- Carbon/Climate Change
Is the global "energy transition" really moving forward?
In a recent study on energy transition, Edmond de Rothschild Financial Group examines countries' efforts to reduce the ecological footprint of their energy sector. The bank published a report assessing the evolution in 60 countries of carbon dioxide emissions linked to energy consumption, the share of fossil fuels in the energy mix and energy intensity which relates the amount of energy used over a year to a unit of GDP produced. While there has been visible progress in efficiency since 1990, the increase in the global energy mix is disappointing. The graph below shows the evolution of the distribution of the different energy sources in the global energy mix over the last 30 years (between 1990 and 2017).
The evolution of the energy mix from 1990 to 2017
Source: “Transition énergétique” - Edmond de Rothschild Financial Group
In 2017, 85.1% of energy consumption came from fossil fuels, whereas in 1990 this rate was already 86.7%. The share of fossil fuels in the global energy mix has therefore only decreased by 1.6 percentage points over the past 30 years. It is interesting to note that the share of coal has decreased more significantly than other fossil energy sources, probably to the advantage of renewable energies but also of natural gas. In addition, global energy consumption increased by 2.4% per year on average between 2000-2009 and 2.0% between 2010-2017, so fossil energy consumption is much higher in absolute terms in 2017 than in 1990, but the same is true for the non-fossil share of the energy mix.
The report points out that to limit global warming to 1.5 degrees, CO2 emissions will have to be reduced by 45% by 2030 according to the IPCC. It indicates that the two drivers that will be essential to achieve this will be the increase in the share of renewable energies in the energy mix and an improvement in energy efficiency. Whereas the share of renewable energy has been rather stagnant over the past three decades, energy intensity is following a positive trend with observed decreases of 12.6% since 2010 and 21.5% since 2000. This decline is mainly due to the developed countries, which have enforced new measures to limit the impact of factors such as low energy efficiency of buildings, high fuel consumption of vehicles, the use of inappropriate modes of transport and lower energy prices, all of which can increase the energy intensity of countries.
Since the IEA forecasts a 25% higher level of energy consumption in 2040 than in 2010, significant changes are urgently needed to drive the energy transition. For the evolution of the energy sources, considerable investments must be made to reduce the share of fossil fuels in the global mix. In parallel, the structural shift from an energy-intensive economy towards services and lighter industries, on the one hand, and the electrification of production processes and the use of more efficient technologies within different sectors (industry, building, services, transport) on the other hand, seem to be the main sources of improving energy efficiency according to the estimates made in the report.
Félix Fouret, Carbon/Climate Analyst
Source: Beyond Ratings, Edmond de Rothschild Financial Group, IAE