'The troubled energy transition' - a critique

Troubled by looking at laggards not leaders

Hi folks. In light of current events, we have joined Ember and renamed our Substack as ‘The Electrotech Revolution’ to tell the story of the rapid energy transition. After a couple of quiet months, we are returning to the debate to critique one of the many fossil narratives that have been pouring out this year. We look forward to being in touch.

The latest issue of Foreign Affairs has a long article by Daniel Yergin and others on the so-called ‘troubled energy transition’. They set out a series of incumbent talking points to argue that the energy transition is not happening and will not happen any time soon, meaning that there is plenty of room for more of the fossil fuels produced by those incumbents. Their analysis is flawed, and its conclusions are incorrect.

The main mistake is a failure to understand what is happening outside the fossil fuel system and beyond the United States. The energy transition is driven by the rise of new energy technologies, which we call electrotech, and which now make up two thirds of spending on energy. Electrotech is that cluster of special technologies enabling the rapid growth of electricity supply (solar and wind), demand (EV and heat pumps) and connection (batteries, grids, digitisation and AI). And these continue to enjoy a spectacular fall in costs and exponential growth in deployment. Solar panel costs have halved since the start of 2023, and battery storage costs halved in 2024. In 2024 we installed as much battery storage as we have done in the last 30 years, while clean energy now supplies all the structural growth in electricity demand and is still growing fast. Electricity demand, the second vector of the energy transition, is surging across the world, and is about to make up all the growth in final energy demand as we move into the Age of Electricity.

China the electrostate is driving the transition, and Chinese electrotech is cascading out across the Global South, enabling countries to grow faster based on their huge domestic energy sources of solar and wind. The peoples of the Global South are moving to the electricity based energy system being rolled out today in China, not the fossil fuel heavy system of the last century.

Yergin makes much of the fact that the share of fossil fuels in primary energy supply is still around 80%, but this is to look backwards at stocks, not forwards at flows: to understand the future, you need to look at who is providing the growth, and this is increasingly coming from electrotech solutions.

The reality is that the collapse in costs has started a technology race to the top between companies and countries to dominate the commanding heights of a rapidly changing energy system. Three forces comes together to ensure that this electrotech revolution will continue: efficiency, cost and energy security. Electrotech is three times more efficient than burning stuff, saving the associated thermodynamic losses. Electrotech is modular and a technology, meaning that it enjoys learning curves so costs keep falling and deployment keeps rising on a well-trodden path called an S-curve. And renewables by definition are local, enabling every country in the world to enjoy energy security from its own sun and wind.

Yergin deploys a series of straw man arguments which are easy to knock down, but simply not relevant to the energy transition. The fact that it is hard to hit net zero does not save the fossil fuel industry from disruption as growth turns to decline. The pushback against ESG is not relevant to the technology race to the top. And there was no consensus formed in lockdown that we should do the same every year.

He argues that we always use more and more of every type of energy. This is factually incorrect - fodder used to be one of the primary sources of energy supply, but the peak was long ago, and most analysts no longer bother to count it. It is also missing the point that price and availability determine what energy source we use. As electrotech continues to get cheaper and grow exponentially, it pushes more expensive fossil technologies out of the energy mix, as we have seen with coal in the United States and Europe.

He talks about the supposedly high capital costs of the energy transition, without considering the much higher costs of continuing to maintain the expensive fossil fuel system and channel trillions of dollars in rents to its petrostates and oligarchs. He argues that the Global South cannot deploy renewables, without recognising that for the Global South as well, local abundant solar and wind is the cheapest way to get energy to their people, as seen most recently in Pakistan or Uruguay. Solar and wind are now racing up S-curves of deployment across the Global South, and a quarter of the grouping has already leapfrogged the United States.

Yergin argues that fossil fuels are a tool for energy security, when in reality 80% of people live in countries that import fossil fuels, and every country has access to the renewable sources that make available 100 times more energy than the fossil fuel system. He argues that renewables require large amounts of minerals, without noting that the fossil fuel system requires around 100 times more material by weight because we burn them every single day. He references that tired old idea of the ‘energy trilemma’ without realising that it has been solved by electrotech, which is cheaper, cleaner and local. And he appears to think that the energy transition is driven by the United States, when in reality it is driven by China, and fossil fuel demand has been falling in the United States in any event since 2008.

The article makes a number of valid arguments which highlight the need for action. There is local opposition to change, and that needs to be handled sensitively. We do need to ensure that China does not dominate every aspect of the transition. The path to the future is not straight and will vary by country. Many electrotech technologies need to be rolled out faster, some need to be improved, and others to be invented. There are many barriers as we challenge the entrenched power of fossil fuel elites. So far we have found solutions to these problems, and we need to continue to do so.

The world is changing fast, and to the winner will come the spoils. Peaking demand for fossil fuels today will be followed by decline before the end of the decade, and that will lead to stranded assets, falling prices and collapsing petrostates. Incumbent arguments seeking to prop up the status quo serve only to distract from the real challenges that face us, hold back the United States in the greatest race of our times, and hand victory in the technologies of the future to its strategic rivals.