Global emissions set to fall, but net zero remains decades away

World on track for 2.3°C of warming, as net zero pushed to 2098

According to DNV's latest Energy Transition Outlook, current transition pathways place the world on track for 2.3°C of warming despite significant progress in reducing emissions. The report forecasts that global emissions will fall by 44% from today's levels by 2050, yet this remains insufficient to achieve the ambitions of the Paris Agreement[i].

While net zero remains theoretically achievable, DNV does not expect it to be reached until 2098, with success dependent on large-scale deployment of technologies such as direct air capture that have yet to be proven commercially at scale.

“Our forecast reaches net zero in 2098 resulting in end-century warming of 2.3°C. The 1.5°C budget is exhausted in 2029 and the 2.0°C budget in 2052. Cumulative emissions exceed the 2.0°C carbon budget by 420 Gt. After 2060, cumulative emissions (260 Gt) are 62% of the overshoot.”[ii]

Energy security and supply shocks

The latest research finds that rather than converging on a single energy transition pathway, countries are increasingly pursuing strategies shaped by their energy security priorities. Electrification is being driven by fossil-importing nations such as Europe, China, and India, whose absolute electricity demand is forecast to grow by 62% on average over the coming 20 years. However, fossil exporters are also electrifying due to efficiency gains and cost advantages. In North America, the Middle East, and Russia, electricity is expected to increase by an average of 47% over the same period.

The outlook also finds that longer-term fossil fuel use is being influenced by near-term issues. The report suggests that short-term supply shocks, including the conflict involving Iran, have further weakened the case for oil as a global export commodity, leading to what they suggest will be permanent demand destruction. The longer the conflict persists and energy prices remain elevated, the greater the reduction in long-term oil and gas demand.

Electrification accelerates

Despite the disappointing net-zero timeline, DNV identifies electrification as the single most important driver of long-term decarbonisation. The rate of electrification over the next 20 years will be more than double that of the previous 20 years. In 2005, electricity represented just 16% of global final energy demand. Today, this stands at 21%, and DNV expects it to increase to 33% by 2045.

This is crucial given DNV argues that faster electrification is the most powerful lever available to improve prosperity, strengthen energy security, and accelerate decarbonisation[iii].

Knut Ørbeck-Nilsen, Group President and CEO of DNV, comments: “The defining challenge of the coming decade will be turning the accelerating deployment of renewable generation into economic advantage. That means extracting more value from every renewable megawatt we build.”[iv]

Final energy demand for electricity is expected to double by 2060, with wind and solar expanding ten-fold to deliver 77% of electricity by then. Perhaps unsurprisingly, data centres are expected to play a crucial role in this growth. Global data centre electricity demand is projected to increase to 1,100 TWh in 2030, 2,700 TWh in 2040, and 5,700 TWh in 2060, a fourteen-fold increase from today. As a result, data centres’ share of global electricity consumption increases from 1.2% today to 2.7% in 2030, and 6.8% in 2060. Over the same period, IT power capacity is expected to rise from 82 GW to 860 GW. AI workloads exceed all conventional data centre use from 2031, with inference rather than training accounting for the majority of AI demand, while the regional distribution of demand shifts away from North America throughout the period.

Ørbeck-Nilsen explains: “The data centres that hyperscalers are building illustrate the challenge. Their concentrated demand can strain local networks and force expensive grid upgrades. This makes them unpopular when the costs are borne by local communities, but the real issue is decades of underinvestment in grid infrastructure.”

He adds: “Expanding and modernising the grid is essential with or without data centres. The countries that prosper in an increasingly electrified economy will be those that can attract new electricity-intensive industries while continuing to provide reliable and affordable power for households and businesses alike.”