The global transition to a low-carbon economy is losing momentum, making the 1.5-degree Celsius climate goal of the Paris Agreement increasingly unattainable, according to a new report from Equinor. In its annual Energy Perspectives analysis, the Norwegian energy giant cites geopolitical instability, including the war in the Middle East, and a shift in national energy security priorities as primary drivers for a “justified” slowing of the global transition.
Why is the 1.5-degree goal becoming less credible?
Equinor states that the window for meeting the 1.5-degree target has largely closed because the necessary, unified global action was required years ago. According to Christian Becker, director of global external analysis at Equinor, the erosion of a global, rule-based order has forced nations to prioritize short-term economic stability and energy security over long-term climate commitments. While the energy transition is not being reversed, the company observes that it is proceeding at an “adjusted tempo and scale” that makes the Paris Agreement’s most ambitious target unrealistic.
Despite the shift away from the 1.5-degree target, Equinor’s models show that global oil demand is still expected to peak in the early 2030s, driven largely by petrochemical demand in emerging economies like India and various African nations.
How do geopolitical shocks influence energy markets?
Geopolitical volatility, specifically in the Middle East, is directly disrupting global energy supply chains. Equinor’s report highlights that the potential for infrastructure damage—such as risks to the Hormuz Strait or facilities like Qatar’s Ras Laffan—creates significant price volatility. These events force energy-importing nations in Asia and Europe to re-evaluate their reliance on natural gas. In some instances, when prices spike or supply is threatened, countries are reverting to coal to ensure domestic energy security, complicating the path toward decarbonization.
What are the four scenarios for future energy?
Equinor outlines four distinct pathways for the global energy market, each reflecting a different level of cooperation and policy intervention:
- Walls: Current trends persist with moderate growth and a limited, gradual energy transition.
- Plazas: A highly integrated global economy with high growth and high energy demand, leading to slower emission cuts.
- Silos: A fragmented world defined by weak economic growth, nationalistic energy policies, and limited international cooperation.
- Arches: A scenario driven by regional and national climate policies resulting in faster emission cuts, though even here, the 1.5-degree goal remains out of reach.
The role of electricity and hydrogen in the transition
Electricity demand is rising globally, fueled by industrial growth and the proliferation of data centers. According to Equinor, coal remains the primary source of power generation through 2029, particularly due to sustained growth in India. While renewable energy is expanding, gas-fired power continues to provide necessary flexibility to stabilize grids. Meanwhile, hydrogen is identified as a critical tool for decarbonizing heavy industries like steel and cement. However, the report notes that high costs and a lack of integrated infrastructure remain significant barriers to adoption, with 98% of current hydrogen production still derived from fossil fuels.
When analyzing climate risk, look beyond headline emission targets. Equinor’s data suggests that real-world energy security concerns often supersede long-term policy goals during times of international conflict.
Frequently Asked Questions
Is the transition to renewable energy stopping?
No. Equinor emphasizes that the transition continues, but it is moving at a slower pace and with a different scale than previously anticipated.
Why is coal still being used if the world wants to cut emissions?
Many nations prioritize energy security and affordable power. According to Equinor, coal remains a competitive energy source in emerging markets and acts as a backup for countries experiencing gas supply volatility.
What is the biggest barrier to green hydrogen?
The primary obstacles are high production costs and the current lack of global infrastructure to link supply with industrial demand.
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