Fossil fuels still provide most of energy despite ‘energy transition’

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Against the backdrop of an ongoing war that has disrupted shipments of oil and liquefied natural gas through the Strait of Hormuz, where do matters stand when it comes to the much discussed global “energy transition”?

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A common narrative among politicians is that we’re witnessing a historic energy revolution, which involves a forced march away from fossil fuels and the dramatic ramping-up of renewable energy production. An important advantage of renewables (e.g. wind, solar) is that they allow for greater domestic self-sufficiency, reducing the need to import energy from unstable regions of the globe. The risk of relying on fossil fuels from the Middle East has been on display over the last two months.

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Yet the energy transition—if there is one—is slow-moving, in part reflecting the trillions of dollars invested in existing assets and infrastructure. Indeed, some historians have observed that the evolution of the global energy system has involved adding new energy sources to those already in use, rather than replacing the latter with the former.

Some proponents of the energy transition story claim an extraordinary—almost magical—change is occurring. But the data on global energy supply and demand are inconsistent with this view. For one thing, the overall demand for energy is increasing as the global population and economic output grow, and as lower- and middle-income economies seek greater prosperity. Consumption of most traditional forms of energy (coal, oil and natural gas) for use in industrial processes, transportation, electricity generation, and the heating and cooling of buildings is rising, particularly in Asia, Africa, the Middle East and Latin America.

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Today, fossil fuels still provide about four-fifths of the world’s primary energy, only a little less than a decade ago. According to recent projections from Shell, global energy demand will grow by 25 per cent from 2024 to 2050, with the demand for oil increasing by three to five million barrels per day by the early 2030s and natural gas demand expanding briskly into the 2040s.

While the production of renewable energy is also growing in many countries and the fossil fuel intensity of the transportation sector is declining as electric vehicles make headway, fossil fuels still underpin modern societies and economies.

A stated policy goal in Canada and other countries is to add more “clean” electricity and replace other forms of energy with electric power generated from no- and low-carbon sources. Some believe this will quickly reshape the wider energy system and cause greenhouse gas emissions to plunge. But again, the data paint a more nuanced picture. In 2025, electricity comprised only 20 per cent of global energy output. Non-traditional renewable energy—wind and solar, biomass and “other”—provide only 4 per cent of the world’s primary energy. Biofuels supply less than one per cent. To be sure, these forms of energy are becoming more popular, and demand for them is growing, but in absolute terms they represent only a small slice of the global energy pie.

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Even with concerns over climate change, the world continues to demand and use more energy. There are no detectable inflection points in the data suggesting a rapid pivot to a fundamentally different energy system.

Absent some revolutionary new technology, and based on the long historical record of energy use, the inexorable march of rising energy demand will likely persist. The good news is that the world is using less energy per person (and per unit of economic output) than it did in the past, signalling some decoupling of energy consumption and related emissions.

Jock Finlayson is a senior fellow at the Fraser Institute. 

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