Reliance on Renewable Energy Is Still Decades Away

Fossil fuels will be with us for decades to come.

It’s true that climate-technology innovation, seeking to decarbonize the environment, has made significant strides in recent years. The cost to deliver solar and wind energy has fallen more than 50% in the past decade. Advances in biologically sourced chemicals, materials and alternative fuels are also remarkable and are transforming once entrenched petroleum-based industries.

But that’s not enough. Global energy demand is accelerating, driven by multiple factors. Some of the most populous countries are experiencing rapid economic growth, and their energy consumption is soaring. For example, India’s GDP is expected to grow at over 7% annualized for the next several years as the nation works to expand its manufacturing capacity. Indonesia’s growth could be around 5% a year, and domestic demand is displacing commodity exports as a growth driver. China’s economic slowdown appears to be stabilizing and could grow at about 5% annually.

All that growth demands energy. Where will it come from? Renewable sources made up just 17% of primary energy consumption worldwide in 2022.

Innovation itself is increasing power demands, seemingly exponentially. Just look at artificial intelligence, or AI, which has the potential to accelerate productivity and efficiency across multiple economic sectors. Power consumption for AI-related data centers and applications is expected to increase by 1,000 terawatts a year. That’s enough energy to power Japan for 12 months.

While innovation and industry continually intersect, this time innovation appears to be colliding with the energy industry, just as it is adjusting to innovations around climate tech. Substantial challenges are arising as societal pressure mounts to reduce fossil-fuel use while also ensuring energy security and building new infrastructures to support new demand and energy sources.

“Renewables and nuclear energy will dominate the growth of global electricity supply over the next three years, together meeting on average more than 90% of the additional demand,” according to a 2023 International Energy Agency report. While encouraging, this indicates that even with rapid growth, renewables do not even fully provide for increasing demand, let alone total demand.

A 2023 McKinsey & Co. analysis stated that renewables’ share of the global power mix “could more than double in the next 20 years.” But that would still provide less than 50% of the world’s energy needs at current levels. And perhaps just as important is the energy-security aspect of the transition to non-carbon-based power sources and the need for consistent, uninterrupted energy supplies. Wind and solar power generation depend on favorable weather and are not always consistent.

That leaves fossil fuels and nuclear power to fill the gap—for decades to come.