OIL and gas are to be “crucial” components of world energy in the future, although their importance will slip as renewable sources become more widespread.

In its first Energy Transition Outlook, classification, services and risk management group DNV-GL predicted the energy mix until 2050, which shows that fossil sources will account for 44 per cent of the world’s energy supply, compared to 53 per cent today.

Elisabeth Tørstad, CEO of the group’s oil and gas division, said energy demand would plateau after 2030 due to improved efficiency. Gas will become the world’s largest single source of energy by 2035, and will also play “a key role alongside renewables in helping to meet future, lower-carbon, energy requirements”.

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Tørstad said: “We have seen impressive and important innovative efforts across the energy industry, resulting in cost saving and efficiency gains.

“The oil and gas industry must continue on a path of strict cost control to stay relevant. Coming from a tradition of technological achievements, and having the advantage of existing infrastructure and value chains, this industry has the potential to continue to contribute to energy security and shape our energy future.”

The group said its forecast had major implications for the oil and gas industry, as well as renewables and energy-intensive industries.

“Gas will be the largest energy source by 2034, and will hold this position through to 2050, even though its share of the energy mix will start to decline from 2040 onwards,” said the report.

“There are large opportunities for gas to co-develop with other energy sources and to add flexibility to the expanding electricity system.”

The report described the predicted growth in renewables as “exponential” and said it would significantly change the energy landscape as consumer-scale technologies such as solar panels and electric vehicles become increasingly affordable. This, in turn, would see their use accelerate dramatically.

“Portfolios of network projects, some as small as home installations, could become more significant than large utility scale generating plants,” said the report.

“Investment horizons will shrink, and investors and insurers will need a new understanding of what they are financing and covering. Change will also embrace investments at residential, commercial and industrial scale, such as battery storage, or energy efficiency measures.”

DNV-GL’s president and CEO, Remi Eriksen, said he hoped the outlook would help build a more “unified” view of the future, but cautioned that it should also act as a wake-up call to the industry.

He said: “The consequences of the decarbonisation of the energy mix … are substantial.

“We forecast that by mid-century, primary energy supply will be split roughly equally between fossil and renewable sources.

“That presupposes a very substantial growth path for renewable energy, but not enough, we calculate, to bring humanity on track to reduce climate emissions in line with the climate goal agreed in Paris in 2015. That should be a wake-up call to all stakeholders in the energy system.

“The industry that we know and serve has taken bold steps in the past; even bigger strides are required into the future. I hope our report … provides food for thought, and action.”