Across the world, there is near unanimous agreement on the long-run vision for the global energy mix. This vision includes:
- Widespread adoption of solar and wind (both onshore and offshore), augmenting hydro where available
- Backstopped by various forms of storage (perhaps including electrolyzed hydrogen for long-duration needs)
- Powering a society based on electricity for almost all stationary and transportation energy needs
- Fossil fuels relegated to only selected niches (e.g., aviation)
Any regional variations in this vision relate primarily to the path taken towards this destination.
Simply put, different regions will navigate the energy transition to this end-state differently. This is due to regional differences in economic maturity, the energy infrastructure inherited from previous generations, available renewable resources, and prevailing political attitudes.
Most regions of the world fall into one of six archetypes, which in turn establishes how their energy sectors will evolve in the coming decades:
- “Lucky”
In certain places, the incumbent electricity systems have long been able to leverage copious quantities of inherent renewable energy resources that are both low-cost and dispatchable. Cases in point: geothermal power for Iceland, and hydroelectricity in the cases of Scandanavia, New Zealand, Brazil, Quebec and the Pacific Northwest in the U.S.
For economies such as these, carbon emission reduction goals for the power sector are almost moot, and the remaining move to a zero-carbon economy is limited to shifting vehicles to electricity from petroleum-based fuels. While this remains a major challenge, at least the power generation sources that will be used to electrify vehicles in these markets are already suitable for the 22nd Century.
- “Earnest”
By contrast, several regions seeking to be among the leaders in the clean energy transition — most prominently Germany, California and the Northeast U.S. (New York and New England), but also many island economies facing severe consequences from climate change, such as Hawaii — entered the 21st Century saddled with significant reliance on fossil-fueled generation capacity.
In these regions, fossil electricity is rapidly being replaced primarily with new solar and wind energy installations. Fortunately, wind and solar costs have fallen so dramatically in the past two decades that what once would have been prohibitive is now often highly cost-effective. However, because these types of renewable energy are intermittent in nature, large additions of supply are producing significant grid operations challenges. Because of the forceful political and civic commitment in these regions, it is likely that the drive for carbon reductions will continue largely undimmed despite the challenges.
- “Booming”
Some economies are growing so fast that virtually all economically-viable energy additions — based both on renewable energy and fossil fuel — will occur. In the face of such rapid growth, retirement of any existing fossil fuel assets is out of the question. Prime examples of this archetype include China, India, and the Arabian Peninsula.
While notable additions of clean energy infrastructure will occur here, and the per-unit carbon intensity of these economies will decline, the rate of economic growth may dominate such that absolute emission volumes will continue rising.
- “Overlooked”
Some of the most deprived economies of the world, including most “failed state” countries and some large borderline cases like Indonesia and South Africa, are beset by extreme poverty (and other often-associated social ills such as corruption and tribal warfare) that prevent investment in renewable energy — or any forms of energy, for that matter.
In economies of this type, performance on carbon metrics are a “nice to have” but not a high priority. Consequently, the energy transition will proceed painfully slowly here, and any progress will be easily overlooked.
- “Uncertain”
A number of regions would logically be expected to proceed promptly through the energy transition: places like Australia, France, South Korea, Japan, Ontario, and the Midwest U.S. All have added large quantities of renewables in the past two decades, and are populated with citizens that like to think of themselves as environmentally progressive.
While they may not yet realize it, these regions are at a crossroads: most of the “easy” inexpensive carbon emission reductions have been achieved, and incremental reductions will be much harder and thus more costly to achieve — especially as advocates push for retirement of low-emitting non-renewable energy sources. When this occurs, it is uncertain that environmental aspirations will triumph over economic pragmatism in these areas.
- “Indifferent”
Alas, due to insufficient belief in the need to take actions to mitigate climate change, some regions won’t take substantive action to reduce emissions that causes any negative economic consequences whatsoever. Put Russia, Eastern Europe, and the Southern U.S. in this camp.
The energy transition in these areas will clearly happen much more slowly, driven primarily as lower-carbon energy approaches become lower cost than higher-carbon energy approaches. While policy won’t drive the transition in these regions, technology innovation will: with the introduction of fracking technology to shale resources, ample supplies of low-priced natural gas is driving dirtier coal power out of the marketplace. Where renewable resources are inexpensive due to abundant sun, wind and land (e.g., Texas), they too will be added with vigor — but where that’s not the case, such as in the Deep South of the U.S., growth in renewables will be very slow.
The world cleaves into these six archetypes relatively neatly. From a population standpoint, the planet is disproportionately weighted towards “Booming” and “Overlooked”. In net, the global energy mix may reach its envisioned end-state by the year 2200, but given the sizable fraction of the world’s population in some of the slower-moving archetypes, unlikely much sooner than that.