely to be a small and demand globally. To read the latest
being the fuel of last resort. By 2024, acceleration in Europe’s energy report, visit eto.dnv.com/2021
only six per cent of the reduction in transition with some pace made to
natural gas supply will be taken up by decarbonise and reduce emissions by
coal. Bioenergy will make up for 20 2030 – greenhouse gas emissions will References
per cent of the shortfall in natural gas be 610Mt (or 2.3 per cent) lower in 1. In DNV’s model, Europe comprises all European
supply in 2024. Europe in the period 2022-2030 – the countries, including the Baltics, but excluding
By contrast, a bigger and faster effect globally is minor. However, the Russia, Ukraine, Belarus and Turkey
renewable energy buildout has a much wider analysis and opinion is clear and 2. eto.dnv.com/2021
slower initial effect. It will take two concerted. The world is not on track to 3. www.iea.org/reports/a-10-point-plan-to-cut-
years, for example, to make up 10 per meet the targets of the Paris Agreement. oil-use
cent of the shortfall resulting from an In 2021, DNV modelling forecast a 4. www.consilium.europa.eu/en/policies/green-
absence of Russian gas. However, while most likely future in which the world deal/fit-for-55-the-eu-plan-for-a-green-transition
there may be a small impact in 2023, it exhausts the carbon budget for the 5. www.dnv.com/publications/the-power-of-
becomes more meaningful with each Paris Agreement’s 1.5°C limit on global optimism-managing-scale-and-complexity-as-the-
passing year. warming by 2029, and the 2°C limit by energy-transition-accelerates-219562

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