The Rocky Mountain Institute said that global demand for fossil fuels peaked in 2019, and renewables are filling that demand due to falling costs and shifts in global capital.
The latest analysis by Rocky Mountain Institute (RMI) energy expert Kingsmill Bond shows that demand for fossil fuels in the electricity sector has already peaked in demand. Driven by falling costs, clean energy goals, and a gravitational shift in global capital toward renewables, solar and wind power are expected to carry the torch left by coal, oil, and gas.
Technology adoption often follows a model called the S-curve, in which exponential growth is experienced as technology takes over the highest demand available option. This exponential growth ends when a preferred replacement technology becomes available and the demand for the old technology is stable.
Bond said this has already happened for fossil fuels in the electricity sector. Indeed, his analysis shows that fossil fuels in the electricity sector have reached peak demand and are now bouncing along a plateau before an inevitable decline in the second half of the decade.
According to RMI Research, fossil fuel demand for electricity peaked in 95% of Organization for Economic Co-operation and Development (OECD) countries and 31% of non-OECD countries excluding China. China is on track to reach its targets for deploying solar and wind power by 2025, which means the nation is likely nearing its peak demand for fossil fuels.
RMI said OECD demand for fossil fuels peaked in 2007, demand for coal in 2013, industrial demand for fossil fuels as energy peaked in 2014, and demand for internal fusion engine cars in 2017. And by 2019 58% of the world has experienced peak demand for fossil fuels. In 2019, renewables accounted for 85% of the growth in energy demand.
“Electricity is the largest demand sector for fossil fuels,” Bond said. “The peak here marks a major turning point in the energy transition and gives us hope that we can achieve the goals of the Paris Agreement.”
The research is part of an ongoing series of reports tracing the energy transition called Climax: The Series.
The report shows how change increases over time, often resulting in exponential growth. In 2011, the world struggled to sell 29 GW of expensive solar panels, in 2021 182 GW has been deployed, and by 2031 the industry is poised to sell 1,000 GW, according to RMI.
“Putin’s war, the desire for domestic energy sources, and the high price of fossil fuels are adding pressure for change,” Bond said. “When we add deployments in solar, wind, electric vehicles, heat pumps and hydrogen, we expect clean technology deployments over this decade to replace four times as much demand for fossil fuels as they did in the last decade.”
Bond said efficiency is another driver in the transition. Fossil fuels are relatively inefficient, requiring 10% of their energy to be extracted and processed, and losing up to two-thirds of the available energy in thermodynamic losses. Renewable technologies provide greater efficiencies. An electric car uses about a quarter as much energy as an internal combustion engine, solar power is 2.5 times more efficient than coal, and a heat pump uses three times less energy than a gas generator.
“As these superior solutions enter the market by volume, they will increase global efficiency gains by approximately 1% annually and drive primary energy demand growth towards zero,” Bond said.
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The explosive growth of renewable energy is currently taking place. By 2024, renewable energy capacity is expected to be double the total cumulative installed capacity in 2019.
Meanwhile, global analysts join the Marshall Islands Institute in concluding that fossil fuels have already passed their peak. DNV of Norway was the first major forecaster to reach this conclusion, the International Energy Agency (IEA) argued in 2022 World Energy Outlook Fossil fuel plateau has been reached.
“The Stone Age did not end for lack of stones, nor did the Age of Horses for lack of horses,” said Bond. “The era of fossil fuels to search for finite fossil stocks is giving way to the renewed era of cultivation of infinite renewable flows. Superior renewable technology is winning the battle of the energy future, and it is time to recognize this major tipping point. Countries, companies and investors who accept and embrace the energy transition will thrive, while That those who refuse and resist will struggle and eventually fall.”
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