We are living through an extraordinary period in the evolution of international energy markets. Amid the turmoil and trade disruptions caused by Russia’s brutal invasion of Ukraine, energy reliability and security concerns have suddenly re-emerged with a vengeance. And the higher energy costs linked to the war are hitting consumers and businesses across the globe.
Despite widespread worries about climate change and a growing collective commitment to reduce greenhouse gas (GHG emissions), four-fifths of global energy demand is still being met by a combination of coal, oil, and natural gas, according to the most recent edition of BP’s Annual Statistical Review of World Energy.
The BP report – a respected source of data on all matters concerning energy – shows that total world energy consumption and related GHG emissions fell in the early stages of the COVID-19 crisis in the first half of 2020. However, as economic activity revived, so too did the appetite for energy. In 2021, as economies rebounded from the temporary 2020 slump, energy consumption and greenhouse gas emissions rose – soon surpassing 2019 levels. As expected, fossil fuels provided most of the added energy required to lubricate the recovery of employment, travel, and industrial production.
So how much energy did the world consume in 2021? The answer is 595 exo-joules (EJ), equivalent to 97 billion barrels of oil. This was six per cent more than in 2020 and 1.3 per cent more than in 2019. Since 2015, when the international Paris Agreement on climate change was inked, global energy consumption has risen by about seven per cent.
When looking at the pattern of energy demand across different fuel types, the good news is that renewable energy sources have gained ground. From 2015 to 2021, there was approximately a four per cent shift toward non-nuclear and non-hydroelectric renewables within the overall global energy mix. However, these carbon-free energy sources still satisfy just seven per cent of the world’s energy demand. Importantly, the march of renewables is happening almost exclusively in one sector, electricity generation, which itself accounts for just one-fifth of the primary energy used in the world. The rest of global energy demand is for things like transportation, the heating of buildings, agricultural production, and various industrial processes.
It’s clear that the timetable for reducing fossil fuel use and scaling back greenhouse gas emissions defined by politicians and governments bears no relationship with the data and trends in energy production and use. Politicians talk about a quick, largely painless transition to a low carbon future, but that isn’t going to happen – at least not without the arrival and quick take-up of multiple disruptive technologies.
On a more positive note, energy consumption per capita and per dollar of economic output continues to decline. This means the world is becoming more energy efficient, even as fossil fuels continue to serve as the foundation of the energy system.
Our guess is that in 2022, global energy consumption will be a bit higher than in 2021, even with recent inflationary pressures and the other extraordinary events that have rocked the international economy in the last several months. The pace of the low carbon transition touted by many politicians may stall because of the fallout from the Russian-Ukraine war and growing fears about energy security, particularly in Europe and China – where coal use is now climbing.
What awaits us in 2030 and 2050 – eight and 28 years away, respectively? There is little sign that the worldwide need for flows of highly concentrated energy is diminishing. This points to continued robust demand for fossil fuel energy, even as policymakers, investors and civil society groups pursue a lower carbon future. History and scholarship teach that energy transitions take a long time, much longer than the dates proposed by politicians in a hurry to solve the climate change problem. We remain skeptical that the world is on the cusp of a pronounced and rapid shift in the composition of energy production and consumption. The data in the latest BP report confirm that this skepticism is well-founded.
As published in Troy Media.