‘The Statistical Review is a great opportunity to zoom out, look at the bigger picture and connect up some of the dots,’ said Rachel Morison of Bloomberg. She emphasised that on the demand side, industrial energy demand consumption had ‘remained weak’ in Europe despite low prices. ‘The Review indicated that power demand has largely remained the same. Though it’s a different story in the US, with projected demand increasing because of data centres – something which is likely to happen in Europe too, but perhaps more slowly,’ she said.

Romain Debarre of Kearney saw a year of ‘very contrasted outcomes on the energy landscape’ from the Review. On one side there was very good performance on the energy transition, with a renewable push by wind and solar. However, 2023 continued to be marked by a lot of geopolitical tensions, which the energy industry ‘had generally reacted very well to’, given the changes in natural gas flow and oil flow in Europe, as well as LNG developments since the Russian invasion of Ukraine.

Debarre considered these changes to be ‘relatively positive’. But on the negative side, he was concerned that oil consumption continued to grow in 2023: exceeding 100mn b/d for the first time, ‘which is certainly negative for climate change’.

He called for a more pragmatic approach to the energy transition: ‘Because we are investing in new sources of energy production like wind and solar, but are ignoring one of the main pillars of the energy transition – energy efficiency.’ Lack of momentum when it comes to energy efficiency was a major theme of the panel discussion.

Debarre also questioned the ‘very tiny’ progress being made on green hydrogen production globally – at merely 1% of primary consumption according to the Statistical Review, despite the European Union and other governments providing massive support investment. ‘So you can question the relevance of hydrogen as a solution to the energy transition,’ he commented.

Lack of progress 
However, the biggest area of concern was the lack of speed or ‘slow progress’ in the energy transition.

Alarmingly, like many of the panellists, Debarre noted: ‘There is no progress on energy transition’, as global energy consumption grew by 2%, green energy consumption grew by 2%, and global energy emissions grew by the same percentage of 2%. ‘So, the more energy that is consumed, the higher emissions climb.' Indeed, there appears to be ‘no such thing as the energy substitution promised in the past, as we approach the 1.5℃ target today’. He asked whether we are just ignoring the energy transition, according to the latest figures in the Statistical Review.

Simon Virley of KPMG emphasised that next year is thirtieth anniversary of the first COP in Berlin in 1995, when the share of world energy coming from fossil fuels was 86% and is still 81.5% today. He said the slow progress was disappointing and remarked: ‘Despite all the growth of renewables, that’s how much difference we’ve managed to chip away in terms of the share of fossil fuels.’

Virley said three facts jumped out. ‘There was an 18-month period, during COVID, when it looked like the world might be on the right trajectory for the Paris Agreement. But sadly we’ve rebounded and gone straight back on the horse in terms of pre-COVID trends.’

On a brighter note, he was encouraged by China’s progress on renewables – adding more renewables than the rest of the world combined, according to the Statistical Review. ‘Because if China can do it at that scale… costs should continue to come down, and hopefully that should help with deployment of renewables and other low-carbon technologies around the world.’

But Virley was disturbed to discover that 96% of power additions in India are fossil fuel, with India consuming more coal than North America and Europe combined. Redoubling the need for ‘those countries that are further along on the energy transition having to step up now in terms of finance... helping those countries where demand is growing faster to transition faster. Because otherwise the consequences will be very dire.’

Juliet Davenport emphasised three issues. Firstly, she considered that the plight of Africa was not being managed properly. ‘Given the lack of a significant increase of the availability of energy for people who currently don’t have access to energy… we don’t seem to be able to decarbonise them either.’ She insisted that developed countries should invest more and help less-developed countries ‘leapfrog from fossil [fuels] directly to clean energy technologies’. Davenport saw this as a real opportunity but recognised that ‘in a high interest world it becomes even harder to look at developing economy investment’.

Winds of change and drought
Davenport then made a very striking point about climate change. Global wind speeds are down this year and have been for a couple of years. Consequently, she suggested that wind turbines should be adapted to use lower wind speeds. What’s more, both she and Nick Wayth highlighted the impact of droughts on hydro output in China and round the world. ‘If we’d had higher wind speeds and higher hydro, maybe China would look significantly different in terms of the amount of carbon it is producing,’ suggested Davenport.

Thirdly, she questioned the attitude towards average per capita emissions in the chart showing US emissions right at the top and Europe looked ‘quite smug’ at the bottom. Davenport argued that you’d probably get a better picture taking a more holistic view, ‘adding China and Europe together… as Europe exports a significant amount of its emissions through its supply chain to China’.

On that point, Wayth mentioned that Chinese energy consumption had bounced back, broadly in line with the pre-COVID trend, with year-on-year growth broadly equivalent to 150% of the UK’s entire energy consumption. While the scale of China’s renewable energy deployment had been ‘absolutely phenomenal’.

Grid constraints and COP28 goal
Wayth was also concerned about grid constraints – with a typical wait of 15 years to get many UK projects off the ground. He said: ‘You could triple renewable capacity by 2030, but that’s no good if it’s not tripling generation [in the network] as well.’

Davenport, too, expressed frustration with grid constraints. ‘Here in the UK, renewables accounted for 40–50% of electricity production. One of the challenges is you now begin to get into grid and system constraints. So the next level of investment is going to need not just renewable investment, but wider system investment as well.’

Morison then asked if the panel thought the COP28 goal of tripling renewables by 2030 was realistic, or even enough?

Virley expressed ‘a bit of scepticism’ with the calculations. ‘In absolute terms we’re adding more and more hours of renewables. But we’ve seen how hard that has become in recent years with higher interest rates, grid constraints and supply chain problems. We need to tackle those blockages clearly. But those problems have been writ large in lots of geographies… and there are going to be quite some challenges for policymakers to overcome and deploy that scale of renewables, year after year after year.’

Wayth was more positive. He reckoned that: ‘We have got to the point in most geographies where renewables are winning… and don’t need government support or subsidies. With Texas recently overtaking California as the largest solar state in the US.’ Nevertheless, given the changes in government happening in Europe and the US over coming months, Wayth admitted that ‘it really is a challenging target’. And if we get to that target, is it enough? ‘Well, that depends how much fossil fuel is displaced on the way down as well,’ he remarked.

A dirty business
Morison pointed out that the mix of fossil fuels in the global primary energy mix ‘actually seems to be getting dirtier!’ and asked: ‘Why are we seeing growth in the burning of the dirtiest fuel – coal and oil, while gas sort of stayed still?’

‘It’s about availability and price. That’s the blunt truth,’ said KPMG’s Virley. ‘When Europe managed to divert from Russian gas, it paid a price for it’, he continued. This brought up the classic issue of the energy trilemma. ‘When push comes to shove… for governments around the world, the famous trilemma kicked in, where energy security and affordability squeezes out the actual decarbonisation when times are tough. That’s what 30 years of this data shows us.’

Virley felt that gas is going to have to be a major transition fuel, complementing the growth of renewables and electrification for flexibility; and the promise of hydrogen in the longer term ‘if we can get carbon capture going at scale’.

A global approach
Wayth sees the need for a more global approach and modularity, much in the same way that wind and solar have scaled so rapidly and costs come down so that solar panels are the same price in Germany and China and India. There’s also a need for a similar approach to nuclear. ‘I think the only way you can get to a nuclear target, is when it becomes the domain of government, more so than private industry. But if we have 50 different regulatory regimes for SMR, forget it!’

There was also the thorny issue of whether new deposits of oil and gas should be left in the ground, in line with the International Energy Agency recommendation, or developed.

Debarre said: ‘The question goes far beyond legislation, because you have [the issue of] energy security, not only for the producers, but also for the buyers like European nations and others.’

Davenport was of the opinion that the question should be ‘turned on its head’ and said: ‘Rather than trying to restrict the level [of fossil fuel production], I would really start to try and invest in reducing the requirement to do that.’

Energy Institute CEO Wayth came back to his pet theme. ‘The polarity is unhelpful’, he said. ‘If planet Earth was one country, we would be increasing production in the Middle East, which are the cheapest and lowest-carbon barrels. We wouldn’t be doing the difficult, expensive stuff… That world doesn’t exist. But if we hold that mindset, I think it’s an important way to start thinking. And once you start applying a carbon price to each barrel of produced oil, that would begin to alter that discussion.’

Indeed, there was plenty of food for thought and reflection.

• Further reading: ‘Feeding our energy-hungry world’. Our appetite for energy continues to grow, and with it consumption of fossil fuels, according to the 73rd Statistical Review of World Energy, which records the production, consumption and trade flows of fossil fuels and renewables, around the world, by region or by country. This year’s data reveals an increase in global energy consumption, in fossil fuels and in carbon emissions, but also an increase in renewable sources of energy. 
• The new Energy Institute Statistical Review of World Energy is an illuminating read, laying bare the state of play in the global energy economy and its journey to net zero, according to Nick Wayth CEng FEI FIMechE, Chief Executive of the Energy Institute.