As the COP29 climate summit kicks off, the role of fossil fuels in the global energy mix is about to reach its peak. The striking acceleration in production and installation of renewable energy sources lies at the basis of the stagnating levels of fossil fuels as an energy source. The exponential growth in renewables and concurrent slowing growth of fossil fuels is especially evident in the projections for coal usage: we are at the beginning of the end for coal. Here’s how renewables are rapidly replacing fossil fuels—and how COP29 agreements could accelerate the shift away from coal. Yet, what can we really expect from this climate summit with fossil fuel interests and political roadblocks at play?
Even with fossil fuel interests and recent political developments, the fundamental change in energy systems worldwide cannot be seen separately from renewable energy and transport technologies like solar, batteries and electric vehicles (EVs), that are constantly outpacing – or rather, shattering – expectations.
Growth in renewables
Solar
The remarkable growth of solar got a lot of attention earlier this year, when The Economist ran a special issue on solar energy. The economist laid out how solar exhibits a textbook example of exponential growth: Solar capacity doubles roughly every three years, meaning it grows ten-fold each decade. Installations of solar have consistently been more than 3 times higher than expectations. Wind energy has seen a similar trajectory as solar, although to a slightly smaller extent. Nevertheless, solar and wind are the two fastest-growing energy sources in history.
The rapid growth of solar is strongly related to its low – and continuously decreasing – prices. These developments are both strengthened by a viscous cycle, where abundant and inexpensive ingredients like silicon enable increasing production, while costs are lowering. Lower costs boost demand, which in turn accelerates further development. This so called ‘learning-curve’, where each doubling of cumulative production leads to significant cost reduction, is a phenomenon that fossil fuels lack – their extraction and production costs tend to rise over time rather than decrease.
The world’s solar capacity hit 1,419 gigawatts in 2023, radically more than forecast by any major forecaster 🚀🚀 https://t.co/2FFsXtGuI7 pic.twitter.com/the7O5gQW4
— Science Is Strategic (@scienceisstrat1) June 20, 2024
Consequently, in many regions, solar energy has become more cost-effective than fossil fuels. As solar becomes increasingly cheap relative to fossil fuels, the large majority of people and companies will opt for it over other energy sources, even if there is a political proclivity towards fossil fuels. Again, as demand rises, so does production, further strengthening this cycle away from fossil fuels.
Naturally, solar comes with some clear challenges. The sun doesn’t shine during the night, and solar panels produce less energy in the winter season and during cloudy days. Simultaneously, many regions that have already strongly adopted solar technology, have experienced days where solar electricity production during the day exceeded electricity needs. So far, that has often led to solar panels being shut-off: a waste of resources.
Batteries
This is where advancements in battery technology become essential. Batteries, both on small and large scale, have the ability store the abundance of solar energy produced during daytime. Besides increased energy efficiency, lower electricity costs and limiting price fluctuations overall, this helps stabilizing the energy grid and further reduces emissions by replacing electricity sources such as coal.
Like solar, batteries show to have an incredible learning curve. Not only is their price following a trajectory similar to that of solar technology, but their energy density – the amount of energy that can be stored – is also increasing at an incredible rate.
As more batteries are produced and installs, costs are falling dramatically, while energy density is improving. Source: OurWorldInData
These price and efficiency-related improvements are the major reasons why batteries are becoming more and more popular. But there are more advantages: batteries have the capability of empowering people. With home or neighbourhood-scale batteries, the energy system becomes more decentralized. Individuals or communities could store electricity produced with their own solar panels, or bring in energy from the grid when prices are low. The energy can be used or discharged to the grid when energy prices are higher. Altogether, this makes batteries more attractive even on small scales.
Electrification & efficiency
Electricity is only part of the equation. It is important to realize that energy and electricity is not the same. In fact, electricity accounts for only around 20% of the global energy demand. Other important sectors are transport (about 30%) and industry (about 37%).
With transitioning technologies that emit GHGs to non-emitting technologies, electrification is playing an important role. An example is switching from products such internal combustion engine (ICE) vehicles to electric vehicles (EVs). This transition not only decreases the emission of greenhouse gasses, but it has the additional advantage that it makes our global energy system much more efficient. To be specific: Even if we need to produce more electricity to provide for EVs, the total amount of energy required goes down. This is a consequence of the fact that EVs are much more efficient at converting energy than ICE cars, since combustion is a relatively inefficient process. In numbers: petrol cars only convert only 20% of their initial energy to motion, while EVs convert almost 90% of their initial energy source into motion.
Electric cars are much more efficient at converting energy to motion. Image Source: Hannah Ritchie
Electric Vehicles (EVs)
Although not as sensational as e.g. solar, this transition from ICE vehicles to EVs is also showing a nonlinear trend. In most parts of the world, more EVs are sold every year, decreasing the share of new ICE cars.
In many regions, the price of EVs is still a major barrier, as most EVs are much pricier than traditional vehicles. However, prices of EVs are falling. In addition, the supply of second hand EVs is increasing. Once EV prices reach levels like those of ICEs, the former will be more popular as ‘fuel’ costs are much lower. Considering this, the total operating cost is already lower for many EVs. Nevertheless, many people can still not afford the large upfront cost of an EV.
It helps that EVs are technically superior to ICEs and in many ways deliver an improved driving experience. There are also objections, such as range anxiety. But these will become less of an obstacle as battery technology improves, and with that the range and charging times. Either way, as with solar and batteries, more and more people are buying EVs and prices are dropping, further increasing the demand and production cycle.
It is not surprising that at this point, the share of EV sales is especially large in rich countries. Currently, the Nordic countries lead in terms of EV share, with in Norway almost 90% of new sold cars being electric. Denmark follows with almost 1 of 2 new sold cars being electric. Just as with other sustainable techniques, China is climbing rapidly in this list, as aggressive government subsidies helped making their companies leaders in the EV market. In total numbers, China is already leading the sales of EVs, and by a huge margin.
The share of new car sales that are electic vehicles. Source: Our world in data.
There is still a long way to go. But given that the increase in EV sales grows rapidly, the majority of new sold cars will be electric in many countries within a few years. Once new sold cars are mainly electric, it takes a while for the complete fleet to become electric too, as cars typically have a lifetime of more than a decade. Yet one thing is certain: the growth of EVs is too strong for the trend to reverse.
Challenges in the energy transition
Of course, the energy transition has its difficulties, too. The industrial sector accounts for almost 40% of the global energy use. Certain processes in heavy industry require direct burning of fossil fuels, as the processes involve very high temperatures or chemical processes. These industries are hard to electrify. Although progress is being made, more innovation is required to substantially decrease emissions.
And while road transport is relatively easy to decarbonize, air traffic and shipping account for a substantial chunk of the energy consumption in the transport sector. They are much harder to electrify than road transport. Other non-emission techniques are still early in their development phase.
Ironically, roughly one third of the global shipping fleet is dedicated to transporting fossil fuels. Accordingly, transitioning away from fossil fuels requires much less shipping. Just as EVs are much more energy efficient than ICEs, transitioning away from fossil fuels decreases the need for water-transport, increasing efficiency of our global energy system in a different way.
One worry is that the termination of one environmental issue (fossil fuels) is replaced by another (mining to foresee the world of the rare earth metals needed for the transition). However, the comparison is skewed. The argument comes down to efficiency once again. Unlike fossil fuels, a one-time use product, rare earth metals in (EV) batteries are becoming increasingly recyclable as technology improves. Together with advances in battery chemistry, mining of raw ingredients for battery manufacturing could already peak by the mid 2030s, while mining for batteries could be avoided altogether by 2050.
COP29
While it is undeniable that the world’s energy system is transforming towards a more efficient and sustainable model, the question is whether it’s happening fast enough. The world is warming steadily, and extreme weather events are becoming more frequent. Therefore, even though fossil fuels are already about to peak, there is a clear imperative for COP29 to expedite the transition.
One of the most effective measures that could be taken at COP29 to accomplish a faster transition, is agreeing to stop fossil fuels subsidies. Fossil fuel subsidies reached a striking $7 trillion – 7.1% of the world’s GDP – in 2022, while the G20 countries have been spending about 3 times as much on fossil fuels than on renewables in 2023. Subsidies should instead be shifted towards implementation of renewables, electrification, and research, development and innovation of new technologies that can help the decarbonisation of the global economy. At the same time, implementation of carbon prices, like the European model that have proved successful, should be implemented in places where it’s currently not, and agreements over a higher, global carbon price should be discussed. Another valuable initiative to support the transition would be for wealthier nations to help fund renewable energy installations in lower-income countries. This would allow them to leapfrog the fossil-fuel-dependent phase of development and transition directly to cleaner energy sources, while providing energy and with that, improving living conditions in those countries.
COP29 – Acceleration or delay?
Although there is a clear imperative for the COP29 climate summit to speed up the transition, there are valid reasons to remain cautious about expecting substantial climate action. One major concern lies within COP itself, as fossil fuel lobbyists have gained more and more ground in the event over the years. In addition to fossil fuel companies sending larger delegations each year, recent editions of COP, including this year’s, have been hosted by oil-friendly countries. The event’s leadership committees also have increasingly close ties to the oil industry. On top of all this, leaders from various key countries last minute decided to skip COP29.
In addition to these concerns within COP, other geopolitical factors will also hinder agreements on more ambitious climate action. With the re-election of President Trump, agreed climate policies are likely to be reversed or abandoned in the country that features the world’s largest economy. During his previous presidency, Trump already withdrew the U.S. from the Paris Climate Accords, and his “Drill, baby, drill” stance suggests oil production in the US will be prioritized (and subsidized). This approach would slow the renewable transition domestically, and negatively impact climate agreements on an international level, potentially setting back global climate action.
The end of coal – either way
Expecting increased carbon pricing and a stop on fossil fuel subsidies under a Trump presidency is delusional, at least in the US. Still, while his policies will be a setback to the acceleration of renewables, even President Trump won’t be able to stop the market economics driving the energy transition. New, ambitions international agreements from COP29 have the potential to further accelerate the global transition, but may be improbable given the current political landscape. Either way, thanks to market economics and innovation, coal and fossil fuels are peaking during this decade, marking the beginning of the end for coal.
