Staff are checking the transformer equipment of the 100MW wind power project in Zhanatas, Kazakhstan.

Photo by Ospanov (Xinhua News Agency)

It is certain that human society will eventually bid farewell to the fossil era, but it is difficult to judge when. It depends not only on the speed of clean energy development, but also on how determined people are to pursue clean energy. In the final analysis, energy security is the fundamental reason why fossil fuels will not be replaced in the short term. What is relatively certain at present is that wind and solar energy are pushing the world into a new era. And the most critical straw that breaks the camel's back for oil demand may be electric vehicles.

European Commission President Ursula von der Leyen said recently that the growth model centered on fossil fuels is outdated. Although this statement is a personal opinion, it is still quite weighty. While insisting on green transformation, the EU is also creating a sustainable development model. The EU Green Agreement aims to reduce emissions by more than half by 2030 and achieve net zero emissions by 2050. To achieve this, fossil fuels must be eliminated as soon as possible and transition to the green energy era. To this end, the EU approved a carbon tax reform plan, which will increase the cost of carbon emissions while actively promoting the development of renewable energy industries such as wind and solar energy and electric vehicles.

Europe hopes to become a leader in the global green energy transition. It has taken the lead in replacing coal and oil with natural gas for heating and power supply, and has also significantly increased the proportion of clean energy power generation. If the EU's ambitious energy transition and growth model are promoted around the world, will it mean the end of the fossil era?

This is a complex issue. In order to respond to climate change and protect the earth's home, it is certain that human society will eventually bid farewell to the fossil era. The question is when the change will come?

A more reliable quantitative analysis is to study where the peak of oil demand is, based on which it can be determined when fossil fuels represented by oil will exit the stage of history.

Many observers believe that with the rise of clean energy, the demand for oil and natural gas will begin to decline in the next 10 years. Energy transition has become a topic that is correct at any time and anywhere. The transition from fossil fuels to low-carbon energy such as wind, solar and hydrogen cannot be overemphasized. In fact, last year, global investment in wind, solar and other transformation technologies hit a record high of $1.1 trillion, and investment in low-carbon energy was on par with investment in traditional oil and gas production for the first time. It can be seen that the development of a low-carbon economy has become a global consensus.

Even so, it is still difficult to determine which year will be the peak of oil. The International Energy Agency expects oil demand to hit a record high this year, and fossil fuel use will continue for decades. Some major research institutions are also cautious in their forecasts. Oil and natural gas will continue to exist, but future production capacity will be reduced due to reduced demand, because oil demand will be gradually replaced by electrification, wind and solar power generation will gradually eliminate natural gas; and hydrocarbon demand will be more concentrated in the production of petrochemical products and petroleum derivatives such as plastics.

It is precisely because of this that the global energy landscape is not changing as fast as imagined. Studies have shown that the world needs to invest $35 trillion to change the existing energy structure so that renewable energy accounts for about 90% of total power generation. This means that we need to accelerate the expansion of wind and solar power production capacity. But the reality is that in recent years, due to the impact of the COVID-19 pandemic, the increase in clean energy production capacity has shown signs of slowing down. The EU's new wind power installed capacity increased by 40% year-on-year last year, but the follow-up was weak and it was difficult to reach the level required by the "Paris Agreement" to control the global temperature rise to 1.5 degrees Celsius above the pre-industrial average. For example, the electric vehicle industry, which is in full swing, is now facing the problem of shortage of key minerals and raw materials. Few new mines are put into production and the ore grade is also declining.

Of course, when fossil fuels will be phased out depends on how determined people are to pursue clean energy. UN Secretary-General Guterres recently urged the world's major carbon-emitting countries to accelerate the transition to renewable energy. He once again called for efforts to phase out coal in OECD countries by 2030 and all other countries by 2040, especially developed countries to ensure net zero power generation by 2035.

However, the opposite happened. The G7 summit held in Japan not long ago did not set a deadline for stopping new coal investment, and even agreed that new development investment in natural gas was still needed, with the reason being "the Ukrainian crisis and its impact on oil and gas." Western countries, led by the G7, are obviously "suspending" the implementation of their "firm commitment" to energy and environmental goals out of their own interests, which is inevitably ridiculed by the world.

However, this also raises a sensitive and serious issue for us, namely the issue of energy security. In fact, this is also the fundamental reason why fossil fuels will not be easily replaced in the short term. Take Europe as an example. The Ukrainian crisis caused a surge in European electricity prices, which in turn affected economic growth. Germany, the largest economy in Europe, has not yet escaped the shadow of recession. At present, European countries put energy security and supply chain security in the first place in terms of economic development and social stability, which is enough to show that the introduction of any public policy is inseparable from the consideration of the interests of various countries.

Perhaps it is more certain that wind and solar energy are pushing the world into a new era. As global fossil fuel power generation declines year by year, clean energy is moving to the center of the world stage. According to the electricity data collected by the Global Power Review from 78 countries and regions around the world (accounting for 93% of global electricity demand), in 2022, global electricity generation reached the cleanest level in history, and wind and solar power generation grew to a record high, accounting for 12% of the world's total electricity generation, of which solar energy was the fastest growing source, with an increase of 24%. In addition, renewable energy and nuclear energy together account for 39% of global electricity generation. Looking ahead, from now to 2050, wind and solar energy can provide up to 75% of clean energy growth, and the production cost will become lower and lower. Research shows that last year, wind and solar power generation in Europe accounted for a record 22%, surpassing oil and gas for the first time, and effectively curbed the demand for coal. Renewable energy is increasingly dominating the EU electricity market, and the pace of renewable energy construction in Europe has significantly accelerated.

There is a classic statement in economics: If you don't invest in the future, you have no future.

From the current development trend, electric vehicles may be the most critical straw that breaks the camel's back for oil demand. Data show that the electric vehicle market is expanding rapidly. Ten years ago, about 130,000 electric vehicles were sold worldwide. Now it only takes one week to reach the same number. Last year, electric vehicle sales accounted for 10% of global light new car sales, and this year it will accelerate and enter the heavy vehicle transportation field. This is why some well-known economists claim that electric vehicles will "destroy" the global oil industry by 2030, and Bloomberg predicts that electric vehicles will trigger a global oil crisis.

When that day comes, the era of fossil fuels will end, and we should be relieved. After all, sustainable green development is what we are pursuing.

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