Despite game-changing climate policies and pledges, nations around the world are reckoning with historically high demand for fossil fuels. But at the same time, investment in clean energy technologies is reaching new peaks. The future is uncertain, but a new report from researchers at Resources for the Future (RFF) concludes that the public and private sectors are sowing the seeds of an energy transition.
RFF’s annual Global Energy Outlook report provides a unique “apples-to-apples” comparison of energy projections by top institutions around the world. This year’s iteration makes several key points.
- National ambition and policy developments are laying the foundation for a global energy transition. But it’s unclear how quickly, and at what scale, public- and private-sector ambition will result in tangible changes at a global scale.
- Global energy demand has rebounded from the COVID-19 pandemic. Demand for all fuels, including coal, oil, and natural gas, has met or exceeded all-time highs.
- There is a record level of investment in clean energy technologies. But investment will need to accelerate, and fossil fuel use will need to decline, to meet climate goals.
- There are still major questions about how the United States will implement recent federal climate legislation, and at what speed and scale changes will occur. Key factors include implementation of tax incentives, direct spending programs, and siting and permitting of energy infrastructure.
- India and China have entered different stages of economic and energy development. Indian energy demand is projected to grow rapidly in the decades ahead, with the energy mix heavily dependent on climate policy ambition. Slowing economic growth and declining population in China is leading to reduced energy demand, and policies are driving decreased reliance on fossil fuels.
“Historical patterns of global growth across all energy sources, including fossil fuels, have resumed after the COVID-19 pandemic. If you look closer, however, at a regional level in Europe and the United States, and especially within electricity, the energy transition is underway,” said Richard G. Newell, RFF President and CEO. “The Global Energy Outlook shows just how critical policy decisions and technological development will be to determining the depth, breadth, and speed of the transition, and what it will mean for the climate.”
Global Energy Outlook report’s significance
RFF’s 2023 Global Energy Outlook report examines how knowledgeable organizations envision changes to the global energy system. In their original forms, energy outlooks from organizations like the International Energy Agency, bp, and Bloomberg New Energy Finance have varying assumptions and methodologies. RFF’s Global Energy Outlook standardizes these differing aspects to create a harmonized analysis of the world’s potential energy futures. This year’s report pulls from 14 scenarios across seven energy outlooks published in 2022 and 2023.
The authors categorize each future energy scenario primarily by the strength of its climate policies: reference scenarios assume limited or no new climate policies; evolving scenarios assume that announced policies will be implemented and that technologies will develop according to recent trends; and ambitious scenarios assume that policies will be enacted to limit global mean temperature rise to 2°C or 1.5°C.
How this year’s and last year’s reports differ
Significant developments in climate policy have changed—and introduced variability—to the global energy outlook. Of note is the United States’ August 2022 passage of the Inflation Reduction Act and the energy crisis induced by Russia’s invasion of Ukraine.
Global investment in clean energy technologies, led by renewable power and electric transportation, grew to an estimated $1.1 trillion in 2022, up 31 percent from 2021. Russia’s invasion of Ukraine and resulting energy insecurity in Europe has accelerated Europe’s shift away from fossil fuels, while also creating high coal demand as an alternative to Russian natural gas in the short term.
On the energy front, the world has recovered from COVID-19-related disruptions, as energy demand from 2020’s record lows continues to rebound and grow past pre-pandemic norms.
How these findings reflect global climate ambition
While new commitments are shifting the energy system at national and regional scales, particularly in Europe and North America, projections show that the actions that are on the table at present are not enough to reduce emissions and limit global warming by at least 2°C by the end of the century.
The new report shows that electricity will play a larger role in meeting future energy needs. Global electricity demand is projected to grow between 62 and 185 percent by 2050 compared with 2021 levels. The proportion of fossil fuels in the electricity mix varies considerably, declining dramatically under ambitious climate scenarios.
Under all scenarios but one, electricity generated from coal—the world’s largest generation source—declines substantially by 2050. For natural gas, projected demand is more varied: policy shifts are likely to drive down demand in Europe and the United States, while demand is projected to grow in the rest of the world under evolving policy scenarios. World oil demand, shown in the graph below, is lower by 2050 than it is today under most scenarios.
World Oil Demand
Rapid growth in renewable sources, such as wind and solar, is projected under most scenarios to be concentrated in North America, Europe, and China.
New technology options are also coming to the fore: carbon capture and sequestration is expected to play a substantial role in many scenarios, and direct air capture of carbon dioxide emissions also plays a major role in ambitious climate scenarios. In some outlooks, hydrogen begins to play a substantial role in industry and long-distance transportation by the middle of the century.
“We’ve been talking about an energy transition for so long—and now it might really be happening. But the road ahead isn’t marked well, and will raise new challenges,” said Daniel Raimi, RFF Equity in the Energy Transition Initiative Fellow and Director. “Still, the need to reduce emissions is clear, and the decisions on energy we take today will have profound consequences for the future of society.”
To learn more …
For more information, read the report, Global Energy Outlook 2023: Sowing the Seeds of an Energy Transition, by RFF Fellow Daniel Raimi, Senior Research Associate Yuqi Zhu, President and CEO Richard G. Newell, Fellow Brian Prest, and Fellow Aaron Bergman.
* “We’re on the Cusp of an Energy Transition. Where Do We Go from Here?” Mar. 28, 2023 Resources for the Future press release.
Corresponding, connected home-page-entry image: NASA/GSFC
Alright!!! Hydrogen powered cars. Imagine where we would be had we developed steam or water powered vehicles instead of petroleum based since the beginning!
https://courses.lumenlearning.com/suny-hccc-worldhistory2/chapter/the-spread-of-steam-power/