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August
31
2020

Fossil Fuels Are Here To Stay
Irina Slav

Following energy news these days is exciting: there is so much about new batteries, more efficient solar panels, cheaper wind energy, and dozens of EV models coming to a market near you any day now. The future looks bright, emission-free, and electric. All it takes to ruin the vision is a single report, in this case from the International Energy Agency (IEA).

Titled Key World Energy Statistics 2020, the report provides an in-depth look at energy production and consumption trends spanning a period between the early 1970s and 2018. And the data shows that we are still heavily reliant on oil and gas, despite all the progress renewables have made. In fact, the portion of oil and gas in the world’s energy mix is so massive it is doubtful we will ever be fossil fuel-free.

Let’s take a look at consumption, for example. Crude oil accounted for 48.2 percent of final energy consumption globally in 1973. Forty-five years and huge renewable energy advancements later, crude oil’s share in total final energy consumption had fallen by a meager 8.6 percentage points to 40.8 percent.

This is not a lot, even if we acknowledge that the drive to cut emissions started a lot later than the early 70s, so renewables have had less than 45 years to stake their claim as an alternative to fossil fuels. Speaking of which, coal’s share in the mix only fell by 3.6 percentage points in the 45-year period, to 10 percent of the total in 2018.

Meanwhile, the share of electricity in this mix, thanks to renewables, went up from 9.4 percent to 19.3 percent, which is certainly impressive growth, especially given the abovementioned unequal start. But is it enough?

Let’s look at the total energy supply. In 1973, crude oil accounted for 46.2 percent of the global energy supply. Gas accounted for 16 percent, and coal accounted for 24.5 percent. A category dubbed “Other” (excluding hydro, biofuels and biomass, and nuclear) accounted for 0.1 percent.

Fast forward 45 years, and we have crude oil accounting for 31.6 percent of the total energy supply, gas accounting for 22.8 percent, and coal, somewhat surprisingly, rising to 26.9 percent. Meanwhile, the “Other” category has risen to 2 percent of the total. But so has total energy supply, and not by a small percentage, either. Between 1973 and 2018, global energy supply rose from 6,089 million tons of oil equivalent to more than 14,000 million tons of oil equivalent as the world’s population grew and became more affluent, driving energy demand up.

It is hardly a surprise, then, that emissions have been rising, although the distribution of “responsibility” among the three fossil fuels has changed. Back in 1973, oil was the biggest emitter, accounting for 49.9 percent of the total, with gas accounting for 14.4 percent, and coal for 35.7 percent. In 2018, probably thanks to energy efficiency and the rising share of gas in electricity generation, among other things, the share of oil in total emissions fell to 43.1 percent. Meanwhile, however, coal’s share rose 44 percent, and the share of gas went up to 21.1 percent. What this suggests is what we already know: fossil fuels are cheap, which is why they are often preferred not just in regions that cannot afford to invest in wind and solar but in the world’s largest renewables investor, China, along with most other countries. And while solar and wind are getting cheaper, their reliability remains a problem, which has only recently begun to receive the attention it deserves in the form of a focus on not just generation capacity but also on storage. 

Speaking of wind and solar generation capacity, this has registered some impressive growth and not over 45 but a lot fewer years. Between 2005 and 2018, electricity production from wind soared from 104 terawatt-hours to 1,273 terawatt-hours. Solar power generation registered equally impressive growth, from just 4 TWh in 2005 to as much as 554 TWh in 2018. 

Based on this data spanning more than four decades, the IEA’s outlook for the next two decades also features oil and gas, and features them heavily, both under what it calls the Stated Policies Scenario, and the Sustainable Development Scenario. In fact, under both scenarios, oil and gas together will continue to account for more energy supply than renewables, even in 2040. The only marked difference is that under the Sustainable Development Scenario, the share of oil in the mix will fall by about a million tons of oil equivalent between 2030 and 2040.

What does all this tell us? A lot of things that could be interpreted in accordance with one’s personal opinions as facts tend to be. Yet interpretation does not change these facts, and the facts laid out by the IEA show that the world is still very much dependent on oil and gas—and even coal—for its continued energy supply. The 100-percent renewable energy world is still decades away, and more than a couple.

By Irina Slav for Oilprice.com

 

 

 

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

 

 

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