The Collapse of Fossil Fuels - and why that is a good and timely thing

The Fossil Fuel Energy Idea reaches its inevitable conclusion

There is an energy tale that goes like this.

Earth’s energy is always carbon-based, and energy transitions are never released from carbon: energy’s fate is to move from one form of carbon to be replaced by another.

Energy only ever passes from one fossil fuel (carbon-based) to another in a great unending chain of fossil fuel layering—biomass (wood) supplemented by coal, coal by oil, and oil by natural gas.

Thus each fossil (carbon) energy source is never replaced, and humanity simply expands its energy consumption by burning more forms of carbon that it extracts.

Eternally.

So the carbon-centric world view views any new imposter energy option such as solar, or wind or batteries as cumulative, additional to the everlasting bedrock of the carbon system.

New energy merely accumulates on top of elder carbon.

It is summed up as “no transition, just addition”.

Charts like these inform the thesis.

At first glance it appears intellectually feasible from a geologic and historic perspective.

But this theory after a closer look seems fanciful and strange, almost mystic, and very high risk from a long-term perspective, though that is what many high-profile energy scholars and analysts believe.

So no.

No – clearly there are not many chemist graduates in the midst of these theorists.

Let’s be clear - we are going to need a lot more chemistry than burning ancient carbon in the coming centuries for our world energy system to work in the long-term for the billions of souls already on the planet.

The everlasting carbon-energy mind-set is a vast analytical over-reach that assumes the past few decades of fossil fuel expansion explains the long-coming centuries of global energy technical development.

Recency bias on steroids if you will.

Chemistry well beyond carbon

The current energy transition will be very different from the limited additive ones of the past - and frankly it has to be as there is only so much inherited carbon we can burn.

The best estimate we have is here – about 40 years of global economic reserves left based on current consumption.

“Energy history” is not a deep science, rooted in long-term equations or universal laws, or indeed chemical analysis, it is a youthful socio-economic narrative mostly describing global fossil fuels, which are barely older than the scholars discussing them.

When fully written, we are going to need a lot more chemistry than carbon for energy’s proper history.

The transition ahead of us will in fact tell the story of carbon’s evolution from the primary energy provider via combustion, to its future minor role as the creator of added value products such as, perhaps, plastics.

As primary energy is replaced by better and more effective chemistries.

From extraction to manufacturing, from carbon to all our other elements

The most fundamental energy move we have to make, for the long term, is the shift from carbon energy to other materials that can create global energy at scale.

This is not to demonise carbon; it is making the simple point that only burning carbon is not a good long-term energy idea.

It is too high risk, because there is not enough carbon to go round.

Carbon is found in finite amounts and we can’t re-create those carbon reservoirs - oil and gas fields - we can only happen upon them.

Those carbon reservoirs took billions of years to create from organic animals and plants.

Great while they last – but once gone the earth’s carbon energy capital won’t help us into our energy long years in the next century and beyond.

Carbon is also inefficient when used (60% wasted), it’s located in only a few places at exportable scale (eg the desert plains of the Middle East) and the long-term side effects of burning it are not good (we use it up quickly, and it creates lots of pollution as we do it).

So – without a new energy idea, using other elements and technical skills we now have, energy will run into a supply wall soon, especially given humanity has tripled in size in the last 70 years to 8 billion, and probably grows to 10 billion in the next 20 years.

You see the problem. The risk of betting all on carbon.

But conversely the huge opportunity of moving beyond it.

That move away from carbon fuels opens up a new concept of global energy.

Moving away from shuffling coal, or oil or gas around, and sending them on distant journeys for expensive processing.

To the alternative – renewables, or more precisely large scale energy technologies such as wind, solar and electric power batteries – which can now produce global energy at fast developing scale.

And as the name suggests, they are sustainable or replenishable, being reliant on wind, daylight, and non-carbon elements and materials that can last for the long-term - and unlike carbon can be recycled and replaced.

Renewables are an energy system based on inorganic (non-carbon) mass energy products, manufactured in tidy factories, and shipped efficiently and cheaply to where they are needed.

Now at global scale.

Wind and solar alone account now for almost 13% of global electricity, growing at 17% per year – meaning at this rate they will be a third of global electricity by 2030, perhaps 70% by 2035.

Fossil fuel exceptionalism ends

These exponential renewable energy technologies, not bound to carbon, behave differently to the carbon fuels we are used to.

Up to now, coal, oil and gas have dominated our lived experience of the industrial revolution since around 1825, and are assumed to be the bedrock, the foundation of energy production –a cliché given their physical reality.

They are assumed to be “always here”, exceptional to abrupt innovative disruption.

No longer.

The Rise of Exponential Energy

The current energy shift is fundamentally unlike past transitions - or additions - which moved carbon from one form to another.

It differs in three interconnected and critical ways:

1. The Shift from Carbon-Based to Inorganic Energy Sources

o Fossil fuels are based on burning carbon, which is finite, inefficient and geographically constrained.

o Renewables, on the other hand, leverage materials that are abundant and reusable (e.g., silicon (sand) for solar panels, extensive mines of lithium for lithium-ion batteries).

o Fossil fuel reserves are depleting, while renewables can be manufactured indefinitely and recycled, breaking the extraction-limited model (lithium reserves are over 200 years and increasing).

2. The Transition from Extraction to Manufacturing

o Fossil fuels require constant extraction and transport, suffering supply constraints and geopolitical risks – and do not follow a learning by doing model as each reservoir is unique.

o Renewables are manufactured, meaning they become cheaper with scale (Wright’s Law), creating an energy abundance effect rather than scarcity.

o This disrupts the historical layering model—solar panels, wind turbines, and batteries are not fossil energy additions but direct fossil fuel replacements.

3. Exponential Growth of Renewable Energy

o Unlike the linear growth of fossil fuels, solar and wind follow an exponential adoption curve.

o Solar PV costs have dropped >90% in 15 years, mirroring Moore’s Law-like improvements in computer processing power.

o Wind and battery technologies are also rapidly improving, driving cost declines and scaling up far faster than fossil fuels have historically achieved

o And EV battery adoption follows an S-curve, an exponential growth pattern, moving from less than 1% of passenger car sales in 2016 to 15% today, signalling rapid displacement of oil demand in transport

Other major energy system trends support this shift.

Electrification of Demand – innovation of energy end use

• As electric vehicles (EVs), heat pumps, and industrial electrification grow, they displace oil, gas, and coal consumption at a faster rate than previous energy transitions.

• There is a feedback loop that as energy electrifies across all sectors especially global power, renewable technologies grow in deployment, become cheaper, and are deployed more widely, starting the cycle again

Energy Efficiency

• Digitalization, AI-driven optimization, and energy storage are improving energy efficiency in ways not seen in previous energy transitions.

• More energy services are being provided with less raw energy input.

The transition underway today

Power and mobility – the great shift

Let’s look at this disruptive shift from fossil fuels to technological energy in two large energy sectors: electric power and road transport.

Together they make up about 50% of global energy consumption.

And as an introduction to this here is the senior columnist Ambrose Evans-Pritchard writing this month in the (right-wing) UK paper the Daily Telegraph:

“The instant snapshot of where we are today is misleading. The “second derivative” tells us where we are going, and that points to a short-term plateau, followed by a cascading collapse of the old fossil order.

Once cheap EVs meet cheap rooftop solar across the developing world, the direction of travel is only one way.”

Ambrose is very insightful as ever – so let’s go on his journey happening now.

We’ll meet cheap EVs, and then his cheap roof-top solar. And then agree the direction of travel is probably only one way.

Let’s start with the global electricity transition as a back-drop.

1. Power Generation: Renewables are gaining market share rapidly

• Global electricity demand in 2023: 29,800 TWh.

• Wind and solar now generate 4,000 TWh (13%), from just 3% in 2013.

• Wind/solar growth rate (IEA): 17% per year, much higher than total power demand growth (4% per year – a high-end estimate partly driven by wind solar growth)

• Projected fossil fuel peak in electricity by 2030—even if total energy use rises to higher-end rates

If we take these numbers, and look only to 2030, we see on a bulk basis, nothing much is changing, which is what the “addition not transition” theory relies on.

But even so you see a peak in fossil fuel use in power around the 2030.

Chart 1 – The slow plateau ?

But on a “second derivative” basis – marginal change, the world looks very different. Looking at the changes in yearly growth, or declines.

And when yearly changes go negative, you have what is commonly called a peak – that peak in fossil fuels in power is painfully easy to note in the marginal change charts.

And so devastating to incumbent companies to deal with.

Chart 2 – the marginal shift – the power of the second derivative

As Carl Sagan ventured decades ago, to make sense of this world and make it work well we are going to have to understand a bit of maths and a bit of chemistry, (and even some physics).

Otherwise – who is running science and technology when almost all politicians have no science degrees.

Because that is the world in which countries, companies, and we ourselves have to navigate to survive and thrive for the long term.

Let’s bring this to life in a second chart of global power which extends to just 2038 and the implications of this incremental change for fossil fuels.

2038 being as close to us now as 2012 – when wind and solar power were less than 1% of global power.

When you live in exponential world, every year, and every choice counts.

CHART 3 – the collapse of the fossil fuel order in power

If that chart to 2038 is correct, it means the reduction of 30 million barrels per day of oil equivalent or 90% fossil fuel reduction in the power sector over the next 13 years.

Not the plateau, but the collapse of the fossil fuel order in global power, as Evans-Pritchard coins it.

If you are born in 2040 and beyond, fossil fuel power will be more a historic study, than economic input, rather like noting horses and carts in a world of electrified cars.

Talking of which.

2. Road Transport: The EV Disruption

If the possible collapse of fossil fuels in global power still seems abstract, fossil fuel collapse in road transport is now a reality and well underway to study real-time

• EVs were less than 1% of sales in 2016, but are now in 2024 15% global sales, and 25% in China – one in four cars sold today in China, the largest car market in the world, is a fully electric car.

• China also dominates EV battery production with 65% of global EV battery capacity and sales

• Legacy automakers are struggling—Volkswagen, BMW, and Toyota face existential threats as they lag behind new EV players like BYD and Tesla.

• The global auto industry (worth around $3-4 trillion/year) is a fossil fuel proxy both in revenue scale and technological disruption.

• If EVs can disrupt this industry, fossil fuel refineries are next, as are the platforms that produce crude oil in the first place - all the way up and down the fossil fuel carbon chain.

Here is how that change from 2016 – 2024 looks on a marginal change chart for the sales of conventional petrol / diesel cars

Chart 4 – a decade of decline in fossil fuel car sales

Yet again as Evans-Pritchard notes, you have a short plateau – all seems fine for a few years – and then the massive steep decline.

Chart 5 – the end of the internal combustion engine (ICE) age: 2016 – 2030

In this way the global car industry is about 5-10 years ahead of the global power industry in terms of the depth of its disruption. But the pathway looks the same.

Seeming plateau, then collapse as exponential energy takes over.

Gradually then suddenly.

Little wonder VW’s market value has dropped 40% in the last 5 years, and 20% in the just the last 12 months: their biggest export market only 5 years ago has switched from VW imports to home-grown EVs, and VW don’t have any better EVs to sell it.

For sure one can argue power utilities as discussed behave differently to car manufacturers.

But do they?

Always the Sun: The Solarisation of Pakistan

If cheaper fuels are available for the grid, they will find a way to displace gas and coal as eg in China where wind and solar have grown 60% to 16% of the grid in the past 3 years, mostly due to China’s global dominance in the solar and wind manufacturing sector.

The immense new trend to manufactured energy appears to have overwhelmed the everyday daily technical details of intermittency and grid connectivity.

And in countries such as Pakistan the availability of good-enough cheap solar panels from China’s overflow of manufactured PV panels has taken electricity quickly from grid to local use, making it the sixth largest solar market in the world.

Pakistan has solarised – without a hint of policy intervention, such is the power exponential technical growth in the world energy system.

From sustainability to new energy opportunity to fossil fuel collapse

The removal of fossil fuels from global energy is no longer just an environmental benefit—it is a business opportunity.

New energy is a 2 trillion per year business growing at over 10% per year. Fossil fuels a $0.5 trillion per year business investment option and in decline.

China is proving that leading the exponential energy transition brings economic leadership: clean energy contributed to over 10% of Chinese GDP for the first time in 2024, over-taking real estate.

The Collapse of fossil fuels – a chapter in “energy history”

Fossil fuels have a great energy history and huge energy present, but their future looks far slighter due to their current decline foreshadowing a quick collapse.

Taken together the changes noted above alone in power and transport, if correct, will remove up to 70 million barrels per day oil equivalent from fossil fuel demand by 2038.

That is about a 50% fall in fossil fuel demand in 13 years, which by any definition is a collapse.

Not a plateau, not a decline, but a collapse – of the old fossil fuel order as Evans-Pritchard fashioned it.

And as also noted it will offer the opportunity of the rise of a new energy order: renewables and manufactured technology, not another layer of fossil fuel addition.

Energy becomes manufactured and dispersed - and countries, companies and consumers gain new agency compared to relying on centralised grids and the reliance on energy from deep but limited reservoirs in remote fields.

The fossil fuel collapse will be significant for a time – but only a chapter in our far far longer “energy history”.

Which given all the above is a good and timely thing.