Global Energy Systems Transition

Global Energy Systems Transition, (% of market)

Source: adapted from The Economist, 2001.

Energy use is in constant transition, particularly from a long-term perspective where changes can be substantial. An energy transition involves a change from one supply system to another, namely in terms of the fuels used, their sources, and how they are processed and brought to the market. A common pattern in energy transition involves moving to sources that have a higher energy content, but that require a higher level of technical expertise to be extracted, processed, stored, and distributed. In time, this has implied growth in the quantity consumed, changes in energy sources, and the usage of sources that tend to have a lower environmental impact. The first significant energy transition took place during the industrial revolution, which mostly involved the adoption of coal as the dominant source of energy. By the early 20th century, a significant transition toward petroleum took place, mainly because of the diffusion of internal combustion engines and the shift of maritime shipping to bunker fuels. Even if there is a gradual transition away from petroleum to natural gases and alternative energy (wind, solar), it is expected to dominate global energy systems within the foreseeable future.

Several utility factors favor the usage of petroleum as the main source of energy in general and for transport activities in particular:

  • Occurrence. Concerns the location of energy sources considering the demand. Several energy sources are only available when a transportation system is able to transfer large quantities from its extraction areas to markets. The exploitation of oil fields in several regions of the world (Middle East, Siberia, etc.) was made possible when an efficient transportation system relying on pipelines and tankers was established.
  • Transferability. The distance over which an energy source can be transported depends on its physical form (solid, liquid, or gas), energy content, and available transport technology. Most petroleum products are in a liquid, more or less viscous, form. They thus offer an efficient transferrable form, which is less convenient than solids such as coal, but much more than gases. Furthermore, economies of scale in transportation, notably maritime, enhance transferability by reducing unit costs.
  • Energy content. A low energy content is inadequate when demand is high and concentrated in space. Gasoline and other petroleum products have a high energy content compared to other fossil fuels like coal, but even more when compared to hydroelectricity and solar energy.
  • Reliability. Continuous availability is an advantage over intermittent sources. The emergence of many sources and constant supply through maritime and land routes has given a relative reliability to petroleum products.
  • Storability. An energy source has an advantage when it can be stored to answer fluctuations in demand and interruptions of supply. In liquid form, petroleum products are easily stored and several countries have built strategic reserves.
  • Flexibility. The capacity of an energy source to answer multiple uses is an advantage over energy sources that can only fit a single purpose. In addition to providing energy, petroleum by-products are the basis of whole industrial sectors (petrochemical) that synthesize goods like plastics, fertilizers, pharmaceutical products, and synthetic rubber.
  • Safety. Sources that can be provided and used at low risks (human and environmental) are an advantage. Although the petrochemical industry presents some risks (accidents during extraction, refining, transport, and usage), oil is considered a safe source of energy for its production and usage.
  • Cleanliness. Sources that produce limited waste and are cleanly used are an advantage. Relative to other conventional energy sources like coal, oil is cleaner to use and produces a limited amount of waste. Still, the use of petroleum products has negative environmental impacts, such as the emission of particulates and carbon into the atmosphere.
  • Price. Low-cost energy sources are generally preferred. Cost is a function of the occurrence, transferability, and energy content of an energy source. With massive investments in large-scale extraction, refining, and transport of petroleum products, a constant supply, and intense competition from several oil-producing countries, petroleum products prices are cheaper and more stable than many other sources.