Fossil fuel production wastes 75 per cent of primary energy, loses $4.6T per year

This article was published by The Energy Mix on June 14, 2024.

By Christopher Bonasia

In addition to the emission reductions and resilience gains in renewably-generated electricity and the 300 to 400 per cent operating efficiency of electric heat pumps, analysts are now turning their attention to another massive efficiency gain in the energy transition: the 75 per cent of energy from fossil fuels that is wasted before delivering any value, at an annual cost of US$4.6 trillion.

“Fossil inefficiency is fossil fragility,”  RMI researchers write in a new report.

“Inefficient energy use is vulnerable to more efficient alternatives, as competition by more efficient solutions can deliver more or better services, more conveniently, at lower cost.”

In 2019, humanity used 606 EJ of primary energy—in this instance, “the energy that’s harvested directly from natural resources” like oil, gas, and coal—across the globe. Those exajoules are the equivalent of nearly 105.5 billion barrels of oil.

After it’s been extracted, that energy passes through four additional stages as it is processed into final energy like gasoline and electricity, converted to useful energy in devices like engines and water boilers, to deliver energy services like heating and transport, that is then finally used to create value and prosperity for consumers.

But with inefficiencies along the way, that system wastes nearly 400 EJ of energy each year. About one-third of that total is lost during production and transportation, and another third when final energy is turned into useful energy. The most significant sources of energy waste are fossil fuel power plants and internal combustion engines.

The RMI team says that calculation leaves out losses between useful energy and energy services and value: Roughly 30 per cent of construction materials are wasted on building sites, for example, and 35 per cent of truck miles could be eliminated with better logistics.

All in all, the researchers say 75 per cent of the energy produced with fossil fuel technologies is lost.

All of that waste comes at a blisteringly high cost in dollar terms: losing 379 EJ per year means wasting around US$1 trillion per year in energy spending on the supply side, and another $3.6 trillion on the demand side, about $600 wasted per person per year in a world with a population of six billion. The losses are equivalent to 40 per cent of total global energy spending, 5 per cent of global GDP, or “roughly double the annual investments into the energy system every year.”

Now, other new research by RMI concludes that the fossil fuel industry “faces a reckoning”, as costs for renewable energy generation plummet and clean technologies become more reliable. With more efficient technologies available, the global energy system is seeing opportunities for greater efficiency, spurring a transition that is taking shape much faster than analysts and energy modellers expected.

Taken together, these shifts are leading to a decarbonized world where there will be much lower final energy demand than in the current one built on fossil fuels, data researcher Hannah Ritchie reported last fall.

“The winds are changing,” say the RMI researchers.

“End-use efficiency is driving out fossil fuels, reinforced by three new tailwinds that upend the energy landscape: renewable electricity, localization, and electrification. These drivers will allow us to drastically cut down on energy waste and phase out fossil fuels.”