Environmental impact is a key concern for governments across the world. Cutting emissions, improving energy savings and increasing the consumption of renewable energy have been the focus of many energy and transport policies. The EU, for example, has set a 10% renewable energy transport target for 2020 and a 27% target for overall energy consumption for 2030. However, challenges remain when it comes to transitioning from reliance on fossil fuels to renewables. So, has the growth of alternative fuels really impacted the global energy industry yet?
A reduction in primary energy consumption
According to the European Environment Agency, the deployment of renewable energy since 2005 reduced primary energy consumption by 36 Mtoe in 2015. Technology such as solar, biofuels, hydropower and wind power has had a significant impact, not just in terms of reducing emissions but also energy consumption too. However, some countries are seeing better results than others and a reduction in energy consumption is not consistent. For example, Denmark has seen an 8% drop in primary energy consumption but other countries, such as Latvia, experienced an increase as a result of reliance on biomass fuels.
Increasing investment in alternative fuels
As the energy market opens up to alternative fuels, more finance is also beginning to flow in that direction. China has proven itself to be a clear leader in terms of investment in renewable energy, followed by the EU, Brazil and Japan. In the US, the Trump administration has focused on investment in coal, oil, and gas, as opposed to clean energy but 73% of Americans now favour developing clean energy sources, which could cause a policy shift in the near future.
Job creation
The expansion of alternative fuels has created a new swathe of jobs within the global energy industry. Specific skill sets and value chains are required to enable alternative fuel infrastructure deployment and this has created its own employment market.
Different business models
As the market for alternative fuels has grown new business models that are designed to be more sustainable, self-reliant and independent have emerged. The ‘renewable energy cooperative,’ for example, gives citizens ownership and involvement in the business model and represents a move towards decentralisation of the, currently very centralised, energy market. The European Federation of Renewable Energy Cooperatives represents 650,000 citizens who have jointly invested EUR 2 billion in installations to produce renewable energy.
A shift away from carbon?
Given the focus on decarbonising the energy market, it’s no surprise that most experts predict that the industry will feel the impact of efforts to move towards greater consumption of alternative fuels and reduced oil and gas reliance. In fact, a report by the European Environment Agency found that an increase in alternative fuel use across the EU since 2005 has had a considerable impact on the demand for fossil fuels. In Sweden, for example, fossil fuel consumption has reduced by 24% and in Denmark by 22%.
However, this is going to be a very slow journey – according to McKinsey, the fuel mix, particularly in the power industry, will remain reliant on fossil fuels right through to 2050. From a high of 82%, fossil fuel dominance of the total primary mix is down to 74% with alternative fuels predicted to rise to 7%. So, despite the significant growth in alternative fuels the global energy industry is not really feeling the impact - yet.
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