Energy Transitions: Setting the Stage by Gao Yiming
What is Energy?
Energy is the invisible currency in the natural world, coming in many places and forms. It is carried by the sunlight that is harvested by forests. It pushes the tides and powers the oceans. It is passed down in the food that feeds all life on earth.
Humans have come a long way in navigating our place in the natural world and only in the recent few centuries did we rapidly innovate and change the way in which we leverage on this invisible currency. Today, it has become the hidden enabler of the modern economy. We may not think of much in our everyday lives, but it powers the manufacturing of most of what we see, drives modern transport, and lights up our cities.
The first industrial revolution in the 1700s marked the beginning of that rapid change in the way we use this currency, with more major breakthroughs in the second industrial revolution. Much has changed since then. Back then, coal-powered steam engines were regarded as the life-changing innovation.
Today, progressive industries are dropping coal we once embraced like a hot rock. In the second industrial revolution when oil gushed out of the surfaces in Pennsylvania in the mid-1800s for the first time, it is celebrated like the blessed rain after a long drought. Today, we are most likely to recognise the same event as an oil spill and environmental catastrophe.
The changing methods in which we leverage on this invisible currency affects both natural and anthropogenic systems, and this change is what is the essence of the new buzzword of “Energy Transitions” today.
History of Energy Transitions
While the “Energy Transition” term today is popularised as the changing shift from fossil fuels to renewable sources, it is useful to remember that the world has undergone immense changes in the way we use energy in the past.
In fact, the current energy transition is the fourth energy transition we are going through since the first industrial revolution.
The World Economic Forum posted the four transitions in a neat illustration as shown:
The first three energy transitions come in the forms of coal, oil, and natural gas, respectively. This fossil-to-renewable transition is the one that is unfolding in front of our eyes as you read this. But while the major transitions have happened in the past, there are three distinctive features that make this fourth energy transition unique from the rest:
1. An Environmentally-Driven Transition
The environmental movement is one that began in the late 1900s, when we first reckoned with the environmental implications of our energy and the causality between greenhouse gas emissions and climate change. Since the energy sector contributes to nearly 70% of greenhouse gas emissions by source, reforms in the global energy system is one of the keystones to mitigating climate change and meeting greenhouse emission targets.
So, while the previous three energy transitions have been driven primarily by economic reasons, the current transition is environmentally motivated to deal with the ramifications of the hindsight pandoras’ box which we once unknowingly opened.
2. The Cause for Absolute Transition
Another factor of importance when we discuss the previous few energy transitions is the concept of a relative transition and an absolute transition. It has been pointed out in “Global Energy Transitions” by Bruce Podobnik that in the past transitions, the development of new energy systems overlaid onto pre-existing systems which continued to expand. For instance, while there is an increased reliance on oil in the 1900s, coal usage continued to increase. The proportion of coal energy only decreases relative to the rise of oil.
In order to effectively reduce the greenhouse gas emissions of the energy sector, the energy transition needs to be absolute shifts that includes the replacement of incumbent supplies rather than stacking new developments on top of them.
3. A Transition from Two Fronts
When we look at energy transitions in the past, it is mostly discussed from how much a certain resource is used from the supply side and how the development of a supply serves as an enabler for new technologies in demand. For example, the influx of oil enabled the rise of internal combustion engines and therefore light transport vehicles, a feat that cannot be attained by coal.
But in order to displace energy incumbents and reduce consumption for absolute transition, extensive work needs to be done on how we use energy in conjunction with how we supply it. Therefore, the supply-side transition and the demand-side transition will be two blades of the scissors in modern energy shifts.
A Transition in Full Force
Over the past two decades, the rise of clean energy industries has been spurred by immense technological and economic breakthroughs. The momentum of the clean energy swing can be shown in many ways, of which two of them are:
1. Soaring Capacity
The year on year deployment of renewable energy has increased almost 6 fold from 2001 to 2019. This increase is spearheaded by the exponential growth in renewable majors like solar and wind over the past two decades. The speed of development is immense considering the fact that these industries were still in their infancy in the market by the beginning of the century.
2. Crashing Costs
With economies of scale across mass deployments, the costs of renewables for some technologies have also plummeted to within the fossil fuels range to be able to compete head-to-head with the incumbents in the market. The trend is likely to continue as more renewable technologies further exploit cost-cutting measures and deploy technologies at scale The masts of clean energy solutions are up and the winds of the market is blowing. It is no doubt that these clean technologies will be the rising stars of the 21st century. It is now about getting more people on board these ships that are setting sail.
A Long Uphill Climb As sustainable energy systems go from strength to strength, the main question rests not with “if” energy transition is going to happen, but with “how” and “when”. Despite the rapid development of sustainable energy systems, governments and industries are normally faced with some very sobering statistics that incumbent fossil fuels are still heads and shoulders above clean energy in global energy consumptions, and still rising in terms of absolute consumption.
To get from where we are now to where we want to be, we will need to greatly accelerate the current speed of transition. Each year, global energy think tanks produce rigorous analysis and chart out pathways on how the energy transition can be accelerated to realise environmental targets.
Below is the Sustainable Development Scenario as shown in the World Energy Outlook 2018 by the International Energy Agency.
Of course, scenario generation is a controversial art by itself and different organizations will have different interpretations of how to get to our desired targets. However, something that all the scenarios from all international think tanks agree on one thing: We will need everything in our toolbelt.
From supply side abatement to demand side curtailment to carbon capture and nuclear, energy transition is going to need all the help it can get.
The Audacity of Hope
“We are the first generation to feel the effects of climate change and the last generation who can do something about it” Barack Obama
Climate change and energy transition is going to be one of the defining challenges of our times. As the dawn breaks for a new age for a more sustainable energy system, we are living in important and exciting times of transformation in the energy industry.
It spells a future where humans as a collective will learn to use the invisible currency of energy in not just an efficient, but responsible way. That future is not yet written.
"We will need to write that future with the choices we make today."
Further readings Our World in Data: EnergyOur World in Data: Emissions by SectorInformation is Beautiful: Carbon Budget World Economic Forum: Energy Transitions IndexWorld Economic Forum: Energy Transitions 101IEA: World Energy Outlook 2018