The interests of the oil and gas industry run deep in North America. From Highland Park Ford Plant in Michigan, the Model T became the world’s first mass-produced car, with a gasoline-powered four-cylinder engine at its heart. And in the US and the wider world, the rest was history. But today, we are staring down a new global-scale transition: away from fossil fuels and toward renewable energy production.
Today, the US is still the largest oil consumer in the world — as it has been for much for the last 100 years — and fossil fuels make up 80% of the domestic energy supply in Canada and the US combined.
Yet, so potent are the efficiencies of solar and wind power, that in the space of a generation, the energy mix in North America and beyond will be transformed.
A deep dive on North America's energy transition
DNV has taken a deep dive into the energy transition in the US and Canada, forecasting the most likely energy future in 2050. The model used has been honed over the seven years since the company started forecasting the global energy transition.
The overall story for North America is one of domestic decarbonization. The 80% fossil fuel make up of energy supply will drop to just under half by 2050. This will primarily be driven by rapid electrification, particularly road transport and in homes, and the increase in solar and wind as a means to generate that electricity.
Domestic consumption in North America will fall by 75% between now and 2050, which equates to almost half of the reduction of global oil demand. All things considered, oil production in the US and Canada was about 17 million barrels per day (Mbpd) in 2022, and DMV’s forecast foresees it plateauing until 2024 then ultimately declining to just 7 Mbpd by 2050. The land of big oil, though, will remain a leading producer of the black stuff — even if the market will be much smaller. Export volumes of oil will grow until 2030 and then stabilize, while export volumes of natural gas will remain stable at the present volumes.
Electricity’s share in final energy demand will grow to 41% in 2050, from 21% in 2022. At present, solar is the third largest renewable source in the power sector after hydropower and wind. By 2050, solar PV will have grown 15-fold from today’s levels and will account for almost half of all electricity generated in North America and will be the region’s leading source of power.