Headline 1: China rations diesel among fuel shortages.
Headline 2: China orders coal miners to boost output.
Headline 3: Why Christmas may be stuck in a shipping container.
These headlines, and a lot similar to these, are not a full blown crisis, they are the Canary in the Coal Mine.
This is a wake up call that our socio-economic model is careening towards a major wall, where climate change and geopolitical issues combined can derail our very way of life, where the energy security has become the symbolic cog on the wheel which is going to come undone.
However, there is a way out of this railroad to disaster. It is called transitioning from the traditional fossil fuel resources, whose price imbalance and supply chain constraints can bring entire countries to a standstill, to a more autonomous and planet friendly source, which would mean that instead of focusing on the basics, we can focus on the value added components of the economy.
Let me illustrate my point.
The following image from the worldenergydata.org illustrates how much energy is consumed by each sector, and where the energy comes from
Just taking the snapshot of the status as on 2018, we can make the following summaries:
- The industrial sector, the heart of our economic way of life, consumed 33% of the world’s energy and fuel, of which more than 80% of this was sourced from Coal and Gas. Electricity primarily generated from coal.
The transport sector, which can be compared to our veins and arteries, keeping the goods and services moving, accounted for another 32% of the world’s energy consumption. Over 92% of the energy used was provided by Oil.
The residential use of energy represents 20% of energy use. Here 25% of the energy usage comes from Gas primarily used for heating and cooking.
The commercial sector which represents approximately 10% of the global energy use is primarily utilizing Electricity, which again is mainly derived from burning coal.
Agriculture and other highly fragmented economic activities account for approximately 5% of the energy use. Here more than 50% of the energy matrix is made of fossil fuels. However, this sector is also the most heavily impacted, as they are not able to influence the price, but suffer the full consequences of the supply crisis we now face.
Additional observations regarding the forms of energy consumed in the energy matrix:
- Electricity accounts for approximately 20%. However this mostly comes from burning fossil fuel.
- Oil accounts for approximately 35%.
- Coal accounts for another 10% approximately consumed in its direct form by the industry.
- Natural Gas accounts for approximately another 15%.
- Only 10% of the global energy or fuel consumption is currently coming from renewable sources.
So How does data visibility help us plan for the future?
For the industrial sector:
- Move the Electricity consumed to that generated by sustainable and climate friendly sources such as Hydroelectricity, Nuclear, Solar, Wind, Biofuels, Green Hydrogen, Synthetic natural Gas, synthetic oil Geothermal to name a few.
- The coal used for reduction processes are critical for the chemical transformation of ores into usable metals or base products. Case point, Cuprite ores need coal to reduce it into Copper. Iron ore can only be transformed into Steel after processing it with coal. To extract Silicon for making solar panels we need coal to treat the sand. However, this Carbon can also be obtained from more renewable processes, not just from the ones dug from the ground.
- The use of gas as a raw material is again something that needs to be examined by chemists. However, certain end products may be obtained from different methods. CO2 for industrial use can be also obtained from Carbon capture, not just from making CO2 from natural gas. The natural gas used as a fuel can be replaced by synthetic natural gas or other renewable heat generating sources, as long as the process needs can be fulfilled.
The Transport Sector:
- Shipping, Cargo transport, and Road transport are the main consumers, can also look into Green hydrogen.
- Re aligning global supply chains to reduce the energy footprint of the transport sector can only be possible if there is a better accountability of the energy consumed per mile, and of emission per mile for every product consumed. By looking at the cost impact we can look for more holistic solutions and approach.
For the residential sector
- The key will be to move away from Natural Gas for heating and cooking towards more sustainable sources.
- Replace the Natural gas with Synthetic Natural Gas where moving away from Gas is not completely possible.
- Utilize distributed generation using renewable means coupled with new energy storage technologies such as high density batteries.
The commercial sector
- Utilize their real estate footprint wisely and generate a part of the electricity consumed locally
- Redefine waste management at source to move towards a sustainable source of the gas consumed for heating and cooling.
- Move heating and cooling away from gas based to electricity based.
These simple strategies can help us achieve a more sustained transition from fossil fuels towards a cleaner energy matrix, and also take us away from the supply chain induced economic disaster that we are moving towards currently.