The world relies on fossil fuels on a daily basis, from electricity, heat, and transportation to feeding the processes that make a huge range of products, such as steel and plastics. Yet fossil fuels have been proven to emit harmful air pollutants, pollute waters, degrade land, and are the main reasons for global warming. Despite all this, is the world ready to solely rely on renewables?
Governments across the world have joined together to tackle climate change with the aim to move from fossil fuels to green energies. While climate change activists are welcoming any sort of change towards net zero, the question still hangs as to whether the world is ready to give up on fossil fuels.
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An example of why the world may not be able to give up on fossil fuels is the recent shortage of lorry drivers in the UK. It proved that there is still a high demand for fuel, and unless automobile manufacturers find a way to equip electric vehicles with more powerful batteries, which would allow them to go longer distances, people will not give up that easily.
Chris Bowden, managing director at energy supplier Squeaky, says that there is plenty of fuel, but “public fear does put strain on the UK’s infrastructure”.
He continues: “The current fuel shortage is a prime example of the world’s fragile supply chain. The government is now needing to dip deep to offset the risk – a suspension of competition law between oil firms, temporary visas for foreign fuel tanker and food lorry drivers, and steps to try and speed up the process to get HGV drivers.”
A need for fossil fuels
The comfort the world has had for years, either provided by oil or gas or both, is not ready to be matched by renewable energies. However, the current crisis has highlighted the importance of gas in setting the power price in the UK, according to Bowden.
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By GlobalDataHe says: “The UK system is highly interconnected to global gas markets, and these drive the underlying market price for electricity as gas generation is the marginal price setter now we have largely displaced coal.
“Over the last decade, the UK has become more independent on imported gas, and there’s also been a significant change to the supply mix, as the UK’s transition to a cleaner energy system means the UK is now a largely imported gas and renewables system.”
First coal, then oil and natural gas, allowed rapid growth in industrial processes, agriculture, and transportation. The modern economy relies heavily on the fossil fuel energy system – fossil fuels powered the industrial revolution, pulled millions out of poverty, and shaped the modern world.
Highlighting the decrease in demand for gas during the pandemic, Bowden adds that it was the decrease in demand for gas during the pandemic in combination with“reduced economic activity in the UK” that “drove electricity prices to historic lows of £20/MWh”.
He continues: “However, as global economies started to recover post-Covid, there has been a surge in the demand for liquefied natural gas (LNG) and Asia has outbid the UK and Europe for these LNG cargoes.
“Combine all of this with a structural upward shift in carbon credit pricing, low levels of renewable generation from wind, and a fire on the French interconnector and you have a perfect storm that has pushed electricity prices to levels never seen before. At the time of writing, winter 2021 prices have risen above £200/MWh and short-term hourly prices have been as high as £2,500/MWh.
“Globally we are seeing energy systems move towards a mixture of intermittent generation and flexible generation – gas – to balance it, combined with baseload generation – coal and nuclear. The fossil fuel generation sets the price, so we are inextricably linked to fossil fuels until we have alternatives like storage and demand side response.”
Can we give up fossil fuels?
If governments can put the right policies in place, we are poised to make dramatic progress toward a clean energy future. This would involve cutting energy demand in half; growing renewable energy resources; electrifying almost all forms of transportation; and getting fossil fuels out of our buildings. According to Bowden, the integration of renewable sources in the energy system is one of the key components of any energy system decarbonisation strategy.
He says: “However, this integration raises many challenges in terms of planning, operation, and reliability practice. Renewable technologies are not comparable with fossil-based generation in terms of dispatchability. This translates into high system costs of renewable generation, as it requires holding significant back-up capacity to ensure a balanced energy supply throughout the day.
“In fact, these challenges will only further increase as the share of renewable energy generation increases to levels never witnessed before. To date, these aspects have been only marginally considered in economic analyses of renewable energy deployment.”
Steve Crolius, former top advisor to US President Clinton on climate change and energy transition, stresses that we should not look at whether it would be too ‘“hard” or too “easy” to give up on fossil fuel.
Instead, he says: “It is about economics. It will be so costly to decarbonise certain end-uses that it will make sense to continue using fossil fuels in those applications. The best thinking is that the energy needed in these applications is modest enough that net zero can be achieved through implementation of offsetting measures that remove carbon dioxide from the atmosphere.”
Offshore oil and gas platforms
Giving up on fossil fuels would involve the decommissioning of offshore oil and gas rigs and platforms – meaning that when a field production cycle comes to an end and all the usable fuel has been processed, the facilities must be dismantled, and the surrounding area returned to its natural condition.
However, this comes at a great cost. Estimated costs for UK offshore oil and gas decommissioning is £46bn – although the Oil and Gas Authority is working towards a £39bn by end-2022 target.
Bowden believes that the cost should be covered by the owners, however “there has been much discussion – particularly amongst central banks – on how to link CO2 reduction and economic growth. One idea is to pay fossil fuel-based economies money to leave hydrocarbons in the ground so perhaps a company could be paid money to cease hydrocarbon extraction earlier”.
He goes on: “Renewables imply a more flexible and decentralised approach to energy generation and one way to achieve this is interconnection with other markets. Electricity transmission operates under several significant constraints, among which are the interconnections between different regional electricity grids and the capacity constraints of transmission lines that limit movement of energy.
“Brexit was partly about decoupling from European markets so it will be interesting to see if this has an impact on the free flow of gas and power between the UK and Europe, as this is essential for both the UK and the EU to meet its decarbonisation targets. If gas and power become highly politicised, we may see restrictions on this free flow of gas and power between countries.”
