EXECUTIVE SUMMARY

The media daily report on the “Energy Transition” implying that the world is undergoing a rapid and irresistible transition from fossil fuels (oil, natural gas, and coal) to various “low-carbon dioxide alternatives”, notably wind and solar energy. Let us examine the facts instead.

According to the British Petroleum Statistical Review of World Energy, in 2019 84% of world energy use was supplied by fossil fuels. Another 11% was supplied by hydroelectricity and nuclear energy, and 5% was supplied by “renewables”, mostly biomass. The non-OECD group consumes two-thirds of the energy and produces two-thirds of the GHG emissions. Moreover, with every passing year, the non-OECD share increases, and the emissions reductions made at great cost by the OECD countries count as a smaller and smaller part of the world total.

From 2010 to 2019, the world experienced the fastest annual average rate of growth in world oil demand in history, as total demand grew from 88 million barrels per day to over 100 million barrels per day. The highest rate of growth, year-to-year, in that period was from 2010 to 2011, when demand grew by 2.6 million barrels per day. After a decline of 8.7 million barrels per day in 2020 due to the pandemic, all major authorities project demand to grow in 2021 by somewhere between 5.4 and 6.0 million barrels per day and by another 3.0 million to 3.5 million barrels per day in 2022. The International Energy Agency (IEA) projects that over the period to at least 2026, oil demand will grow by over 1 million barrels per day per year.

The death of coal has been declared long and often. Yet, coal demand grew from about three billion tonnes of oil equivalent in 2005 to 3.8 billion tonnes of oil equivalent projected for 2021. The largest single influence on coal demand over the last decade has been the almost doubling of coal consumption in China, but there has been rapid growth in other countries as well. Moreover, China, India, Indonesia, Japan, and Vietnam are planning to build more than 600 coal plants. The new plants will be able to generate a total of 300 gigawatts of energy for at least 30 years and up to 60 years.

Global natural gas demand grew by 59% from 2005 to 2019, from 2.6 trillion cubic metres to 4.1 trillion cubic metres. It declined only 1.9% year-over-year from 2019 to 2020. According to the IEA, gas demand growth over the period 2019 to 2025 will be primarily in Asia and the Middle East, with the industrial sector accounting for 40% of that growth. Once again, the story is the same. For at least the next five years and probably beyond, the world’s appetite for fossil fuels will grow, not decline.

The banks and other financial institutions that pressure fossil fuel companies and their investors to reduce funding for fossil fuel development clearly are not basing their judgements on actual trends in energy consumption. Instead, they are wagering their clients’ money on the thesis that the central planning of OECD governments will drive future global energy trends. There is no evidence based on consumption to support this contention.

The real “energy transition” is from a world energy market led by North America and Europe to one dominated by economic and population trends in Asia and other non-OECD countries. That transition has been well underway since at least 2005, and it is accelerating. It is the only energy transition that is indeed “irresistible”.

About the Author

ROBERT LYMAN is an economist with 27 years’ experience as an analyst, policy advisor and manager in the Canadian federal government, primarily in the areas of energy, transportation, and environmental policy. He was also a diplomat for 10 years. Subsequently he has worked as a private consultant conducting policy research and analysis on energy and transportation issues as a principal for Entrans Policy Research Group. He is a frequent contributor of articles and reports for Friends of Science, a Calgary-based independent organization concerned about climate change-related issues. He resides in Ottawa, Canada. Full bio.

The post WHAT ENERGY TRANSITION? first appeared on Friends of Science Calgary.

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July 21, 2021