These days, attending any conference on oil and energy inevitably involves extensive discussions about the energy transition. This refers to the shift from fossil fuels (oil, gas, and coal) to renewable energy (solar, wind) and nuclear, as well as the transition from internal combustion engine vehicles running on gasoline and diesel to electric vehicles.
In any language, “transition” means moving from one state to another, such as moving from one house to another or changing one’s ideology, religion, or mindset—often in a gradual manner. Throughout its long history, humanity has experienced hundreds, if not thousands, of transitions, differing by society, era, speed, and impact.
In the context of energy sources and uses today, this transition demands special attention. It is not as straightforward as some may believe. Energy is the backbone of all aspects of life—industry, agriculture, individual well-being, travel, medicine, war and peace, and much more. Moreover, energy use and demand are growing daily due to economic and population growth, increasing human needs, and the expansion of modern cities. Oil demand, for example, has risen from less than a million barrels per day at the start of the 20th century to over 100 million barrels per day today.
Energy sources are diverse and will remain so. Some countries have tried to reduce the use of certain sources (i.e., transition in energy use, as the modern term suggests) for political, economic, or scientific reasons—such as the belief that oil will soon run out. Politically, after the 1973 war and the Arab oil embargo, Western countries worked to reduce their oil imports from Opec by turning to other sources. They succeeded in cutting demand for Opec’s crude oil output from about 30 million barrels per day in the mid-1970s to 14 million barrels per day by the mid-1980s.
However, the world is not confined to the West, and it is constantly changing. The energy transition has costs, and the extent to which energy use transitions depends on economic, financial, and competitive considerations, including prices. Consequently, growth in global demand for Opec oil eventually returned. A significant shift in energy and oil usage occurred in Southeast Asia, particularly China, due to economic growth and social prosperity. China transitioned from being an oil exporter in the mid-1990s to the second-largest oil consumer and largest importer today, despite increased domestic production (currently importing over 11 million barrels per day).
Although China’s oil demand growth has slowed in recent years due to economic factors and other challenges, other countries like India, Indonesia, and parts of Southeast Asia are experiencing growing oil demand. Just as China and Southeast Asia led significant economic growth over the past 30 years, sub-Saharan Africa could become a major driver of global economic growth and energy demand, including oil. Several factors contribute to this, such as an annual economic growth rate twice that of Europe. Africa’s GDP is projected to rise from $2 trillion today to $29 trillion by 2050 (in today’s dollars), and its population is expected to grow from 1.5 billion to 2.5 billion during the same period. This contrasts with the shrinking populations of Western countries. Urbanization and aspirations for a lifestyle similar to that of the global majority are also fueling growth, alongside increasing international investment and competition among China, the US, and some Western nations to tap into Africa’s growth and resources.
In summary, the global discourse on the energy transition, often featured in studies and international debates, will eventually reach its peak and then fade gradually as the world shifts focus to new ideas. It’s essential to note that intellectual trends have a lifecycle: they gain prominence, peak, and then gradually decline, eventually being replaced by new concepts. This applies not only to energy but also to other areas like politics, economics, and even science. For instance, in the oil sector, discussions in the 1970s revolved around oil depletion, in the 1980s on the supposed impending end of Opec, in the 1990s on peak oil production, and later on peak demand. Over the past five years, the focus has been on the energy transition.
If the goal is to combat global warming by addressing harmful emissions such as carbon dioxide, then it is crucial to name the problem accurately and focus efforts on reducing these emissions, rather than emphasizing ambiguous concepts like “transition.” Discussions should center on the four key aspects of energy: its affordability, energy security (ensuring supply meets demand), diversification of energy sources, and the reduction of harmful emissions — not targeting specific sources.
FROM ‘TRANSITION’ TO ‘DIVERSIFICATION’
These four principles should guide thinking and action in energy matters, rather than the vague and increasingly obscure concept of transition. It’s time to think outside the box and gradually shift our focus from the “transition box” to a new framework, such as diversification of sources of energy supply. This aligns with the natural evolution of ideas and past experiences in various fields.
*Dr Ibrahim al-Muhanna was a key energy advisor to four Saudi oil ministers and is the author of ‘Oil Leaders’. He now serves as Vice Chairman of the Saudi Association for Energy Economics. This opinion piece was first published in Arabic in Asharq al-Awsat on 8 January.
