Fossil fuel still plays a prominent part in today’s world, even though we are increasing our emphasis on alternative energy sources. The world’s dependency on fossil fuels is likely to get worse in the next decades. Even though global leaders acknowledge the need of transitioning to a low-carbon society, the steps taken to ensure it are not adequate.
Fossil fuel usage has roughly doubled since 1980, however, in the present day, coal consumption is falling in many parts of the world. Oil and gas usage, on the other hand, is still growing. Data shows that despite alternative energy sources such as renewables have become cheaper comparatively, the share of fossil fuels in the world’s energy mix still remains high compared to a decade ago. According to a report by REN21, fossil fuels’ share in the global energy mix was 80.2 percent in 2019, compared to 80.3 percent in 2009. The report further revealed that renewable energy share in the energy mix has grown to 11.2 percent in 2019 from 8.7 percent in 2009.
Climate change will also have a disastrous impact on the global economy. In its new report, ‘The economics of climate change: no action not an option’, Switzerland-based insurance giant Swiss Re said, “Climate change poses the biggest long-term threat to the global economy. If no mitigating action is taken, global temperatures could rise by more than 3°C and the world economy could shrink by 18 percent in the next 30 years. But the impact can be lessened if decisive action is taken to meet the targets set in the Paris Agreement.”
As a result of climate change, temperatures across the globe are rising due to greenhouse gases trapping more heat in the atmosphere. We are also seeing longer and more prolonged droughts as a result of climate change. Tropical storms too are becoming more severe due to warmer ocean water temperatures. We have started witnessing the impact of climate change. In July this year, intense rainfall and storms over Western and Central Europe led to severe floods in major European countries such as Austria, Belgium, Croatia, Italy, Germany, Switzerland, Luxembourg and the Netherlands.
Fossil fuel still a major source of global energy needs
Energy consumed across the globe is only growing every year. As per data, primary energy consumption grew by 1.3 percent last year amid the pandemic. In 2018, primary energy consumption grew by nearly 2.8 percent. In fact, energy consumption has been growing for the last few years. Most of the energy is consumed in developing nations across the globe. China, which is one of the largest economies in the world, alone contributed to three-quarters of the world’s energy consumption growth. China was followed by its neighbour India in second and Indonesia in third. Developed nations, however, such as the US and Germany posted the largest declines.
In 2019, fossil fuel accounted for 84 percent of the world’s primary energy consumption. Oil consumption rose to a record high in 2018 led by China. However, the pandemic struck in late 2019 and global oil production fell for the first time in a decade. Oil demand took a significant hit in 2020 as major economic activities across the globe were halted. This led to production cuts and as things stand, it will take another couple of years for the oil production to reach earlier heights.
As energy consumption across the globe slowed down in 2020, so did emissions. Global energy-related CO2 emissions fell by 5.8 percent, the largest annual percentage decline since World War II, according to the International Energy Agency. In its report, it said that “In absolute terms, the decline in emissions of almost 2 000 million tonnes of CO2 is without precedent in human history – broadly speaking, this is the equivalent of removing all of the European Union’s emissions from the global total.”
In 2020, demand for oil plunged 8.6 percent and 4 percent for coal. The IEA report further revealed that global emissions from oil use plummeted by well over 1100 Mt CO2, down from around 11400 Mt in 2019. Around 50 percent of the decline is attributed to the drop in road transport activities across the globe, while the slump in aviation demand accounted for around 35 percent.
Global coal production increased by 1.5 percent led by increasing demand in Asia, especially in China and Indonesia. However, overall, coal consumption declined by 0.6 percent and coal’s share in primary energy fell to the lowest level in 16 years.
Meanwhile, alternate energy sources such as renewables reached their highest ever annual share of the global energy mix. Renewables continued their impressive growth with wind being the largest contributor followed but solar. Much of the development with renewables is happening in China. Notably, it is also the largest market for renewable equipment manufacturing in the world. China was closely followed by the US in second and Japan in third. Interestingly, renewables surpassing nuclear power for the first time as their share in the power generation increased to 10.4 percent.
Fossil fuels and climate change
Fossil fuel is the major cause of climate change. According to the Intergovernmental Panel on Climate Change (IPCC), fossil fuel is the dominant factor for global warming. In 2018, around 89 percent of global CO2 emissions came from fossil fuels directly or indirectly. Most of the damage is caused by coal, which is by far the dirtiest of fossil fuels. Coal alone is the single largest source for global temperature rise, responsible for over 0.3C of the 1C increase in global average temperatures.
The IPCC further warns that fossil fuel emissions must be halved within a decade or so if global warming is to be limited to 1.5°C above pre-industrial levels. A report by the UN revealed that we are on track to produce more than double the amount of coal, oil and gas by 2030 than we can burn. So, more needs to be done. This is shocking because global leaders signed up to the Paris Agreement committing to reduce carbon emissions in 2015.
IPCC further stresses the point that countries need to seriously tap into alternate or renewable energy sources. We have reached a point where merely reducing unsustainable and polluting power sources will no longer do the job. What we need to do is get rid of them altogether given the dire state of affairs. Governments are encouraged to take notice and develop policies to reduce emissions and work closely with corporate leaders.
A report published in 2019 stated that by 2024, the oil and gas sector will invest around $1.4 trillion in new oil and gas extraction projects. As per the report, this could push warming beyond the 2°C mark, let alone 1.5°C. Canada and the US alone will account for nearly 85 percent of the expanded production. Some of the other countries are Argentina, China, Norway, Australia, Mexico, UK and Brazil among others. The corporate sector especially companies engaged in the oil and gas industry are some of the major contributors to climate change. Oil spills have a devastating impact on our ocean’s ecosystem.
Corporates and governments need to unite to tackle climate change
A research report published by the University College London concluded that global oil and gas production will have to decline by 3 percent every year until 2050 if we are to keep global warming to below 1.5 degrees Celsius. Similarly, a Greenpeace report published last year estimated that the global cost of air pollution from fossil fuels was around $2.9 trillion per year. If we break it down further, it means the global cost of air pollution was $8 billion per day. It is without a doubt global usage of fossil fuels needs to be reduced.
The Intergovernmental Panel on Climate Change (IPCC) has literally rung the alarm bells. Climate change is an emergency and a pretty big one. However,it is not a problem that one single person, institution, or a country could solve alone. For humanity to fight climate change, it will need a unified response with all stakeholders involved be the companies, investors, bureaucrats or important position holders at all levels of government. All must come together and work towards one common goal, which is climate change.
Unfortunately, we often find that such a level of collaboration is lacking between corporations and governments. In the present time, more and more people are gaining awareness when it comes to climate change and how fossil fuel is a contributor. This has forced many governments to take climate change more seriously. We have seen big multinational companies also increasing their attention towards climate change. We have seen oil giants such as Exxon and BP set ambitious goals to reduce emissions recently. Suzanne M. McCarron, vice president of Public and Government Affairs at ExxonMobil said, “ExxonMobil will continue to focus our efforts on providing the energy the world needs, while simultaneously addressing the risk of climate change by reducing our emissions, helping consumers reduce theirs, and advancing research to find new low-emissions technologies for the future.”
Last year, BP’s chief executive Bernard Looney announced the company’s plans to turn the company from a predominant oil and gas company to an integrated energy company. He and his new management team gave more than 10 hours of presentations over three days last week, in a bid to show the world that the oil and gas giant could adapt to a low-carbon future without sacrificing returns.
Bernard Looney said, “The world’s carbon budget is finite and running out fast; we need a rapid transition to net-zero. We all want energy that is reliable and affordable, but that is no longer enough. It must also be cleaner. To deliver that, trillions of dollars will need to be invested in replumbing and rewiring the world’s energy system. It will require nothing short of reimagining energy as we know it.
“This will certainly be a challenge, but also a tremendous opportunity. It is clear to me, and to our stakeholders, that for BP to play our part and serve our purpose, we have to change. And we want to change – this is the right thing for the world and for BP.”
However, the question on everyone’s mind is ‘enough being done?’ Experts argue that most companies and investors need to take the next step which is lobbying for strong government policies. Stronger policies have the power to guide the global economy towards a sustainable future.
As things stand, we have seen a majority of multinational corporations drafting plans to cut down on emissions. Over the years, we have seen more and more corporations acknowledging climate science. There are many large corporations who now consider climate change to be a risk to their assets and many are now working towards mitigating it.
However, only a few of these companies are actively pushing for government climate action. There are also many companies that have lobbied against climate change, however, do plan to cut emissions in the near future. This proves that corporates and governments across the globe are not on the same page when it comes to climate change.
We have also seen many companies acknowledging the fact that they will have a hard time meeting their own climate goals without government policies. A shift to a clean-energy world without strong government support is just not possible. Without support from the government or policies to promote clean or renewable energy, it will be difficult for companies to meet their climate goals. Even if they somehow manage to achieve those goals, they would have to take a huge financial hit, which could threaten their existence in the long run.
Climate change-led disasters are on the rise
Some companies such as Apple are indeed pushing for robust government climate policies. But it is not enough. Given the position we are currently in, corporates across the world need to unite to fight climate change. We are already seeing what climate change can do. Earlier this year, intense rainfall and storms over Western and Central Europe led to severe floods in major European countries such as Austria, Belgium, Croatia, Germany, Italy, Luxembourg, the Netherlands, and Switzerland. The floods led to the death of at least 242 people. Around 196 people lost their lives in Germany, 42 in Belgium, 2 in Romania, 1 each in Italy and Austria. According to Swiss Re, the widespread flood in Europe earlier this year due would cost insurers in the region around $12 billion.
Last year, the US recorded losses of around $22 billion due to disasters that are believed to be a result of climate change. What is worrying is that the recorded losses are increasing every year. According to credit rating agency Moody’s, the US is the third most exposed country to climate risks, behind China and the Philippines, by 2040. According to a new report from the World Meteorological Organisation (WMO), a disaster related to a weather, climate or water hazard occurred every day on average over the past 50 years which has led to the death of 115 people and causing losses of around $202 million daily.
The report also notes that the number of disasters is increasing as time passes by. Such disasters have increased by a factor of five over the 50-year period mostly driven by extreme weather caused by climate change. The report said there were more than 11 000 reported disasters attributed to these hazards globally, with just over 2 million deaths and $3.64 trillion in losses.
WMO Secretary-General Prof. Petteri Taalas commented, “The number of weather, climate and water extremes are increasing and will become more frequent and severe in many parts of the world as a result of climate change.
“That means more heatwaves, drought and forest fires such as those we have observed recently in Europe and North America. We have more water vapor in the atmosphere, which is exacerbating extreme rainfall and deadly flooding. The warming of the oceans has affected the frequency and area of existence of the most intense tropical storms.”
“Economic losses are mounting as exposure increases. But, behind the stark statistics, lies a message of hope. Improved multi-hazard early warning systems have led to a significant reduction in mortality. Quite simply, we are better than ever before at saving lives,” he added.
Losses as a result of climate change are being recorded in almost every part of the country. Unless, different stakeholders unite to fight climate change collectively, the damages would be far too severe for humanity and as feared by many, irreversible.