A common narrative these days holds that the world is in the midst of an epic energy transition. However, the data don’t support this view.
Energy demand and supply patterns aren’t static, of course, and some change is certainly afoot. Yet the pace of change is best described as modest and incremental, not dramatic and transformative. The energy transition story favoured by many politicians and environmental groups is influenced by what psychologists call “availability bias” and “confirmation bias.”
Proponents of the rapid energy transition story want you to believe that an extraordinary shift is taking place, in some cases because they see this as a way to bolster public support for an agenda focused on raising taxes, redistributing taxpayers’ money, subsidizing new technologies, and expanding the size and role of government in the economy.
Many accept the arguments of proponents of a dramatic energy transition without reservation. But the raw data on worldwide energy supply and demand are inconsistent with these claims.
For one thing, the demand for energy is increasing almost in a straight line as the world’s population and economic output grow – and as lower and middle-income economies seek to climb the ladder to greater prosperity. Globally, consumption of traditional forms of energy – coal, oil and natural gas – for use in industrial processes, transportation, electricity generation, and the heating and cooling of buildings is rising, particularly in China, India and other developing nations that are now the main drivers of the growth of energy consumption.
Importantly, all fuels – primarily non-renewables – underpin modern societies and economies. The ubiquitous mover of people and goods, the internal combustion engine, continues to dominate worldwide, even if some stories suggest otherwise. It is striking that in 2023, four-fifths of global energy demand was still being met with fossil fuels, a share that’s little changed from two or three decades ago. Greenhouse gas emissions also continue to increase, particularly in transportation and in many emerging market economies.
To be clear, when talking about “the energy transition,” we are talking about greenhouse gas emissions and electricity generation. There is a belief in some quarters that adding more “clean” electricity will quickly reshape the global energy system and cause emissions to plunge. Innumerable media stories, press releases from governments, and reports from advocacy organizations suggest a tipping point in global energy use has been reached or is close at hand.
But, once again, the data say otherwise. That’s partly because electricity – a sector poised to grow as countries strive to reduce reliance on fossil fuels – makes up less than 20 per cent of overall global energy output. Non-traditional renewable energy – wind and solar, biomass and “other” – provide only three per cent of the world’s energy. Biofuels supply less than half a per cent.
While these less emissions-intensive forms of energy are becoming more popular and demand for them is climbing, in absolute terms, they are simply too small a share of the worldwide energy mix for this to have much effect.
In any case, the conversation about “renewables” and biofuels conveniently overlooks some significant issues that complicate the energy transition story.
The first issue is the energy needed to manufacture machines and run energy systems and processes. “Renewable” energy is not emissions-free from a life-cycle perspective, considering the raw materials and other inputs required to build renewable generation facilities and the supporting transmission infrastructure.
Second, “renewables” and biofuels require significant amounts of land to produce or generate energy. Communities are becoming increasingly aware of these impacts and saying no to the loss of land and landscape effects caused by alternative energy development. In many countries, this resistance is likely to slow the pace of any broader energy transition.
Despite concerns over emissions, the world continues to demand and use more energy. This is a fact. The data show no detectable signs of a rapid shift toward a fundamentally different energy mix. Without groundbreaking new technology, the steady increase in energy demand is expected to persist.
Remarkably, despite much doomsday messaging, the world now uses less energy per person and per unit of economic output than in the past. This is good news, pointing to some decoupling of energy consumption from emissions. However, this positive development does not indicate that a historic global energy transition is imminent or already underway.
Denise Mullen is Director of Environment, Sustainability and Indigenous Relations at the Business Council of British Columbia. Jock Finlayson is Chief Economist at the Independent Contractors and Businesses Association (ICBA), which is Canada’s largest construction industry association.
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