Fossil fuel—be it coal, oil or gas—continues to meet some 82pc of the world’s energy needs, and that figure would have been higher had China’s economy been stronger, the UK-based Energy Institute (EI) said in late June.
This fact sits side by side with another important statistic: there has been record growth in renewable energy, according to the Statistical Review of World Energy, which was formerly BP’s benchmark annual publication but is now managed by EI.
Breaking it down further shows oil now accounts for only a third of energy demand. It has been falling steadily over the past four decades from a peak of 50pc in the early 1970s, according to the data.
Similarly, gas’ share in primary energy has plateaued for now at least, dipping to 24pc in 2022 from 25pc the year before.
Meanwhile, coal demand has continued to grow. Its comeback in the face of higher of gas prices, as many switched to the cheaper black rock, is an uncomfortable truth in the debate around energy sustainability, security of supply and affordability during global economic weakness. Coal reached its highest level of consumption in almost a decade in 2022, rising by 0.6pc year-on-year, to 161EJ, with China and India leading the way.
And coal output continues to feed that demand. Global coal production increased by more than 7pc in 2023 compared with 2021, reaching a record high of 175 EJ, the report says. China, India and Indonesia accounted for more than 95pc of the increase in global production.
Renewables, excluding hydro, saw their share of primary energy consumption grow by almost 1pc in 2022 compared with 2021, making up 7.5pc of the mix.
Indeed, 2022 saw the largest-ever increase in wind and solar newbuild capacity, the EI says, noting that they hit a combined record 12pc share of power generation, with solar up 25pc and wind up 13.5pc
But the question most policymakers and industry participants are afraid to ask is how scalable clean energy can be to meet increasing energy demand.
The EI tried to put a positive spin on it, noting that, although starting from a low base and running well behind most projections for clean energy levels needed to meet the Paris Agreement climate targets, the growth of renewable energy remained robust.
But the real faux pas is arguably the politically challenging but relatively clean option: nuclear. The EI pointed out that, in Europe, gas and coal consumption also saw a fillip from plugging the gap resulting from lower nuclear power output in France and Germany as much of Europe and other parts of the world have turned their back on building projects in recent years. Nuclear generation fell by 4.4pc in 2022, the EI notes.
Affordability
The numbers do not lie with regards to the trends. The reasons are strikingly obvious and ugly at the same time: it is very different to deliver cheap clean energy on a mass scale, and the priority for much of the world is still affordability first, especially as urbanisation and population growth suggest energy demand will not peak any time soon.
Even with the relatively slower primary energy demand growth seen last year, increasing by just 1.1pc compared with 5.5pc in 2021, consumption patterns are now around 3pc above the 2019 pre-COVID level, according to the EI.
EI chief executive Nick Wayth put it like this: “As the world emerged from the pandemic and its impact on demand, 2022 witnessed energy markets again in crisis, with the Ukraine conflict upending assumptions about supply around the world. That, in turn, precipitated a price crisis and profound cost-of-living pressures across many economies.”
And he sums it up by saying the EI Statistical Review shows “how the world’s energy markets struggled to respond to the crisis, how the trade and flow of energy contorted, and how vulnerable our economies are to supply and price shocks”.
The Russia crisis may have awakened the world from its energy complacency, but it could still sleepwalk into a bigger energy security problem if it does not see the different merits and pitfalls of all energy types.
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