The Energy Institute’s Statistical Review of World Energy informs businesses and policymakers of the latest energy trends in this vital sector. What does the latest edition tell us about energy use?
With over 70 years of heritage, the Statistical Review tracks the global production, consumption, and trade of all forms of energy.
The 2023 edition was the first with KPMG as a sponsor. Here’s a summary of their findings, and of some of the discussion themes at the launch of the 2023 Statistical Review.
A challenging backdrop
The latest issue looks back on 2022, a tumultuous year for the energy sector due to three ongoing crises:
1. Supply crisis. With post-pandemic demand for energy surging, the Ukraine conflict disrupted supply, with Russian gas flows to Europe suddenly curtailed.
2. Price crisis. The supply crisis led to record international gas prices, driving downturns and cost-of living crunches in many economies.
3. Climate crisis. Last year saw devastating floods in Pakistan, and deadly heat events across Europe and North America.
Watch the video for more on the landscape and key takeaways from the Statistical Review.
The 2023 Review: key findings
In this difficult context, five main themes emerged from the 2023 Review. Dr Nick Wayth, CEO of the Energy Institute, took us through them at the launch event:
1. Post-Covid demand is still rebounding
Demand for energy – and transport fuel in particular – continued to increase. Passenger kilometres have now doubled since the pandemic, though are still below pre-Covid levels.
There were, however, some significant variations between geographies and fuel types. Each country’s consumption was influenced by its government’s approach to lifting Covid rules.
That left China as a major outlier, due to its lasting lockdowns. Jet fuel consumption in the world’s largest economy remains significantly below pre-pandemic levels. But a return to those levels is expected in 2023, with restrictions lifted.
2. The Ukraine conflict has transformed global energy trade
The conflict had several seismic effects. It upended our assumptions about the world’s energy security and affordability and threw the vulnerability of global supply into sharp relief.
International gas prices hit record levels, rising by 300% in Europe and 200% in Asia, hitting consumers and economies hard around the world.
The crisis also drove an unprecedented shift in global energy trade. Before it, 31% of Europe’s gas came from Russia. That was rapidly replaced by flows from the US, Middle East, and Norway. It usually takes governments years to agree energy supply deals of this sort; these were struck in a matter of months.
3. Renewable power deployment maintains its pace
Encouragingly, renewables (excluding hydropower) met 84% of last year’s growth in net electricity demand.
This was led by solar and wind power, which accounted for 84% of net additions, and reached a combined 12% share of power generation (a new record). In fact, 2022 saw the largest ever annual increase in new-build wind and solar capacity.
Overall, electricity generation from renewables is up 29% on 2017. But that’s still behind the expected tripling of power by 2050.
4. Global primary energy consumption grew by around 1%
Energy use is now almost 3% above the pre-Covid level seen in 2019. The supply crisis over the past year suppressed gas consumption by 3% but that was offset by increased use of oil and coal.
While renewable consumption (excluding hydropower) is up by 13%, this isn’t yet replacing carbon use. The dominance of fossil fuels in the energy mix is unchanged, at around 82% of total consumption.
5. Global energy-related emissions continue to increase
With oil and coal use offsetting the fall in gas consumption, total carbon emissions were up 0.8% worldwide.
That’s despite the strong growth in renewables, and a fall in energy intensity recorded last year. The reality is that emissions aren’t moving in the right direction for the world to meet the demands of the Paris Agreement.
Implications for the energy transition
There are positive trends on the renewables front. Generation is now commercially viable without government subsidy in much of the world. Capacity is doubling every three to five years, and crucially, increasing fast in giant economies like China and India.
But progress is slow. The drop in energy demand at the height of the pandemic would need to happen year after year for the Paris targets to be met. Yet the opposite is the case.
To quote Energy Institute President Juliet Davenport OBE: “If we were to RAG-rate the energy transition, we’d have to give it a red/amber. It needs the kind of pace and urgency we applied to the shifting of energy flows in reaction to the Ukraine crisis.”
In summary
In Nick Wayth’s words, 2022 was a year when “a lot happened, and not much happened” in the global energy sector.
High demand coupled with a crisis of supply prompted record energy prices and unprecedented structural changes. Yet at the same time, energy use returned to pre-covid levels as the world returned to its old patterns of behaviour. It is evident that the green transition isn’t gathering the required momentum.
What does all this mean for businesses?
No organisation can change the dynamic alone. But firms must make what changes they can. It’s time to deliver on net-zero commitments – by focusing on:
1. Adoption of renewables. Renewable energy is increasingly commercially viable. Moving to renewable power contracts can reduce costs and carbon emissions.
2. Supply-chain resilience. Consider the risks from climate change to physical locations (due to flooding and heat); and diversifying energy supplies (to cool working environments).
3. Energy efficiency. Harness innovation to embrace technologies such as hydrogen and carbon capture; and to measure progress against net-zero commitments.
By accurately reporting data trends, the Statistical Review of World Energy helps keep us all focused on these critical objectives – hence its importance to businesses and policymakers.
