Energy-importing countries are scaling clean energy three times faster than exporters, as governments seek to reduce reliance on imported oil and gas by expanding domestically produced power, according to the tenth edition of DNV’s Energy Transition Outlook.
The disruption to energy supply through the Strait of Hormuz is reinforcing governments’ determination to reduce dependence on imported oil and gas. At the same time, exporting countries outside the Middle East are increasing production to compensate for disrupted supplies, whilst their own decarbonization journeys are increasingly slower compared to the rest of the world.
DNV's tenth edition of the Energy Transition Outlook (Click here to access the report)
As a result, the share of non-fossil energy in the primary energy mix of importing regions increased by 2.2 percentage points over the past five years, compared with just 0.7 percentage points in exporting regions. This means China, India, and Europe have collectively shifted towards non-fossil energy more than three times as fast as the Middle East, North America, and Russia.
Prolonged conflict would permanently reduce fossil-fuel demand
The disruption to the Strait of Hormuz has strengthened incentives for importing countries to diversify supply and reduce their exposure to oil and gas, increasing the long-term risks facing fossil-fuel exporters. DNV’s new forecast sees the Middle East supplying around 40% of global oil production in 2050, compared with 50% in last year’s Outlook.
An additional DNV sensitivity analysis examines the impact of the Middle East conflict continuing until 2030, with oil and gas prices remaining moderately elevated during that period. Under this scenario, global oil and gas demand would be 4–6% lower while the conflict persists. Demand would remain 2–5% below DNV’s main forecast for the remainder of the forecast period, indicating permanent demand destruction as consumers and governments accelerate the shift to alternative energy sources.
'Energy security is redrawing the map of the energy transition,' said Ditlev Engel, CEO - Energy Systems at DNV. 'Importing regions are accelerating electrification, renewables, and storage to reduce their exposure to the most insecure fossil-fuel markets. Exporters, meanwhile, are responding to today’s shortages by increasing investments and production. The result is a widening divide in the speed and direction of the transition.
While the geopolitical landscape is becoming more complex, there should be no doubt that the energy transition is happening, and that it is already large in scale. However, we must continue to embrace and accelerate it, as everyone is starting to recognize that energy is now part of our critical infrastructure and must be prioritized accordingly'
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Source: DNV
