The world is moving into its fourth great energy transition, from fossil fuels to renewables. Previous transitions have marked new epochs. Fire gave hominids energy-rich food, with profound consequences for human evolution. Agriculture and animal power paved the way for settled societies and great cities. The industrial age, powered by fossil fuels, transformed the human condition – and created unimagined environmental damage.
Energy transitions are far more than a switch from one energy source to another. Wholesale energy transitions shape economies and societies.
England initially shifted to coal as a heat source because of the loss of woodland. Abundant coal led to the development of the steam engine, initially to drain flooded coal mines. In time it made possible the railways, international travel and industrial production. Electricity was harnessed for lighting, but ultimately created a host of transformational applications, from air conditioning to computers. The long-term effects of the green energy revolution are likely to be equally far-reaching.
The scale and pace of the change needed are daunting. For the energy scientist, Vaclav Smil, a world authority, the lessons from previous energy transitions are discouraging.
Smil points out that previous energy transitions have been slow and incomplete – the opposite of what we need now. Dominant sources of energy are rarely replaced. New energy sources add to existing ones and, in time, take a growing and eventually majority share of the energy mix. Demand for most types of energy have just kept growing for the last 250 years.
The steam engine was developed during the 18th century, but it was not until the early 1900s that coal overtook previously dominant energy sources such as wood, peat and dung (so-called traditional biomass). In turn coal accounted for the majority of the world’s energy use until the early 1960s, when it was overtaken by oil, more than 80 years after the four-stroke engine was first patented.
History shows too that we rarely stop exploiting an existing source of energy. Use of biomass, humans’ first source of energy, only peaked around the year 2000. Global coal consumption is down modestly from the highs reached in 2010. This year oil use is likely to hit record levels.
Renewables are making headway, but, in apparent confirmation of Smil’s caution, at a pace that would be insufficient to achieve the net-zero carbon target by 2050. Renewables’ share of global primary energy consumption has risen from 6% in 1965 to just 11% today.
In the case of earlier energy transitions a breakthrough technology, such as the steam engine, was developed and refined over decades. Today’s energy transition relies not only on solar and wind, but on as yet undeveloped technologies.
Last month the US climate change envoy John Kerry said that the technologies needed to achieve half of the world’s carbon reductions do not currently exist. Julian Allwood, professor of engineering and the environment at the University of Cambridge commented that, "it's virtually impossible for new energy infrastructure technologies to have a significant effect on global emissions in the time we have left to act." Professor Allwood cautioned that every new energy-infrastructure technology so far has taken between 30 to 100 years to move from invention to taking 5% of the energy market.
Yet the lessons of history may be less relevant to today’s energy transition.
Energy switches have almost always been a search for cheaper, more available and energy-denser sources of fuel. Today’s transition is different: urgent, government-led and with a moral aspect that has more in common with an existential struggle than the prosaic drivers of past energy changes. This energy transition is mobilising the power of government in a way that is rarely seen outside war. Unlike previous shifts in energy use, climate change is a cause that commands widespread and growing public support.
The target of achieving the Paris agreement of net-zero carbon emissions by 2050 is the ultimate ‘Moon Shot’ – an ambitious goal and a commitment to bring vast resources to bear in pursuit of a solution. The Manhattan Project during the second world war, the Apollo Programme and the development of COVID-19 vaccines show what can be achieved with commitment and resources. These episodes seem as relevant to the drive for net zero as the more distant energy transitions of the past.
It is true that the adoption of new energy sources has historically been slow. But these were mainly optional, and take-up largely matters of price and availability. Today’s shift is being mandated, and driven by regulation, taxes and pricing. (There are, for instance, few parallels in the past to the UK’s decision to end sales of petrol and diesel cars in 2030.) The speed of adoption of technologies has quickened over time. It took decades for electricity and the telephone to become ubiquitous in US homes. The internet and mobile phone did so in a few years.
Meanwhile history provides examples of speedy, as well as slow, transitions. China has created a modern transport and digital infrastructure in just 40 years. Derek Thompson writes in The Atlantic that “in 1880, Manhattan had no subway, no cars, and no electric grid; its tallest building was a church. By 1915, New York had a subway system, thousands of cars, the Great White Way (an allusion to Broadway’s newly electric signs)”.
They are almost footnotes in the great sweep of human energy use, but environmental concerns have previously driven rapid changes in energy use. Regulation in the wake of the calamitous London Great Smog of 1952 led to dramatic improvements in air quality in the capital. Lead was eliminated from petrol in most countries between the 1970s and 2000.
The scale of the change that is required now, and the opportunities that will be created, are attracting capital to ‘green’ assets and inflating prices. At the end of 2020 the market value of the electric carmaker Tesla was greater than that of the world’s top seven car manufacturers combined. The traded price of carbon permits on the European exchange has risen 140% in the last year in anticipation of tougher emissions regulations. Last year the dollar value of the basket of renewable energy companies in the MSCI index tripled.
The pattern of transformational technologies driving financial speculation is familiar from the previous booms in railways, oil companies and tech companies. These booms channel capital into new applications and speed iterative improvements. The outcomes for investors are variable, but they drive real economic change. The 1990s tech bubble, for instance, helped lay the groundwork for the internet and tech innovations of the past 20 years.
The experience of the green energy transition so far has been of costs falling more quickly than expected. In the last ten years the cost per megawatt hour of electricity generated from solar fell by just under 90% and from offshore and onshore wind by around 60%. According to the Our World in Data website, solar photovoltaic and onshore wind energy are now cheaper energy sources than nuclear, coal or gas. Subsidies for renewables have fallen away and capacity has expanded. According to the International Energy Agency, renewable-energy generation grew by 45% last year, the fastest rate in 20 years, and an amount equivalent to the entire energy-generation capacity of Germany.
It used to be thought that energy consumption proceeded in line with rising GDP growth, with ever greater levels of energy needed to drive growth. But in recent decades growth and energy use in the West have decoupled. In the last 30 years UK GDP per head has risen by around 50%, while CO2 emissions per capita have dropped by about 40%. Part of this has been driven by replacing home-produced manufactured goods with imports, effectively transferring the pollution from the UK overseas. But greater efficiency in energy use, the reduction in coal burning and the growth of renewables, have also played significant roles.
To reach net zero will require a speedier and more comprehensive change in energy use than has ever been seen. On existing trends and with current technologies net zero seems unattainable today. But trends change. Under normal circumstances it takes more than ten years to develop a new vaccine. The development of the mumps vaccine in just four years was a remarkable outlier. That several COVID-19 vaccines were developed within a year shows that drive, cooperation and resources speed innovation. The history of past energy transitions need not determine the future of today’s energy transition.
PS: One of the fascinating stories we came across in researching this Briefing was about the surge in power of US horses in the 19th century. The development of railways enabled horses to be transported over long distances for selective breeding. Robert Suits, a historian at the University of Chicago, estimates that as a result US horses became 50% more powerful. The Atlantic magazine put it more memorably, “The first thing you should know about the history of energy in the United States is that, about 150 years ago, the horses got absolutely ripped”.
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