During an eventful 2022, energy demand grew by 1.1%, fossil fuels contributed 82% of supply, record additions of renewable energy sources were added and emissions continued to climb.
The Energy Institute’s (EI) Statistical Review of World Energy, released June 26, highlighted some of the ways energy systems have adapted to environmental and geopolitical crises.
“In a year when energy returned to the front pages for all the wrong reasons, both a lot happened and not that much happened,” EI CEO Nick Wayth said.
The dramatic impacts of 2022 contributed “very little change in the overall mix, as primary energy demand rose by just over 1%,” Wayth said.
Much of the world continued its trajectory toward pre-COVID-19 trends, which drove an increase in global oil demand. In 2022, oil demand was over 97 MMbbl/d, 0.7% lower than the all-time high of 2019, he said. Demand in 2022 was 2.9 MMbbl/d higher than 2021, while global oil production increased by 3.8 MMbbl/d. Brent crude oil prices averaged $101/bbl in 2022, its highest level since 2013.
“Demand for transportation fuels was the key feature of 2021, and this continued, albeit at a slower pace than last year,” Wayth said.
While global gas production remained relatively constant compared to 2021, global natural gas demand declined by 3% in 2022. Overall, natural gas decreased from 25% to 24% of the energy mix.
The 2023 Statistical Review of World Energy— the 72nd edition of the report — was the first one conducted under EI’s auspices. Previously, BP produced the annual study. EI carried out the review with partners KPMG and Kearney, supported by BP. Heriot-Watt University compiled the data.
The statistical review gives insight into global energy systems and how they are adapting to both geopolitical crises, particularly the Ukraine war and to the environmental crises, Juliet Davenport, EI president, said in a webcast discussing the study’s findings.
The ‘crippling’ repercussions of war
Coal consumption rose 0.6% to 161 exajoules (EJ), marking the highest level of coal consumption since 2014. One EJ is equivalent to roughly 34 million metric tons of coal.
China and India drove coal demand growth, while consumption in North America declined by 6.8% and in Europe by 3.1%.
Overall, global coal production increased by over 7% last year.
Russia’s attack on Ukraine came as international gas prices were escalating. That led to unprecedented changes in the trade flows of energy, he said. And the energy industry was already struggling with legacy supply chain issues and rising prices, he said.
“Supply struggled to keep pace with demand. The Ukraine conflict compounded this on a scale not seen before. We saw record natural gas prices, a three-fold increase in Europe, two-fold in Asia and the U.S. hit a 14-year high,” Wayth said. “The knock-on impacts have been crippling in many consumer economies around the world beyond gas and into power markets and into many other commodities, including food, driving up inflation and creating the cost-of-living crisis that we're all now living through.”
Energy transition? yes and no
Solar and wind gained ground in 2022. Together, the two supplied 7.5% of energy in 2022, a 1% increase over 2021. China alone accounted for 37% of the growth in solar and 41% in wind.
“The pace of renewable deployment continued at record pace driven by solar and wind, equivalent to around 84% of net additions to the power sector,” he said.
When combined with hydropower, those three renewable energy sources contributed 14% of the 2022 supply. He noted, however, that oil and gas still contributed 82% of supply and emissions continued to increase, although they are slowly being disconnected from energy, he said.
According to the report, CO2 emissions from energy use, industrial processes, flaring and methane grew 0.8% in 2022 to reach a new high of 39.3 billion tonnes of CO2 equivalent (GtCO2e). Energy emissions rose 0.9% to 34.4 GtCO2e.
CO2 emissions from flaring dropped by 3.8%, while emissions from methane and industrial processes decreased by 0.2%.
“The benefits of record renewable additions was partially offset by the mix of fossil fuel with increases in coal and oil more than offsetting the declines in gas consumption,” he said. “Whilst we are clearly not on track” to meet targets set forth in the Paris Agreement adopted in 2015, he said, “the intensity of energy emissions is continuing to fall, but with regional variations.”
He noted that while absolute emissions in the U.S. increased, the emissions intensity of energy consumption fell — largely driven by a 6% drop in coal use.
In India, both higher absolute emissions and intensity as gas consumption declined. While India's emissions are the highest on a per capita basis, they're nearly one-eighth of those of the U.S. and two and a half times lower than the world average, he said. The EU saw an overall fall in emissions of nearly 0.7%, but energy consumption declined faster, leading to the relative uptick in intensity. In China, the continued fall in liquid fuels demand reduced emissions even as overall demand increased, he said, but the inevitable post-COVID demand growth is likely to reverse this in 2023.
In 2022, the volume of flared gas and methane emissions fell, but remains a massive issue that needs addressing. Last year, global gas flared amounted to about twice Germany's 2022 consumption, he said.
“Is the energy transition happening? The answer is probably a bit of yes and a bit of no.
“Yes, in terms of the renewable growth, but a clear no in terms of the reduction in demand for fossil fuels,” he said. “Are emissions moving in the right direction? Clearly not.”
Some reasons for optimism, such as the record push of renewables and the fall in enery intensity, flaring and methane are positive, but not happening fast enough.
“And did energy markets work in rebalancing supply and demand? Yes, but—and it was a very big ‘but’—at unprecedented cost to energy consumers around the world.”
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