Adaptation has been the key element behind humanity’s survival up till this day as changes to the environment have been bringing overwhelming challenges and existential threats to communities throughout history. With climate change today suggesting a dismal scenario for the future, the global community once more has to adapt to a new reality to secure its economic prosperity and continued survival. As carbon emissions around the world dramatically increase and contribute to a rise in the average global temperatures, experts have emphasized the necessity to have more solid commitments toward energy transition.
Though energy transition may be perceived as a modern trend, it is as old as humanity itself. Human history can in a sense be thought of as a chain of energy transitions, from the day the first fire was lit until today.
In ancient times, society’s main source of energy mainly relied on burning wood and manure, primarily for cooking food and keeping their homes warm. Starting as early as the 16th and 17 centuries, the prices of traditional energy sources, such as wood and charcoal, shot up due to scarcity and eventually coal became the more popular option, especially for technologically advanced nations during the Industrial Revolution. Being the first energy transition, coal became the main fuel to increase production and its price dropped, while innovations were discovering other effective ways to make use of coal.
With the world’s unquenchable addiction to coal, it rose from making up 1.7% of the energy mix in 1800 to 47.2% in 1900, fueling everything from steam engines to internal residential heating systems. However, all of that was about to change with the emergence of oil and gas, being yet another revolutionary energy transition.
Slightly after the mid-19th century, oil made its way onto the stage when in 1859 Edwin L. Drake constructed the world’s first commercial oil well in the US state of Pennsylvania. Though prior to the invention and mass production of cars oil was just used for lamps. The advent of internal combustion engines, nonetheless, led to an increase in demand. With the development of the automobile industry and World War II, demand for oil was brought to new heights, which made massive fortunes and helped expand the fossil fuel industry.
Natural gas also began to follow the same upward trend, with skyrocketing demand for energy sources to fuel gas-based residential heating systems, water heaters, and a range of other home appliances. As oil and gas quickly took over the market, coal began to lose its appeal, even though it is still one of the world’s most vital sources of electricity generation.
With climate change emerging as a potentially dangerous existential threat, renewable energy has become the new target for energy transition. Renewable energy can include anything from a renewable resource, including solar energy, window, biomass, rain, tides, waves, and geothermal heat. Researchers have been hard at work to come up the technologies that will effectively extract the energy from these resources in the most environmentally responsible manner.
Progress in energy transition has been significant yet slow with the International Energy Agency (IEA) insisting that the clean energy industry is in need of more investments in order to meet energy transition and emissions reduction goals. Out of the $16 trillion spent by the international community on pandemic-related economic support, only 2% was invested in clean energy. Consequently, the planet is facing history’s second largest jump in carbon emissions due to the increased use of coal for economic recovery.
In 2020, renewable energy made up 11.2% of the energy mix and investments in global energy transition reached $755 billion in 2021. This has also been accompanied by worldwide demand to enhance operational efficiency through digital transformation as a key ingredient to energy transition. Despite massive efforts in this regard, climate scientists point out that a lot more has to change in order to keep global temperatures within a safe range.
With companies seeking carbon neutrality by 2050, there is a serious commitment toward realizing a future market that is able to effectively prioritize sustainability when doing business. These trends beg the question as to what will become of the oil and gas industry in a future market that aims to minimize the use of fossil fuels? Experts have highlighted that the outcome will not be extinction, but rather adaptation and continuity, pointing out the importance of maintaining the diversity of the energy mix as well as the importance of hydrocarbons in energy security. The importance of fossil fuels for the global energy sector’s future is also made sufficiently evident given the current models by the IPCC and IEA.
Energy transition is inevitably the path that humanity has to take once more to ensure its continued survival as a species on the planet. It also represents an opportunity to fulfill society’s needs while reestablishing the prosperous relationship that humanity once had with the natural environment.