1 Aim of the Book
The Handbook of Managing Fossil Fuels and Energy Transitions focuses attention on the need to manage the decline of fossil fuels as the world shifts towards a low-carbon energy transition. The premise of the book is straightforward: although fossil fuels have powered the industrialisation of many nations and improved the lives of hundreds of millions of people, another century dominated by fossil fuels would be disastrous. On the one hand, fossil fuels are responsible for the majority of the increase in greenhouse gas (GHG ) emissions , and projected increases in oil , gas and coal demand are incompatible with the Paris Agreement on Climate Change (United Nations Framework Convention on Climate Change (UNFCCC ), 2018). On the other hand, although the demise of fossil fuels has been often predicted, they have proved remarkably resilient and with low prices and superabundant resources they are likely to play a role in world energy going forward. This should not detract from the problems that their continuing use poses to the planet. In 2018, the UN Intergovernmental Panel on Climate Change (IPCC ) issued a stark warning that humanity has just twelve years to limit global warming to below 2°C (IPCC , 2018). This is not an arbitrary target. It is a red-line, a warning built on decades of scientific evidence-based research to avoid rising temperatures and rising risks, including threats to ecosystems , biodiversity , extreme weather events , sea level rises and unprecedented stresses to human economic, social and political systems. Yes, there is uncertainty in the consequences of inaction. Uncertainty is inherent to the complex problem of climate change that humanity faces.1 However, for the discerning observer of the spectre of global catastrophe this induced a feeling of justifiable fear. But in any discussion focused on addressing climate change, two factors come to mind: the opportunities made possible by low carbon energy and discussions of the resultant decline of fossil fuels. Although this is a simplification of the issues,2 what appears certain is that given the enormity of the problems fossil fuel use and the emissions and pollutants thereof must decrease. The question arises as to how the necessary decline of fossil fuels will be managed, if it is indeed managed, and the pace that this change requires. This leads to a key theme of the book: whether it will be a ‘long goodbye’ to fossil fuels or not? As this book argues, the reality is not so straightforward.
Ostensibly, accounts of the increasingly important role that low carbon energy plays in addressing the risks of climate change appear positive, evidenced by record levels of global investment and capacity additions in recent years (Wood, 2018). This trend has been particularly notable in the renewable electricity (RES-E) sector, leading to the attainment of milestones unthinkable a few years ago. In 2017 almost 180 GW of renewable electricity (RES-E) capacity was added worldwide, more than for all fossil fuels combined, with more solar photovoltaic (PV) capacity added than for coal , gas and nuclear power combined (Renewable Energy Network (REN), 2019). An estimated 17 countries generated more than 90% of their electricity from RES-E , which is now the leading source of power generation in the European Union (EU) , and this success is being repeated at the nation level including Uruguay , Nicaragua , Costa Rica , Kenya , Austria , Denmark , Latvia , Portugal , Sweden and Scotland (Climate Council, 2019; EU, 2017; Wood and Baker, 2017). In 2017, United Kingdom (UK) RES-E capacity surpassed coal , gas and oil-fired power plants for the first time on the back of a tripling of renewable capacity and a fall by one-third in fossil fuel capacity (Vaughan, 2018) heralding one week in May 2019 without using coal to generate electricity since 1882 (Jolly, 2019).
Nonetheless, fossil fuels continue to dominate the energy landscape, accounting for 86% of primary energy consumption in 2015, a mere 1% reduction from that recorded in 2005. Omitting nuclear power (4.4%), renewables accounted for approximately one-tenth of global primary energy consumption . The heat and transport sectors, although evidencing growth in renewable sources, continue to be dominated by fossil fuels. The power generation sector follows the same trend, with fossil fuels accounting for over two-thirds of the fuel share in global power generation (BP, 2018; World Energy Council , 2016), and 80% of global total final energy consumption (REN, 2019). Of the remaining 20%, nuclear power and renewables account for 2% and 10%, respectively, with the rest from traditional biomass (REN, 2019), hardly an environmentally friendly fuel source. Yet the power sector is supposedly the ‘low hanging fruit’ in terms of decarbonisation , and the one sector that has witnessed huge growth in renewables. As Spencer Dale, Group Chief Economist at BP put it:
Numerous reasons are put forward to explain this ‘backward step’, including falling fossil fuel costs and recent price competitivity between gas and coal in favour of the latter. But what about the role of energy policy ? In the context of warnings about climate change, energy policy is an important tool for policy and decision makers, namely to constrain the development and deployment of fossil fuels, reduce carbon ‘lock-in’ (Unruh, 2000) and drive low carbon energy. Yet despite decades of global experience in supporting renewable energy technologies (RETs) , a developing corpus of low carbon and renewable energy law, policy, regulations and guidance (a ‘low carbon energy law and policy framework’) and rapid falling costs (International Renewable Energy Agency (IRENA ), 2017), the share of low carbon power generation in the global energy mix has effectively stagnated in relative terms. Coal use is up. Carbon emissions are up. Time is almost up.The most striking—and worrying—is the trends in the power sector fuel mix over the past 20 years… despite extraordinary growth in renewables in recent years, and the huge policy efforts to encourage a shift away from coal into cleaner, lower carbon fuels, there has been almost no improvement in the power sector fuel mix over the past 20 years. The share of coal in the power sector in 1998 was 38%—exactly the same as in 2017… Global energy markets in 2017 took a backward step in terms of the transition to a lower carbon energy system; growth in energy demand, coal consumption and carbon emissions all increased… follow[ing] three consecutive years of little or no growth in carbon emissions. (BP , 2018: 6–7, emphasis added)
Instead of talking about global energy markets taking a backward step, we should be proclaiming ‘forward steps’ in relation to global efforts to mitigate climate change. In reality, modelling estimates paint a pessimistic future, one where fossil fuels continue to gain market share to 2030 on the back of increasing energy demand, albeit at different speeds: oil (0.8%), coal (1.2%) and gas (2%) per year (BP , 2013), with overall growth in part due to strong growth in production from unconventional gas and oil . All-in-all, although renewables are expected to continue to be the fastest growing energy source (7.6%), the global fossil fuel share will remain more-or-less constant.
Therefore, the global energy system is at a critical juncture: we need to ensure the reduction and replacement of fossil fuel use and to avoid the fossil fuel industry from reaching a cliff-edge, resulting in the stranding of assets , loss of jobs and revenues for governments around the world. At the same time, any such approach needs to take into account the needs and contexts of different countries around the world (e.g. capacity short/excess, developing , developed, etc.). A nuanced understanding of the fossil fuel sector is critical to this.
This is all the more important given that the decline of fossil fuels, managed or otherwise, will have significant, multiple, interrelated and largely unknown repercussions as we enter a new phase of geopolitics, with resultant impacts to existing and future relations, politics and trade between countries. As the Global Commission on the Geopolitics of Energy Transformation (2019: 12) recently pointed out:
Fossil fuels have shaped the geopolitical map over the last two centuries… the energy transformation will alter the global distribution of power relations between states, the risk of conflict,...