The start of the new Energy Transition
Facts:
1) Fossil fuels have constantly been 80% of the global energy supply for decades.
2) The U.S. Inflation Reduction Act* (August 2022) devoted ~$369 bln to energy security* and climate change programs to be conducted over the next 10 years. They include assistance to consumers in purchasing electric cars and investments in renewable and nuclear energy.
3) The EU has planned to spend ~$317 bln over the following 5 years on reconstructing its energy supplies and decreasing its dependence on Russian energy.
4) Nevertheless, the coal demand increased recently in the EU.
Analysis:
1) One of the crucial factors that incentivizes investment in renewables, especially for the EU, is the Russian invasion of Ukraine. This is so because now the EU countries share the problem of overly expensive energy.
2) International Energy Agency* predicts that the share of fossil fuels in global energy supplies will fall to 75% by 2030 and to 60% by 2050.
3) However, now the coal demand rises in the EU because alternative energy supplies are not developed enough or are unavailable. Coal consumption is expected to be bigger by 7% in 2022 compared to 2021.
Inspired by WSJ and IEA
