6
DNV Energy Transition Outlook 2021
Source: UNEP report ‘Are we building back better’, Feb 2021
Note: In a separate report the IEA’s Sustainable Recovery Tracker
estimated that as of Q2 2021, clean energy measures totalled
USD380bn or just 2% of total fiscal support related to COVID-19
Pandemic recovery spending 2020
FIGURE 5
USD 341bn
USD 1,553bn
82%
18%
COVID-19 economic recovery spending is a lost
opportunity
Government interventions, to stop the spread of the virus
and then to restart activity, revealed how effective
national and global actions can be. Similar action and
funding have yet to be applied to the unfolding global
climate crisis.
The trillion of dollars pushed into the global economy
over the past 20 months have mainly been directed
towards emergency measures like wage supplements
and on building back the existing economic and indus-
trial engine. Yet the opportunity for a green reset of
production, transport and economic activity was unique,
and as we wrote in ETO 2020, “The post-COVID-19
stimulus packages hold the potential to alter the speed of
the transition.” With some notable exceptions, particularly
in the EU, governments have not steered recovery
spending towards a decarbonized outcome.
Global CO
2
and GHG emissions fell 6% in 2020 but will rise
again this year. While the emissions trajectory has shifted
down slightly, that is due to lost economic activity, not
energy-system renewal. The overall pace of the transition
has not accelerated, and that is a lost opportunity.
Variability and low power prices are not roadblocks to a
renewable-based power system
The present power system is not set up for variable
renewables as the dominant source of production.
Yet plunging costs, government support for renewable
power buildout, and carbon pricing will ensure that
renewables will eventually dominate power generation.
Over the coming 30 years, USD 12 trillion will be invested
in both building a larger grid and adapting it to the
variability of solar and wind through technical solutions
such as connectivity, storage, and demand response.
The cost of power from solar and wind will continue to
reduce but price cannibalization threatens the investment
case for renewable capacity if cheap power is unused at
times of ample supply. However, indirect electrification
through power-to-X will require massive renewable
electricity production, and along with various storage
solutions, will ensure that surplus power will be used,
and capture prices maintained at a satisfactory level.
Solar PV + storage will make solar more directly competi-
tive with thermal generation, nuclear and hydropower.
We find that one third of all solar production will be built
with direct storage, and by 2050, solar PV + storage will
produce 12% of all grid-connected electricity.
Highlights – New insights
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