Norwegian oil major Equinor sees the share of electricity in total energy consumption worldwide rising from about 20% today to between 52% and 85% in 2050 – depending on how ambitious global energy transition efforts are.

In parallel, power generation by wind and solar would increase from 7% of global electricity production in 2018 to between 32% and 52% in 2050.

Equinor — in its ‘Energy Perspectives 2021’, released on Thursday — takes into account long-term energy markets as well as Covid-19 recovery policies around the world, and for the first time looks more closely at how hydrogen can play a role in decarbonisation.

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“Equinor has a robust strategy to face a long-term decline in oil and gas demand, and we are developing a portfolio that can also create value in a net zero future,” said its chief economist Eirik Waerness.

Rebalance, Reform, Rivalry

“Profitable oil and gas production [is] necessary to fund growth in renewables, CCS [carbon capture and storage] and hydrogen, all of which will be needed in a low-carbon future. In this future there will be plenty of new business opportunities for us.”

As in its previous outlook, Equinor outlines three different scenarios — Rebalance, Reform and Rivalry. Only under the Rebalance scenario would the world would achieve the goals of the Paris climate agreement.

In Rebalance, total energy demand would have peaked already in 2019 due to immediate and co-ordinated tightening of climate policies, as well as behavioural changes on the back of the Covid-19 recovery, while under Reform and Rivalry, it would have peaks in 2040 and 2045, respectively.

Under the Rebalance scenario, electricity in 2050 would account for 44% of global energy consumption, and wind and solar combined would make up 52% of electricity output.

Raft of technologies needed

But Equinor argues that wind and solar capacities alone will not be enough to meet future demand due to the intermittency of their generation.

The report suggests other technologies with dispatchable power generation and no or low carbon dioxide footprints — such as hydroelectric power (including pumped hydro storage), natural gas linked to post combustion carbon capture, and nuclear power — will be needed.

As an addition to Rebalance, Equinor also carried out a hydrogen sensitivity study, but acknowledges that projections for its future use vary widely, making a precise outlook difficult.

“In the reimaging of Rebalance, slow initial growth is assumed in the global H2 market, with 53 million tonnes of demand by 2030,” the report reads.

“This accelerates to 385 million tonnes by 2050, with China accounting for 28% of demand.”

Blue hydrogen

Equinor assumes that hydrogen will take market share from fossil fuels, primarily gas. But the oil and gas major unsurprisingly also expects that natural gas at first will receive a certain boost from blue hydrogen production (H2 made from natural gas linked to CCS).

The report sees blue hydrogen dominating until the mid-2030s, while green hydrogen (made through electrolysis from renewable energy) gradually increases and from about the mid-2040s on will be produced in larger volumes than blue H2.

While under the normal Rebalance scenario, global electricity demand is seen growing by 90% between 2018 and 2050, that share increases to 133% over the same period if hydrogen use is included.

“This gives an additional demand compared with Rebalance of about 11,500 terawatt hours (TWh), or 1.6 times China’s 2018 electricity use,” the report states.

Equinor in this calculation assumes that all green hydrogen for energy purposes will be produced from renewable energies. Wind generation in the hydrogen study needs to supply some 4800TWh in 2050, close to 42% more compared with Rebalance.

Policies in spotlight

While concentrating on the Rebalance scenario, the report acknowledges that global energy policies currently are not sufficient or adequate to reach it, and therefore also points to a Reform and a Rivalry scenario.

Under the Reform scenario, there will be a continued tightening of climate policies in line with the Paris Agreement, but it will not be enough to actually reach the climate targets. Under such a scenario, developed countries are the main drivers of development, but there is limited success for technologies such as CCS or new energy carriers like hydrogen.

Under the Rivalry scenario, climate policy is not sufficiently prioritised and the energy transition thus will not gain enough momentum as it is only driven by market forces. It would be the least sustainable outlook.

Paradoxically, Equinor admits that, under the Rivalry scenario, oil demand would be the highest.

The company sees its Energy Perspectives as its contribution to a fact-based dialogue.

“An energy transition is a matter of urgency. The discussions on our common energy future, where it might go, and where it should go, have never been more relevant, particularly during the Covid-19 crisis,” Waerness said.

“Globally co-ordinated efforts from governments, as well as innovation from industries and changing behaviour from consumers are required to reach targets.”

(This article first appeared in Upstream's sister renewable energy publication Recharge on 10 June, 2021.)