Changes to the energy system have reached a critical juncture and will continue to accelerate over the next decade, but several serious risks could block progress, according to a new EY report.
According to the report, an estimated $4.1 trillion in annual investment in low-carbon transition technologies and energy-generating infrastructure will be needed by 2050 – four times more than current levels.
The EY study considers four levers for the changes to come in energy: technological progress, supply of raw materials, consumer involvement and government policy – and their impact on 52 technologies, highlighting the complexity and diversity of the changes to come.
According to the authors, there is not a single energy transition, but several, taking place at different rates and in different ways around the world. The transition to renewable energy sources is happening at a much faster pace than anticipated.
The EY report predicts that, globally, green energy will dominate electricity production by 2038 and account for 62% of the energy mix by 2050. However, the current speed of change is not yet sufficient to keep global warming at bay to the 1.5 degree Celsius target and further acceleration is required.
Fossil fuel use will peak by 2030. Hydrocarbons are expected to continue to be part of the energy mix for a longer period than anticipated, particularly due to sectors where their use is difficult to phase out. Therefore, policies are needed to improve the attractiveness of low-carbon alternatives for investors. And if oil and natural gas will exist for a longer time, it will be essential to decarbonize these sectors.
“EY’s latest Energy Transition Report highlights the accelerating global shift to green energy, estimating that it will dominate electricity production by 2038 and account for 62% of the energy mix by 2050. While noting the potential risks, the report highlights the need urgent global annual investment of USD 4.1 trillion by 2050 – four times more than current levels.The call to action also extends to regions such as Romania, underscoring the importance of overcoming challenges related to the decarbonisation of the industrial sector, for a transition from success and inclusive towards green energy,” said Mihai Drăghici, Partner, Consultancy, EY Romania.
Energy transitions are reshaping energy systems around the world, but at different speeds and in different ways. The EY study predicts that change will accelerate over the next decade and beyond, but only if organizations seize the momentum now.