The end of Fossil Fuels & rise of Renewables

When will renewable energy start cannibalizing Fossil Fuels on an absolute basis?

Jan 26, 2024

windmill on grass field during golden hour

So we’ve all been hearing about renewable energy, especially wind and solar and how they are growing at a breakneck speed. So at some point the consumption of oil and other fossil fuels should start going down on an absolute basis, right?

It hasn’t happened yet because even though we are increasing our energy coming from renewable sources at a rapid clip, our overall energy consumption is growing even faster.

For example, from 2018 to 2022 our overall energy consumption grew by 6,385 TWh, a 3.7% - 4 year growth over 2014 to 2018 (which is below the average 4 year growth rate of ~7%). In the same period, Solar and Wind combined added 4,054 TWh, leaving a deficit of 2,331 TWh to be filled by other sources including both other renewables and fossil fuels.

But at some point the renewable energy output will outpace the overall energy consumption growth and lead to a drop in absolute fossil fuel consumption. This is an investigation and an attempt to figure out when that might happen.

Source: Our World in Data (Interactive Chart)

The Study:

In this study, I am looking at data from 1998 to 2022 (2022 was the most recent available data). I picked intervals of 4 years to average out growth a little bit. I also tried my best not to pick years with serious economic weaknesses like 2020.

However it must be noted that the period of 2020 to 2022 had significant economic weakness owing to Covid. But so did the 1998 to 2002 and the 2006-2010 period.

I usually don’t do this but i’ll give it away, renewables have started cannibalizing fossil fuels, not in absolute terms but that is coming too.

In this study, I’m doing a deep dive on:

1. Energy consumption by source in absolute terms

2. Growth rate in 4 year intervals of various energy sources

3. Each source’s contribution percentage towards total energy consumption

We will then also look at these data points by combining all the green energy, transition energy and fossil fuel sources.

For the purposes of this study, here is how I have allocated various energy sources:

Renewable Sources are:

Hydropower
Nuclear
Wind
Solar
Other Renewables

Transition Energy:

Natural Gas
Modern biofuels

Fossil Fuels are:

Oil
Coal
Traditional Biomass

I will primarily be focusing on Hydropower, Nuclear, Wind, Solar, Natural Gas, Oil & Coal when looking at individual sources.

When looking at combined data, I will be looking at ALL sources available.

70% of this article is charts because so it shouldn’t take that long to get through. I think charts are the best way to visualize what’s going on.

Having said that, you will see a few formatting errors in the chart which I blame on Google. I have been experiencing glitches across a lot of Google products over the last year or so and I’m too lazy to try and fix it manually because it does not change my story or make it any harder to read those charts. Let this be exhibit A, of why I’m bearish on Google.

If you like numbers more, then here is a link to the Google sheet with data.

Oil in absolute terms (TWh)

We can see that oil’s growth in absolute terms has slowed down in recent years and saw a dip in 2022. I have argued in the past that we were in a recession in 2022, so the drop could have something to do with that. But 2022 was the most recent year of data we have, so I wanted to keep it (especially given how fast renewables are growing).

In absolute terms, oil, as energy consumption by source, is still lower than what we had in 2018 and 2019.

Coal in absolute terms (TWh)

Coal saw rapid expansion in the first decade of the century but that has slowed down since 2014.

Natural Gas in absolute terms (TWh)

Natural Gas on the other hand has been growing consistently. Natural Gas is arguably a transition fuel.

On average, coal-to-gas switching reduces emissions by 50% when producing electricity and by 33% when providing heat.

Source: International Energy Agency

That explains the growth of Natural Gas as the world races towards renewables.

Hydropower:

Hydropower has been on a steady climb, nothing too fancy.

Nuclear:

Nuclear is a disappointing chart but that might change soon.

Wind:

Wind Energy has taken off like an airplane and continues to grow. However, it is still off a very small base and made up only 3.04% of all energy consumed by source.

Solar:

Solar is going ballistic! Solar too is coming off a small base and now makes up 1.93% of all energy consumed by source. But growing very very fast.

Now let’s compare 4 year growth rates:

Oil:

Oil saw its first drop in growth rate in the last 4 years but again that period encompassed a recession, the covid pandemic and China being weak. So I don’t think this is a clean read of drop in oil as an energy consumed by source. So yeah, it dropped but with an asterisk.

Coal:

Coal was weak between 2014 and 2018 and has recovered a little bit in 208-2022. At best, this tells me that we can’t conclude a clear decline in usage of Oil or Coal based on charts so far. It has not been growing like it did in the past but it also has not been falling off a cliff, yet.

Natural Gas:

Still Growing but slower in previous 4 year periods. Given that Natural Gas’s growth rate also dropped so much in 2018-2022 almost confirms that the drop we saw in oil was also impacted by global economic weakness and it is not clear so far if renewables have started cannibalizing fossil fuel sources of energy based on data so far.