Energy Transition Depends on Collaboration: DNV GL
Achieving the mandatory cut in global carbon emissions by 2050 will require major collaboration, according to Energy Transition Outlook (ETO) a report published September 8 by Norwegian classification agency DNV GL. It says that decarbonisation is "rising rapidly up the agenda of industry and governments, but not at the pace or depth required to meet the Paris Agreement."
The COP 21 Paris Agreement aims to keep global warming to ‘well below 2 °C' and to limit the increase to 1.5 °C. DNV GL’s forecast shows that the world will exhaust the 1.5 °C carbon budget under the Agreement in 2028 and the 2 °C budget in 2050. But the necessary deep decarbonisation of the world’s energy system is still 15 years away, in DNV GL's outlook, with carbon emissions set to remain stubbornly high until the mid-2030s.
One important part of the solution is for the oil and gas sector and the renewable energy sector to work more closely together, DNV GL's head of oil and gas Liv Hovem told NGW. One area might be hydrogen production, transport and storage, where the same infrastructure can be used to carry a range of methane-hydrogen blends. Green hydrogen will be too expensive to play much of a role, but blue hydrogen for which carbon capture and storage (CCS) is necessary will be cheaper. Hovem expects 50%-70% of Europe's gas to decarbonise by 2050 at today's rate, compared with a target of 80%.
The faster governments can incentivise industry to adopt technology, such as through a competitive carbon price, the quicker the industry can take technology down the cost-learning curve so that it can become independently financially viable. This is how wind and solar have become affordable – companies learn by doing, Hovem told NGW: "Project costs for CCS will fall, as they have with renewables."
CCS is a prohibitively expensive process at the moment unless there is a value chain, she said. But blue hydrogen depends on CCS becoming commercial. That value chain is what companies and governments are trying to work out, so that the first step can be taken, after which it will become easier and cheaper, she said. She said that a higher carbon price and mandatory CCS for power generators are among the levers that would help to get the ball rolling.
“The transition to renewables and efforts to cut carbon intensity will significantly reduce emissions, but they will not deeply decarbonise natural gas, which the world’s energy system will depend upon for years to come. It is only by removing the carbon from natural gas – before or after combustion – that the oil and gas industry can deeply decarbonise, reaching hard-to-abate sectors throughout the value chain,” said Hovem in a press release accompanying the report.
Nevertheless, she remains hopeful that the goals are achievable, despite the historic absence of collaboration globally: "It takes a leap of faith and a lot of actions, but a lot can be done in each geography," she told NGW. "We saw it with solar and wind and electric vehicles in some countries. Big advances can spread."