Fossil Fuels Collapsing but its not an Energy Crisis

Forbes and the Wall Street Journal go even further, resurrecting the term “energy crisis” from the 1970s. The media is in a state of hyperventilation. But what exactly is going on? It’s what I’d call the clean energy transition’s first Fossil Fuels collapse or even proof that cleaner and faster energy is also cheaper and more stable. That’s in contrast to the Economist subhead, which promotes the notion that the shift to clean energy is fraught with difficulties.

What proof do we have? First, renewable wind and solar raised their contribution to global energy supply by an unprecedented 8% in 2021, generating 8,300 TeraWatt hours (TWh) of pure, low-cost energy. Despite weak winds in parts of Europe, global wind generation increased by 17%. In the first year after the epidemic, renewable energy provided 30 percent of the world’s electrons.

Even though governments subsidize Fossil Fuels with $600 billion per year, clean energy has grown. In almost every case, the new wind and solar power were less expensive than coal and gas. Russia and Mexico (cheap gas) and Japan and Indonesia are the only significant exceptions, meaning economies where Fossil Fuels generation is still more affordable than renewables (cheap coal).

Energy price surges are mostly the product of market manipulation, impeding a proper reaction to the pandemic’s rapid economic recovery. This is a play we’ve seen before. Following the financial crisis of 2008, a similar series of price increases occurred: Oil prices increased by 68 percent, seaborne coal by 88 percent, and natural gas prices in the United States increased by 33 percent. Volatile pricing that swings substantially up and down is typical for Fossil Fuels.