- Solar and wind power will grow 15- and 8-fold by 2050
- By 2050, solar will account for almost half of all electricity generated in North America
According to a report by DNV, 12 trillion dollars will be spent in the U.S. and Canada on grid and renewables between now and 2050, compared to 4% now. Capital expenditure (CAPEX) on renewables will overtake fossil fuel CAPEX by 2040 as domestic demand falls by 60% by the middle of the century.
Household energy bills will be divided into two parts by 2050 as they will achieve the rewards of cheaper electricity generated by renewables. To support the growth of renewable energy resources, the grid must expand rapidly, increasing its capacity 2.5 times by 2050.
Policies have already been initiated in the U.S. and Canada to address the lack of grid capacity. However, DNV believes that transmission- and distribution system operators will ultimately be driven by the unprecedented opportunity to capitalise on the vast market for renewable power.
“The cost efficiencies of renewable power are proving irresistible even in the land of big oil,” said Remi Eriksen, Group President and CEO at DNV. “The $12 trillion to be spent on renewables and grid infrastructure in the U.S. and Canada should be viewed as an opportunity to put the region at the heart of technologies essential to the global energy transition, such as hydrogen e-fuels, whilst reducing energy bills for households.”
Boosted by the Inflation Reduction Act (IRA), solar and wind power will grow 15- and 8-fold by 2050. Investments in hydrogen, carbon capture and storage (CCS), and direct air capture (DAC) will all be front-loaded in the 2030s, which otherwise would have matured much more slowly. Notably, IRA has changed DNV’s forecast of hydrogen share of the energy mix in North America from 5 per cent to 9 per cent by 2050, with green hydrogen from dedicated renewables overtaking blue hydrogen by the mid-2030s.
Currently, fossil fuels account for around 80% of energy supply in the U.S. and Canada, but this will drop to less than 50% by 2050. Coal production in the region will drop 85% by midcentury as it struggles to compete with cheaper forms of electricity production such as wind and solar as well as natural gas. The shift to electric vehicles will be the main reason for a reduction in domestic oil demand, with consumption forecast to decline by 75% by midcentury. Oil exports, though, will triple. Natural gas demand is approaching its peak and consumption will almost halve by 2050 as power generation becomes dominated by renewables, but also here export remains stable.
Electrification will double by 2050 and account for 41% of the region’s overall energy demand driven by the emergence of new demand categories such as electrified road transport, electrolysis for hydrogen production, and the use of heat pumps in buildings and manufacturing. Solar will become the largest producer of electricity by the mid-2030s, supported by favorable economics and enhanced policy support in the region. By 2050, solar will account for almost half of all electricity generated in North America. Although currently stymied by inflationary and supply chain pressures, continued policy support for wind will ensure wind accounts for 35% of the region’s electricity supply by midcentury.
“The progressive policies of the IRA are accelerating the transition and demonstrate a pathway that governments can take to hasten the energy transition. However, the U.S. and Canada, like the rest of the world, still need to do more to reach net zero by 2050,” added Eriksen.
While North America’s policies are indeed pushing for an energy transition, achieving net-zero CO2 emissions by 2050 in the U.S. and Canada appears challenging. Projections suggest a 75% reduction in CO2 emissions by 2050, with continued reliance on fossil fuels like natural gas and persistent emissions from hard-to-electrify sectors like cement production. According to DNV’s Pathway to Net Zero scenario, the global Paris Agreement targets necessitated North America reaching net-zero emissions by the early 2040s. This would demand accelerated deployment of carbon capture and storage (CCS) and nearly six times the currently anticipated amount of direct air capture (DAC). Such an ambitious goal would require a level of American commitment akin to the mobilisation efforts that ushered in the atomic and space ages, reflecting the urgency of addressing climate change.
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