The Energy Transition Confronts Reality
Given the scale and complexity of the transition away from hydrocarbons, some worry that economic analysis has been given short shrift in the policy planning process. A clear-eyed assessment of the transition's prospects requires a deeper understanding of at least four major challenges.
WASHINGTON, DC – The “energy transition” from hydrocarbons to renewables and electrification is at the forefront of policy debates nowadays. But the last 18 months have shown this undertaking to be more challenging and complex than one would think just from studying the graphs that appear in many scenarios. Even in the United States and Europe, which have adopted massive initiatives (such as the Inflation Reduction Act and RePowerEU) to move things along, the development, deployment, and scaling up of the new technologies on which the transition ultimately depends will be determined only over time.
The term “energy transition” suggests that we are simply taking one more step in the journey that began centuries ago with the Industrial Revolution. But in examining previous energy transitions for my book The New Map, I was struck by how different this one is. Whereas technology and economic advantage drove earlier transitions, public policy is now the most important factor.
Moreover, previous energy transitions unfolded over the course of a century or more, and they did not wholly displace the incumbent technologies. Oil overtook coal as the world’s top energy source in the 1960s, yet we now use three times more coal than we did back then, with global consumption hitting a record high in 2022.
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