The Black Gold

Renewables energies have experienced substantial growth in recent years with wind and solar both exceeding 30 GW of new capacity in the last two years. This year solar installations will outpace wind for the first time: 36.7 GW of new solar installations and 35.5 GW are expected in 2013, changing from 30.5 GW solar power and 46.6 GW wind power in 2012. In spite of the increasing presence of renewable energies, fossil fuels remain the primary source of the world’s energy needs. The International Energy Agency (IEA) recently published six trends that will be critical in shaping the future global energy landscape. Each of the six trends of the IEA involved fossil fuels, particularly oil and gas, illustrating the dominating role of oil and gas in the energy industry. Here is a summary of the six trends:

  1. The United States is paced to become the world’s top oil producer by 2017 due to its recent fracking boom. The IEA forecasts that American oil and gas production will peak around 2025, and then slowly decline, putting the Middle East back in its Dominating role. Other countries are likely to imitate the US model of fracking to increase their future oil and gas production.
  2. Fossil will continue to dominate the energy market. Currently fossil fuels account for 82% of the world’s energy production and the IEA forecast that in 2035 fossil fuels will account for 75% of energy production.
  3. India will replace China, the world’s present largest importer of oil, as the world’s driver for energy growth. Energy demands will rise in the Middle East and are expected to decrease in Western countries, particularly the United States and the European Union, due to improved energy efficiencies and higher fuel efficiency standards for automobiles.
  4. Trucking will drive energy demands in the transportation sector. The IEA expects the demands for diesel-based truck fuel to grow three times faster than the demand for gasoline. Plastics goods will also grow oil demand from the petrochemical industry.
  5. Brazil will become a major oil exporter. The IEA predicts that by 2035 Brazil will produce 6 million barrels of oil per day, a 300% increase from current production, which would make Brazil the world’s 6th largest oil producer. In spite of Brazil’s huge increase in oil production, the country is expected to maintain a green energy mix for internal energy demands, with 45% of domestic energy coming from renewable sources.
  6. Costly fossil fuel imports will become an increasing economic burden for the European Union, whereas the United States is paced to decrease the cost of its fossil fuel imports.

The IEA predicts that the dominance of fossil fuels in the future will increase carbon dioxide emission by 20% from current levels. This increase in CO2 emissions would lead to an average global temperature increase of 3.6 °C (6.5 °F), which almost doubles the internationally targeted 2°C. One of the primary drivers of the fossil fuel growth that is often overlooked, are government subsidies, mostly from oil exporting nations. In 2012, global fossil fuel subsidies totaled $544 billion, which amounts to more than 5 times the government subsidies of $101 billion that renewable energy sources received. Even if subsidies for renewable energy source were to double by 2035, as predicted by the EIA, they would still be dwarfed by the fossil fuel subsidies without significant reform.

Natural Gas Flared as Waste in a North Dakota Oil Well, where oil production has boomed due to Fracking – Image from National Geographic

The current climate for renewable energy source is challenges and trends indicate that the landscape will remain challenging in the future. As renewable energy technologies continue to improve, the key factor in their future will be energy storage technologies, particularly grid-level energy storage. Grid-level energy storage will have to be performed electrochemically, most likely with battery or fuel technologies, to achieve competitive efficiencies. California is leading the way in energy storage efforts, as shown by California’s recently announced energy storage targets of 1.325 GW by 2020. California’s commitment to grid-level storage may catalyze energy innovations that will fundamentally change the energy landscape as we know it.