• Realizing the energy transition will require navigating several major challenges.
  • These include geopolitical concerns, technological limitations and financial questions.
  • Could a hybrid approach that leverages fossil fuel energy alongside renewables be the answer?

Innovation is often more about chasing after the shiny and new rather than improving on existing technologies. Nevertheless, the looming challenge of evolving from fossil fuels to renewable energy faces the immutable laws of physics and chemistry – and, ironically enough, environmental hurdles – that may be overlooked by today’s energy experts and policy-makers.

The pursuit of discovering cleaner ways to power the globe while reducing emissions has impacted the geopolitical framework, including the rivalry between the US and China. Given China’s near monopoly on many rare-earth materials, including 17 minerals used in numerous industrial and military applications, Beijing is currently poised to reap the lion’s share of the benefits as it leapfrogs the West in the production of electric vehicles (EVs) in lieu of petroleum-powered cars. Indeed, Beijing currently produces 80% of the world’s lithium and 60% of the rare-earth materials required for EV batteries.

As was observed in America’s dependence on foreign entities to produce essential medical supplies at the beginning of the COVID-19 pandemic, the US' dependence on China for its supply of materials critical to manufacturing high-tech products such as EVs, cell phones, computers, solar panels, wind turbines and the F-35 fighter jet (each aircraft requires 415kg of rare-earth materials, according to the US Department of Defense) are forcing the US' economic and national security experts to reimagine vulnerable supply chains controlled by unfriendly nations.

In addition, Russia is home to around 22% the world’s rare-earth reserves, while the Democratic Republic of Congo controls 60% of the planet’s cobalt — another critical element used in the production of lithium-ion batteries. Moreover, Congo’s mining industry is plagued by corruption, military conflict, and the exploitation of child labour.

In our quest to protect the planet by reducing our carbon footprint, it is important to note that our world currently depends on fossil fuels for 84% of its energy needs. Getting to the Holy Grail of net-zero emissions will be a heavy lift, particularly from a technological and cost-benefit standpoint. According to a recent Wall Street Journal essay, when “chemistry, physics and materials science, as well as carbon capture, hydrogen fuel, digitization, manufacturing, artificial intelligence, robotics, software [and] data analytics” are factored in, the scope of our hurdles are enormous, if not overwhelming.

This underscores the need for countries to rethink their reliance on sole-source suppliers of materials critical to their safety and security. Some of these threats may be balanced by nations' domestic reserves of these chemicals and metals, along with reserves held by allied countries.

If the goal of renewable energy and vehicle electrification is to reduce our carbon footprint, access to materials is just one of the many challenges we face. While EVs do not directly emit greenhouse gases, they rely on electrical grids powered by fossil fuels that may emit more pollution than internal combustion engines (although strides are being made to develop grids supplied exclusively with net-zero carbon power sources).

And as with drilling for oil, the strip mining of lithium deposits and other elements for the manufacture and production of the batteries that power EVs scars the landscape and their disposal further degrades our environment. The transition to EVs also requires new infrastructure such as nationwide networks of quick charging stations, for example.

On the other hand, studies have found that in many places EVs produce less emissions overall. Using lifecycle assessment models, researchers from the University of Nijmegen showed that in 53 of 59 regions around the world (including Europe, China and the US), EVs were less emission-intensive than their internal combustion engine counterparts. Furthermore, their costs are falling rapidly.

Comparing and contrasting cars powered by petrol or lithium ions is, it seems, a complex business, not least because there is no single, agreed-upon estimate that applies universally.

Similarly, there is no one-size-fits-all solution to addressing climate change or displacing petroleum with electrification. It is critical that we objectively weigh the opportunities and challenges of both options and consider an amalgamation of the two until the technology catches up with renewable applications and gets us closer to the carbon-free goals of the Paris Agreement. The limitations of chemistry and physics today dictate that we must rely on fossil fuels in order to decarbonize; we need them to power EVs, and in the manufacture and installation of solar panels and wind turbines.

Once EV technologies mature, a network of charging infrastructure is fully in place, and economies of scale reduce the cost of the vehicles, the objectives of renewable energy applications will be realized. However, green energy policies should not run counter to sustainability. Herein lies the inherent contradiction of renewables: they have low energy conversion rates and depend on the fossil fuels they seek to supplant.

We owe it to our planet and its 7.8 billion inhabitants to provide clean air and water in ways that are transparent, methodically sound, and truly cost-effective throughout their entire lifecycle. Despite major technological improvements in how we extract gas and oil in more environmentally responsible ways, and in how automakers have significantly reduced emissions while increasing gas mileage, much work remains to be done.

What's the World Economic Forum doing about the transition to clean energy?

Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated.

Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010.

Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.

Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.

To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.

Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission.

Is your organisation interested in working with the World Economic Forum? Find out more here.

As we have seen, many technological hurdles must be cleared before renewable energy fully substitutes petroleum-based power. Practical solutions to weaning ourselves off our oil addiction should not be ignored nor reduced to a Hobson's choice of strictly oil and gas versus renewables. A hybrid or an optimal combination of both power solutions can be situationally applied based on their overall energy efficiency, output, and ultimate environmental impact. And let’s not underestimate the power of human ingenuity to solve what appears to be intractable obstacles standing in the way of a cleaner environment.

In 2019, EVs and hybrids accounted for 5% of US car sales. The free market, together with reasoned arguments addressing the benefits and drawbacks of the various energy solutions (instead of industrial policies and government mandates), will dictate whether their sales will continue to rise in the future. While we are free to make choices, we are not necessarily free from their consequences.