Dependence on fossil fuels in major advanced economies “is likely to have peaked” according to the Energy Institute (EI), after European use of hydrocarbons fell below 70% of primary energy for the first time since the industrial revolution – driven by demand reduction and renewable energy growth.
Reporting ahead of the release of the 73rd annual edition of the Statistical Review of World Energy (previously produced by BP), the institute said US consumption of fossil fuels had also fallen to 80% of total primary energy consumed in 2023.
Conversely, growth economies have struggled to curb fossil fuel growth, but renewables have massively accelerated in China as an energy source.
“When it comes to the energy transition, the big picture is of course what counts – there is only one planet Earth and therefore one net zero,” said EI CEO Nick Wayth.
“But the big picture masks materially contrasting regional variations… Although we have seen a strong bounce back in energy demand following Covid, [Europe and the US] recorded falls in overall energy consumption in 2023. And both are exhibiting clear signs of peaking or post-peak fossil fuel demand across their economies.”
Wayth added that, in absolute terms, Europe’s fossil consumption had fallen by 6% last year while use of coal had halved over the last decade. France, which has always been a “low fossil country”, saw it fall by just 48% last year (vs 53% in 2022).
“In fact, in 2023 fossil fuel consumption did not increase in a single European country,” Wayth said, adding that it would take “a major unexpected change” for Europe to revert from this course.
“The response to the Russia-Ukraine conflict has shown that energy markets can rebalance and consumers will respond to price signals. That perhaps bodes well for the need to increase the pace of the transition.”
Growing pains
Looking at the global picture, in India fossil fuel consumption was up 8% – accounting for almost all demand growth – and stood at 89% share of overall consumption. For the first time, more coal was used in India than Europe and North America combined.
In Africa, primary energy consumption fell in 2023 by 0.5%. Fossil fuels accounted for 90% of overall energy consumption, with renewables (excluding hydro) at only 6% of electricity.
Meanwhile, China’s full return post-Covid saw fossil fuel use increase to a new high, up 6%, but as a share of primary energy it has been in decline since 2011 – down to 81.6% in 2023. The country contributed 55% of all renewable generation additions in 2023 – more than the rest of the world combined. It also overtook Europe on an energy per capita basis for the first time.
“In 2023, coal consumption in India exceeded the combined consumption of Europe and North America for the first time ever,” Wayth said.
“The forward picture is no more positive. The IEA has recently estimated developing economies outside China account for only 15% of the global clean energy investment pipeline. This is well below what is required to meet growing energy demand, let alone hopes of decarbonisation, in many of these countries, where the high cost of capital is holding back new projects.”
Nevertheless, Wayth emphasised that Chinese energy trends do give cause for optimism in terms of the rate of China’s growth in renewable power, and potential role in meeting the COP28 goal of tripling renewable capacity by 2030.
“Although China’s full return post-Covid saw fossil fuel consumption increase to a new high last year, up 6% driven by increases in crude and coal use, the proportion of primary energy from fossil fuels has been decreasing since 2011 and fell very slightly to 81.6% in 2023. And within the fossil mix, coal is slowly being displaced (in relative terms) by gas,” Wayth said.
“The most interesting point relates to the power sector… China accounted for over half of the global additions in renewable energy generation. Perhaps more significantly it accounted for very nearly half (49%) of net additions to Chinese electricity consumption.”
“The rate of EV sales is also likely to start making an impact on Chinese fuel demand. In 2024, electric car sales in China are projected to reach about 10 million, accounting for nearly half of all new car sales.”
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