Fossil fuels 'stubbornly' dominating global energy despite surge in renewables: Energy Institute

Fossil fuels continue to meet more than 80% of the world's energy needs despite a continued record growth rate of renewable energy in the wake of the COVID-19 pandemic, the UK-based Energy Institute said June 26.

Global primary energy consumption grew by 1%, with global oil consumption rising almost 3 million b/d to 97.3 million b/d in 2022, 0.7% below 2019 levels, the EI said in its Statistical Review of World Energy.

Together with gas and coal, fossil fuels made up 82% of the global energy mix, it said.

Had Chinese demand recovered in line with the rest of the world, oil demand in the world's biggest import market would have been 1 million b/d higher, EI said, pushing fossil fuels to 83% of the global mix.

Formerly BP's benchmark annual energy publication, the oil major handed the Statistical Review to the EI last year, 71 years after it was first published. EI has now partnered with KPMG and Kearney to produce the study.

Fossil fuels accounted for 82% of primary energy in 2021, according to the previous annual review, down from 83% in 2019 and 85% five years ago.

Oil's share of the global energy mix was around 33% last year although it has been falling steadily over the past four decades after hitting a peak of 50% in 1973, according to the data.

In 2022, global natural gas demand declined by 3%, dropping just below the 4 Tcm mark achieved for the first time in 2021. Its share in primary energy in 2022 decreased slightly to 24% (from 25% in 2021). But coal demand continued to grow, rising 0.6% on 2021 to 161 Ej; the highest level of coal consumption since 2014, according to the EI.

"The notion of new-normal post-COVID with energy growth discontenting from the long-term trends does not seem to be playing out," EI CEO Nick Wayth said in a presentation.

Robust renewables

Fossil fuel resilience in the energy mix comes despite record growth rates for renewable energy. In Europe, gas and coal consumption also saw a boost to fill the gap from lower nuclear power output in Germany and France, EI noted.

Last year saw the largest-ever increase in wind and solar new build capacity, EI said, noting that, together, they reached a record 12% share of power generation, with solar up 25% and wind up 13.5%.

Total renewable energy, excluding hydro, met 84% of net electricity demand growth in 2022, EI said.

"The EI Statistical Review is essential reading for policymakers around the world trying to balance the energy trilemma," said Simon Virley, Head of Energy and Natural Resources at KPMG in the UK. "All aspects of the trilemma were put under severe strain in 2022. Despite record growth in renewables, the share of world energy still coming from fossil fuels remains stubbornly stuck at 82%, which should act as a clarion call for governments to inject more urgency into the energy transition."

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, EI said.

"In terms of primary energy, renewables have contributed the majority of absolute growth on a net basis," Wayth said. "If you can continue the doubling of renewables energy every five to six years you get to a point where you do begin to displace fossil fuels."

With global energy-related emissions up 0.8% last year, however, Virley said the world was falling behind on Paris Agreement commitments to limit warming.

Referencing 2020's COVID-19 economic slowdown and a 5% decline in emissions, Virley said: "We need that rate of decline to be repeated every year for the next 30 years to be in line with Paris. It's not happening."

Analysts at S&P Global Commodity Insights forecast that fossil fuels made up 77% of the global energy mix last year, a level set to fall to 62% by 2050 under a reference case scenario.