Energy-Importing Countries Are Moving Toward Clean Energy Three Times Faster

A new DNV report shows that energy-importing countries have moved toward clean energy far faster than fossil fuel exporters over the past five years. Growing concerns about energy security, renewable electricity development, batteries, and reducing dependence on imported oil and gas are the main drivers of this shift.

According to Ambassador Arjan, DNV's 10th "Energy Transition Outlook" report shows that geopolitical developments and uncertainty about the security of energy supply have changed the path of the global transition from fossil fuels to clean energy.

Countries that import a significant part of their oil and gas needs are more than ever looking for domestic electricity production and reducing dependence on high-risk fossil fuel markets. This trend has made investments in solar, wind, battery and electricity supply infrastructures in these countries to increase at a faster rate.

According to the DNV report, the share of non-fossil energy in the primary energy composition of the importing regions has increased by 2.2% over the last five years. This figure was only 0.7% in exporting regions.

As such, regions such as China, India, and Europe collectively are moving toward non-fossil energy sources more than three times faster than regions such as the Middle East, North America, and Russia.

Tensions in the Middle East can reduce the demand for oil and gas

Developments related to energy security and possible disruption of supply from important routes such as the Strait of Hormuz have increased the motivation of importing countries to reduce dependence on oil and gas.

On the other hand, exporting countries outside the Middle East are trying to compensate part of the possible market shortage by increasing production. This issue has caused the speed of movement of fossil fuel exporting countries towards energy transition to be slower compared to importers.

In its latest forecast, DNV expects the Middle East to have about 40% of the world's oil production in 2050. This figure was predicted to be 50% in the company's last year's report.

This change shows that the role of the Middle East in the global oil market will continue to be very important, but the region's share of global production may decrease in the coming decades.

Continued conflicts can reduce oil and gas consumption forever

In a separate scenario, DNV has analyzed the impact of continued conflicts in the Middle East until 2030. In this scenario, oil and gas prices will remain relatively high for some time, and importing countries will make more efforts to find domestic alternatives.

According to this analysis, if the conflicts continue, the global demand for oil and gas will be about 4 to 6 percent lower during the conflict period.

Even after the end of this period, global demand for oil and gas is expected to remain between 2% and 5% lower than DNV's baseline forecast.

The reason for this is that some of the changes in energy consumption will not be reversible. If governments, industries and consumers invest more in alternative energies, even after geopolitical tensions subside, they may not fully return to the previous pattern of oil and gas consumption.

Solar, wind and battery power are the main winners

Along with energy security issues, reducing the cost of clean technologies also plays an important role in speeding up the energy transition.

Solar energy and offshore wind farms are now competitive options for electricity generation in many markets. At the same time, the use of batteries is also increasing rapidly.

According to the DNV report, the capacity of installed batteries in the world has increased about 14 times in the last five years.

This trend shows that electricity is becoming the main pillar of the future energy system; Because both renewable energies such as the sun and wind can be converted into electricity, and sectors such as transportation and heating can be gradually electrified.

More expensive technologies lag behind

Despite the rapid growth of clean energy, not all low-carbon technologies are developing at the same rate.

DNV believes that the gap between mature and economical technologies and emerging and more expensive technologies is widening. Solar, wind and battery power are developing faster as costs drop, but technologies that still require extensive government support face more hurdles.

This is especially true of hydrogen and carbon capture and storage technology.

Compared to last year's DNV report, the company's long-term forecast for hydrogen usage has decreased by 29% and for carbon capture and storage by 15%.

Both technologies still have high growth potential, but high cost and concerns about the competitiveness of industries have made their development not as fast as solar and wind energy.

Unlike many other expensive technologies, nuclear power is growing

Nuclear energy is an exception. Although nuclear power plants are expensive to build and there are problems such as supply chains and long project implementation times, DNV predicts that nuclear energy can maintain its current share of world electricity generation.

According to this report, the installed capacity of nuclear power plants will increase by 30% in the next 10 years and will grow by 170% by 2060.

This forecast shows that, along with the development of renewable energy, some countries still consider nuclear energy to provide stable electricity and reduce carbon emissions.

Electrification will accelerate in the next two decades

Sour Alvik, Director of Energy Transition Research at DNV, believes that electricity is becoming the main winner of the energy transition.

According to this company's assessment, the speed of electrification in the next two decades will be more than double that of the last two decades. Solar energy, wind and batteries will play an important role in this evolution.

Fossil fuel importing countries are leading in this direction, but oil and gas exporters are also gradually investing more in electrification due to cost reduction and increased productivity.

Artificial intelligence will increase the world's electricity consumption

Along with electric cars and the development of electricity-based industries, artificial intelligence has also become one of the new factors of increasing electricity demand.

DNV predicts that the electricity consumption of the world's data centers will reach from about 400 terawatt hours in 2025 to about 1100 terawatt hours in 2030; That means it will almost triple.

According to this prediction, in 2031, artificial intelligence will surpass the usual activities of data centers in terms of workload.

However, data centers and artificial intelligence account for only a fraction of the world's electricity demand growth. DNV says that by 2040, growth in electricity consumption from charging electric vehicles and building cooling systems will continue to outpace data centers.

In North America, the growth of data centers is more important, and these centers are expected to absorb about one-third of the increase in electricity generation by 2030.