Energy Transition Outlook 2021

In this publication, which is a first from DNV, we draw on our ETO model to answer the question: “How can the world achieve 1.5°C within the bounds of techno-economic and political feasibility?”

The short answer is that the world has sufficient technological capability and economic capacity to reach the 1.5°C target. Electricity, powered by wind and solar, will be the dominant technology. Economically, the world will have to spend an additional amount close to 1% of GDP on energy infrastructure. That is significant, but not a roadblock. In the short term, there will be relatively high costs due to incentives and taxes needed to put immature technologies in motion, like we saw for solar PV and wind 25 years ago. The critical constraints — what the world lacks — are time and tough policy. Time-wise, we have to act now, at the beginning of the “decade of action”, and at speed and scale to avoid the mounting costs of inaction.

Policy-wise, tough mandates and bans lie ahead, as well as creative regulations that nudge desired behavioural changes like flying less, using more electricity for road transport, and actively practicing circularity.

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