Energy transition needs to pick up the pace to counter uncertainty over net zero targets

With two vastly different scenarios, Norway’s state-owned energy giant Equinor has painted the picture of the global energy markets’ future, spotlighting the divide between the current speed of the energy transition undertaking and the acceleration needed to tick off all the items on the global decarbonization list to usher in a net zero world.

As the energy trilemma continues to play out in the background, Equinor points out that sustainability requires a balanced approach, however, the speed and scale of the energy transition have to increase to reach the 1.5-degree ambition by 2050.

Within its ‘Energy Perspectives 2024’ analysis, the Norwegian giant uses two scenarios called Walls and Bridges to highlight the contrast between the current pace of the energy transition, which is portrayed in Walls, and the swift, radical changes needed to meet the 1.5°C goal in the Paris Agreement, illustrated by the Bridges scenario.

While the report, which shows possible future paths for the global energy system based on the choices the world makes, brings an update to the Walls scenario from the 2023 outlook, it maintains the benchmark Bridges scenario.

Anders Opedal, President and CEO of Equinor, commented: “Energy Perspectives provides important insight into the outcome space we have to consider when balancing our strategic priorities in the energy transition.”

This year may bring changes to global energy policies, as almost half of the world’s population is going to the polls. The elections held so far along with the upcoming ones serve to demonstrate some of the key trends shaping world politics such as geopolitical competition, economic nationalism, and political polarization.

Following years of a tight energy supply situation, particularly in Europe, Equinor claims that things are looking better, as energy supply security and affordability have taken the front seat, and even contributed to speeding up the transition in some sectors. Another change of pace may be on the cards, as the results of the ongoing and incoming elections will have an impact on global energy markets and the progress of the energy transition.

Eirik Wærness, Equinor’s Chief Economist, underlined: “Despite some region’s adamant push on energy transition efforts, both through stimulus and regulation, the global development over the past few years has made the challenges of delivering on the 1.5°C ambition larger.”

With both industrialized and emerging economies seeing the need to prioritize differently coming out of an energy crisis while managing a higher level of geopolitical conflict, these increased levels of geopolitical conflict and outright wars have made the energy transition more fragmented. As a result, the Norwegian energy heavyweight underlines that positive developments are in many cases offset by negative ones.

“Despite short-term setbacks, the longer-term signals clearly point in the direction of significant energy transition and decarbonisation, but the walls have become thicker and the bridges narrower, and that adds to the uncertainty of the speed and scale of decarbonisation towards 2050 and beyond,” concluded Wærness.

Equinor is pursuing the development of multiple projects. Recently, the Norwegian giant confirmed the departure of its new FPSO from Aker Solutions’ Stord yard. This vessel will move to an oil project in the Barents Sea. A few days earlier, the firm also disclosed plans to invest over $1 billion into bolstering gas infrastructure in the Troll West area.