The Future of Fossil Fuels: Renewable Energy—Wind and Solar

As 2022 draws to a close, climate sentiment has surged to an all-time high, stoked by fears surrounding recurring extreme weather events and mounting data that paints a worrisome picture. Globally, commitments to limit global warming are strengthened by countries and companies, new targets are increasingly being announced, and new coalitions are formed. The implications of various energy transition scenarios chart future pathways of a handful of vital energy system drivers according to global warming targets. The decline in CO2 emissions correlates to the rising demand for solar energy and to the decline of the oil and gas industry. In this chapter, we highlight the announcements/commitments made by nations across the world and their impact on the upstream oil and gas industry. Commitments to limit global warming have slowed down the pace of upstream oil and gas investments in this decade. At the same time, the largest renewable energy sectors, i.e., wind and solar energy continue to exhibit high growth driven by policy support in many countries and improving cost competitiveness of these energy sources. This trend is expected to continue over the coming years given that climate fears are becoming more pronounced across the world minute by minute. Many players from the oil and gas industry have revised their strategic priorities, set clear intentions and tangible goals to decarbonize and, in some cases, diversify portfolios and expand into renewable energy sectors. Despite a push to fast-track energy transition by many in the world, this energy transition faces multiple challenges. A robust renewables supply chain is required which in many areas is yet to be built and this could stifle the renewables adoption rate. There is also a lack of grid availability. In many emerging and developing economies, policies and government support is not formulated to support the industry’s development. Above all, financing of renewables projects—even though it has grown in recent years—is still too little, and not flowing sufficiently to certain countries. Currently, around 77% of the world’s primary energy supply is derived from fossil fuels, most of which must be replaced by renewable sources if global warming is to be halted. The future of fossil fuel to a great extent depends on the rate at which we are able to resolve the many challenges faced by the renewables industry.