Why we will be reliant on fossil fuels for a long time to come

The energy crisis has shown us just how reliant we still are on fossil fuels. And we will continue to rely on them for a long time yet, says Merryn Somerset Webb.

Offshore windfarm
Wind turbines: all well and good till the wind stops blowing
(Image credit: © Christopher Furlong/Getty Images)

Last week, the online UK supermarket Ocado told its customers that it had “limited ability” to deliver ice cream to them, because the price of natural gas had soared.

The rising gas price caused two of the UK’s big industrial fertiliser plants to shut down, as natural gas is the feedstock for ammonia, which is used to make fertiliser. Since carbon dioxide is captured from ammonia production, this has hit the supply of CO2 in the UK. And that has led to a cut in the supply of dry ice that supermarkets use to keep food cool in their delivery vans: so no ice cream.

We can live without ice cream, but what of the other effects? Abattoirs are short of the gas they need to stun animals, hospitals might not have the carbon dioxide they need for minor surgeries, and the nuclear industry is low on the gas it needs for cooling. These things really matter. This mini crisis has been fairly quickly resolved, for now at least: the taxpayer is stepping in to subsidise a fertiliser factory for three weeks.

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We’re still heavily reliant on fossil fuels – and will be for years

However, that doesn’t mean you shouldn’t worry; you should. This incident serves as a timely reminder of just how reliant we are on fossil fuels. Despite our optimistic enthusiasm for wind and solar power, one way or another oil and gas use is shot through every part of our economic and social lives. That will be the case for many decades to come.

In his recently updated book There is No Planet B, Mike Berners-Lee lays out the challenge (and, perhaps inadvertently, the lack of a medium-term solution). When we talk about shifting from fossil fuels to clean energy of one kind or another, we aren’t discussing taking the amount of energy we use now and producing that static amount in a different way. Instead our target is always on the move: the more energy we can get our hands on, the more we use – even if our use of it becomes more efficient.

We use three times as much energy as we did 50 years ago and at current growth rates that will soon double again. Think of this in terms of solar panels. Right now, says Berners-Lee, if we could figure out storage and transmission (which so far we haven’t), we could meet all our global energy needs by covering 0.1% of the world’s land in solar panels. Keep expanding our energy use at 2.4% a year (the ten-year average is 1.5% but in 2018 it was 2.9%) and in 300 years we will need every inch of land mass there is in every country in the world.

In one sense this is a ridiculous way to look at it – we live in a stunning age of innovation and the panels we use today will surely look amusingly archaic in a decade or two, and abattoirs and others can find another solution instead of gas. But you get the point: energy usage is going to keep rising, led by China, the US and India, while energy transitions tend to both take a very long time and never actually end. We just pile new sources on top of old. The world still uses much the same amount of traditional biomass (wood etc) as it did 100 years ago. Even after many years of efforts, coal, oil and gas still make up 80% of our global energy mix, pretty much exactly the same number as a decade ago. We are running to stand still.

This will change, but not as fast as you might like to think. In 2019, 33% of our new power generation needs were met by renewable energy. That’s a start – but 40% were met by natural gas.

We should stop demonising fossil fuels

There’s urgency here, of course – which might speed things up. But there is something else that might slow us down. It didn’t take much to move people to fossil fuels – they are relatively easy to extract, relatively easy to transport, hugely energy dense and efficient and, of course, cheap. Until their externalities were understood, who could possibly have objected? Our current transition is different: people and companies will switch not because the new sources are easier to access, cheaper or more energy dense, but because regulation mandates that they must.

Either way, the truth is that, whether we like it or not, our energy transition involves long term reliance on fossil fuels. That means that we should stop demonising them – evangelising about ESG, following the trend to divest from shares in oil companies and kiboshing new projects with regulation, high financing costs (many banks are pulling back from the sector) and the like. Instead, we should focus on making their extraction cleaner and more efficient while we wait for the engineering challenges around a renewables-led future to be solved.

If we don’t do this – if we allow ourselves to be beguiled by the idea that solar is so advanced that we no longer need filthy fuels to have ice cream, we will find the future held back by needlessly expensive energy – and almost certainly ice-cream free.

Some reckon that the global population will gladly slash their energy use and pay a “greenium” for the energy they do use. I’d say anyone who believes that has never been on the customer services desk at Ocado, or asked someone in India whether they would like the same average living standard as the average European, or, for that matter, received their latest gas bill.

• This article was first published in the Financial Times

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.