National

Note: 1800–1900 data shown at 25-year intervals, 1900–1920 & 1930–1970 data shown at 10-year intervals, and 1920–1930 & 1970–2015 data shown at 5-year intervals. Data: Arnulf Grubler (2008), International Energy Agency (2017). Reproduced from charts by Richard Newell and Daniel Raimi. Chart: Axios Visuals

Since 2010, the costs of producing electricity from solar photovoltaic systems have decreased by more than 80%. Wind and solar now vie with natural gas to provide new electricity generating capacity. To some, these trends signal the world’s latest energy transition: away from fossil fuels and toward a renewable future.

The big picture: These historical changes in the energy system, however, have been a matter of addition, not transition. Although the percentage shares of biomass, coal and oil in our energy supply have fallen with the rise of alternatives, their total use continues to grow. The world has never experienced an energy transition, but the challenge of climate change means that, for the first time, one will need to begin.

Since 1800 biomass consumption has increased by about 275%, and coal use by more than 60% just since 2000. Rapidly falling costs and growing investments have helped boost wind and solar power, but these energy sources — like nuclear, oil, and gas before them — are building on top of old ones, rather than replacing them.

A true energy transition will need to reduce carbon emissions. By 2040, the International Energy Agency  projects that, to reach the climate targets laid out in the Paris Agreement, global coal consumption would need to decline by more than half while oil consumption falls by almost 25%. Natural gas could continue to grow, though more slowly than today. Renewables would need to increase roughly tenfold from today’s levels to provide, together with nuclear, more than 25% of global energy.

Economists have consistently identified the policies to achieve such a transition: a price on greenhouse gas emissions, coupled with incentives for early-stage research and new technology development, including advanced solar,  nuclear and carbon capture technologies.

Yes, but: While some major emitters are adopting these policies, they are mostly falling short of the goals outlined in Paris, and new investments in fossil fuels continue to more than double those in renewables. Meanwhile, federal policy in the U.S. is moving in the opposite direction. And even with ideal policies, a  real energy transition would mean winners and losers, creating  substantial challenges for regions reliant on the production, transformation and consumption of fossil fuels.

The bottom line: To avoid the worst impacts of climate change, renewables and new technologies will need to do more than build atop CO2–intensive fossil fuels — they will need to push out incumbents while at the same time  expanding global energy access and reducing the system’s environmental footprint.

Richard Newell is president and CEO of Resources for the Future. Daniel Raimi is a senior research associate in RFF’s Energy and Climate Program.

Despite renewables growth, there has never been an energy transition

But the challenges of climate change now call for one.

Energy

Expert Voices

World

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

President Trump has claimed that turmoil in the Strait of Hormuz matters less than in decades past, now that U.S. oil production continues to grow while imports fall — a view that does not reflect the global nature of today’s oil market.

The big picture: Middle East tensions have heightened following multiple attacks against oil tankers in the Strait of Hormuz, a 2-mile shipping channel exiting the Persian Gulf through which about one-fifth of the world’s oil passes each day. Even though the majority of those shipments are bound for Asia, the interconnectedness of the global oil market means demand surges or supply disruptions in any region affect oil prices worldwide.

Context: U.S. imports from the Gulf fell to 1.5 million barrels per day last year, down from a high of 2.7 million bpd in 2001. Celebrations of U.S. energy “independence” or “dominance” aside, the U.S. is still vulnerable to swings in the global oil market.

The risk isn’t directly to physical supply, but rather to price movements that affect business and consumers alike.

Past oil price spikes have coincided with numerous conflicts in the Middle East where physical supplies to the U.S. were not threatened. And current instability in Libya, which produces far less oil than the Gulf countries, could spark an increase in global prices.

While record levels of domestic production mean that U.S. producers would benefit more than in the past from high prices, the average American could still face sticker shock at the pump.

What to watch: The standoff between the U.S. and Iran escalated Wednesday when Iran shot down an American surveillance drone.

In response, prices of Brent crude, the global benchmark, climbed more than 5% Thursday morning. Further conflict could drive prices higher still.

The bottom line: The only way to be “independent” of the oil market is to not use oil. Until then, a supply disruption anywhere is a disruption to prices everywhere.

Richard Newell is president and CEO of Resources for the Future and a former administrator of the U.S. Energy Information Administration. Daniel Raimi is a senior research associate in RFF’s Energy and Climate Program.

Strait of Hormuz tensions underscore oil market’s global scope

The effects of regional demand surges and supply disruptions spread quickly.

Ships in the Strait of Hormuz. Photo: Marwan Naamani/AFP/Getty Images

Price of oil

Oil companies

President Trump has <a class="gtmContentClick" data-vars-link-text="claimed" data-vars-click-url="https://time.com/5608787/iran-oil-tanker-attack-very-minor/?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=newsletter_axiosgenerate&amp;stream=top" data-vars-content-id="e881e6a2-62bd-4768-8c83-003d95abebce" data-vars-headline="Strait of Hormuz tensions underscore oil market’s global scope" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://time.com/5608787/iran-oil-tanker-attack-very-minor/?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=newsletter_axiosgenerate&amp;stream=top" target="_blank">claimed</a> that turmoil in the Strait of Hormuz matters less than in decades past, now that U.S. oil production continues to grow while imports fall — a view that does not reflect the global nature of today’s oil market.The big picture: Middle East tensions have heightened following multiple attacks against oil tankers in the <a class="gtmContentClick" data-vars-link-text="Strait of Hormuz" data-vars-click-url="https://www.eia.gov/todayinenergy/detail.php?id=39932" data-vars-content-id="e881e6a2-62bd-4768-8c83-003d95abebce" data-vars-headline="Strait of Hormuz tensions underscore oil market’s global scope" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.eia.gov/todayinenergy/detail.php?id=39932" target="_blank">Strait of Hormuz</a>, a 2-mile shipping channel exiting the Persian Gulf through which about one-fifth of the world’s oil passes each day. Even though the majority of those shipments are bound for Asia, the interconnectedness of the global oil market means demand surges or supply disruptions in any region affect oil prices worldwide.

Richard Newell

Stories

Strait of Hormuz tensions underscore oil market’s global scope

Despite renewables growth, there has never been an energy transition