The green transition involves lowering the usage of fossil fuels in energy, transport, and industry and simultaneously developing new capacity in renewable energy sources. In our first edition of the Outlook we decided to provide an in-depth analysis of the energy and transport sectors.
Energy
The energy sector emerged as a major target for the transition, since it accounts for a sizeable part of global emissions. It became clear that conventional energy sources, predominantly relying on fossil fuels, will not be environmentally and/or economically feasible in the future.
Total energy supply (PJ)
According to our estimates, we will observe a decline of total energy supply until 2050, by 20% in Current Plans and 26% in Higher Ambitions scenario. This can be explained by a move towards more efficient technologies.
One of the key findings of our Outlook is that the share of hydrocarbons in final energy consumption and total energy supply will decline in favour of renewables. In each of the countries analysed, the share of renewables will increase, allowing for decarbonisation and electrification at the same time.
Renewable capacity growth
Renewable capacity installed is projected to grow steadily. This trend is in line with the energy transition and correlates with the widespread electrification.
We expect renewable capacity to increase in all 13 countries. However, it is interesting to note that the rate of growth in the CEE11 countries will be higher than in Germany and Austria.
To enable the growth of renewable energy sources and to ensure energy security in the region, deeper cooperation between countries is needed, for instance on the development of interconnectors.
Transport
The broad transportation sector, which includes the movement of both people and products by road, rail, sea, inland waterways, and air, is one of the largest contributors of CO2 emissions in the EU. Achieving net-zero emissions requires the decarbonisation of all transportation modes.
Final energy consumption in transport [EJ]
In the transport sector, we note the significant reduction in fossil oil consumption. This drop will be driven by the electrification of passenger cars and the widespread move towards use of batteries, hydrogen and decarbonised liquid fuels in other forms of transport.
Battery-electric vehicles (BEVs) are the most promising solution for individual transport. Although they are approaching cost-parity with internal combustion engines in terms of total cost of ownership (TCO) as they are less expensive to operate and maintain, achieving sticker price parity is unlikely in the near future. This presents a challenge for adoption in CEE11 countries, where customers are highly price-sensitive.
As a result, our modelling indicates a significant increase in demand for biofuels. If the decarbonisation objectives of transportation are to be met with insufficient uptake of BEVs (because only a limited number of consumers can afford them), biofuels could assist in their achievement. However, the increase in biofuels demand might be reduced if we will see steep price reductions for EVs and/or increase of popularity and availability of schemes reducing the upfront cost (long-term rentals, subsidies, etc.).
