The Energy Transition: Renewables, Storage, and the Hard Parts

Where We Are

Rough picture of the global energy system as of the mid-2020s:

Total primary energy           ~180,000 TWh/year
Of which:
  Oil                          ~30%
  Coal                         ~25%
  Natural gas                  ~22%
  Low-carbon (all)             ~18%
    Of which:
    Nuclear                    ~4%
    Hydro                      ~7%
    Wind                       ~3%
    Solar                      ~2%
    Biomass, geothermal, other ~2%

Of global CO2 emissions from fossil fuels and industry, energy (generation, heat, industry, transport) is ~75%. Agriculture and land use make up much of the rest.

The big picture: fossil fuels are still dominant. The transition is real; it's far from complete.

What's Going Well

A handful of genuinely positive trends over the last two decades:

Solar PV cost collapse

The cost of solar panels dropped over 90% from 2010 to 2024. This wasn't a single breakthrough; it was steady learning curve: Wright's law applied to solar manufacturing scale. The curve keeps going.

Utility-scale solar is now the cheapest source of new electricity in most of the world. In sunny regions, contracts are signed at $20-30/MWh; in 2010 these prices were unimaginable.

Wind cost reduction

Less dramatic than solar but significant. Onshore wind is now competitive or cheapest in windy regions. Offshore wind is more expensive but rapidly improving; turbines are enormous and keep getting bigger.

Battery cost collapse

Lithium-ion batteries dropped roughly 90% from 2010 to 2024. This enables electric vehicles (chapter 06) and grid storage (below). Stationary storage is now being deployed widely in several regions.

Electric vehicles

Global EV sales went from rounding error in 2015 to ~15-20% of new car sales in 2024, with China leading. Many countries are on trajectories toward majority EV sales by 2030. The speed depends on policy and the charging network.

Grids integrating variable renewables

Denmark runs above 50% wind on many days without reliability issues. California, Texas, UK, Germany, Spain are regularly >50% renewable at various times. The grid-engineering worries about integrating variable renewables have been met, mostly, in practice.

Efficiency gains

Lighting (LED), appliances, industrial processes, and buildings have continued to improve. Energy intensity per unit GDP has been falling in most rich countries for decades. This is unglamorous and hugely consequential.

What's Harder

The full transition requires more than generating electricity. Several hard parts:

Long-duration and seasonal storage

Batteries handle hours, not weeks or seasons. Seasonal mismatches (winter heating in low-sun regions, summer cooling in sunny ones) require longer storage or alternatives.

Options being developed:

• Pumped hydro: mature; limited by geography
• Compressed air energy storage: a few deployed; niche
• Thermal storage: store heat in molten salt, bricks, or sand; release later as electricity or heat. Emerging, promising
• Hydrogen and synthetic fuels: convert excess electricity to storable chemical energy; reconvert later. Inefficient round trip but good for seasonal storage
• Ammonia: hydrogen-derived fuel, storable, transportable; shipping industry is exploring

None of these are as cheap as just having more of the cheap stuff. Hybrid approaches (lots of renewables, modest storage, some firm generation, interconnections across regions) are the leading models.

Industrial heat

Much industrial process heat (steel, cement, chemicals, glass) needs very high temperatures, historically from burning fuel. Electrifying this is technically possible but costly and slow:

• Steel: direct reduced iron with hydrogen instead of coke
• Cement: electrified kilns; alternative chemistries
• Chemicals: electric reactors; hydrogen as feedstock
• High-temp process heat generally: electric, hydrogen, biofuels, or carbon capture

These are harder than electricity decarbonisation because:

• Capital is locked in existing plants for decades
• Alternative processes are sometimes less efficient
• International competition makes unilateral action hard
• The replacements are often more expensive

Aviation

Batteries are too heavy for most flights. Hydrogen-powered aircraft are in development but years out. The main paths:

• Sustainable aviation fuel (SAF): biofuels and synthetic kerosene from renewable electricity. Currently expensive; scaling
• Hydrogen: requires new aircraft designs; Airbus aims for commercial availability in the 2030s
• Electric: viable for short flights; not for long-haul
• Demand reduction: fewer flights; higher prices

Aviation is likely to be one of the last sectors to fully transition.

Shipping

Huge tonnages; low margins; international. Shipping is exploring:

• Ammonia as fuel (hydrogen-derived, fits engine design with modifications)
• Methanol (from biomass or synthesised)
• Wind-assist (rigid sails, kites) for incremental savings
• Battery-electric for short routes (ferries)

Global shipping regulations (IMO) are tightening; the industry is moving but slowly given ship lifespans of 20-30 years.

Agriculture and land use

Food production, fertiliser, livestock, and land-use change together account for 20-25% of global emissions. Technical solutions exist but are harder to deploy:

• Precision agriculture reduces inputs
• Alternative proteins reduce livestock emissions
• Regenerative practices sequester carbon
• Reforestation and peatland restoration

Political economy (farming is politically protected in most countries) slows adoption. Food is a local, cultural, and security issue; transitions are slower than pure economics would suggest.

Hard-to-abate carbon

Some emissions don't have easy alternatives: specific industrial processes, aviation fuel production, long-haul heavy trucking. Carbon capture (at source or direct from air) is part of most deep decarbonisation scenarios.

Carbon capture is controversial:

• At power plants and industrial sites: mature technology, expensive, politically fraught
• Direct air capture: early-stage, expensive, growing
• Geologic storage: proven at small scale, scaling needed

Sceptics see CCS as a delay tactic for fossil industries. Proponents see it as necessary complement to a largely renewable system. Both have a point.

The Realistic Trajectory

A defensible summary of where we're heading:

• Electricity: majority decarbonised in most rich countries by 2035-2040, later elsewhere
• Transport: majority electric personal vehicles by 2035-2045; trucks, shipping, aviation lag
• Heating in buildings: electrification via heat pumps; 20-30 year timescale
• Industry: hardest; uneven by sector; 30-50 year timescale for full decarbonisation
• Agriculture: slowest; significant carbon sink and source trade-offs

The transition is happening. It's not fast enough for the most ambitious climate targets. It's also not zero.

The main policy question isn't "will it happen" but "how fast, with what tradeoffs, and who bears the costs".

The Permitting Bottleneck

Across every region trying to build renewables, storage, and transmission, the bottleneck has shifted from cost to permitting.

• A solar farm takes 2 years to build; interconnection queues take 3-5
• A transmission line takes 10-15 years from concept to operation
• A new nuclear plant takes 10-20 years
• A wind project can take 5-10 years of permits before construction

Fast-building countries (China notably) have much shorter timelines because they have less restrictive permitting processes. Democratic countries navigate local objections, environmental review, land rights, legal challenges; this is slower.

There's active discussion about how to speed up permitting without sacrificing environmental or local interests. The speed of the transition depends on whether this discussion produces change.

Jobs and Distribution

The transition moves money and jobs around. Coal communities lose; battery manufacturing regions gain. Oil-producing countries face long-term revenue declines; mineral-producing ones (lithium, copper, rare earths) see potential booms.

Transition policy that handles this well (retraining, economic development, honest timelines) has better political prospects than policy that ignores it.

Related: energy prices matter enormously to industry and households. A transition that substantially raises prices hits poorer households disproportionately. "Just transition" is the policy language for addressing this.

The "Last 20%" Problem

A counterintuitive point: the first 80% of decarbonisation is likely easier and cheaper than the last 20%.

The first 80% is mostly about deploying mature technologies (solar, wind, batteries, EVs, heat pumps) widely. Costs are known; trajectories are clear.

The last 20% is the hard-to-abate sectors. Per ton of CO2 avoided, it's substantially more expensive. This is why "net zero" often includes some carbon capture, some residual emissions, and offsetting.

Policymakers who promise easy paths to net zero often underestimate the last 20%. Honest policy acknowledges it's harder and plans accordingly.

The Rich-Poor Divide

Rich countries have most of the historical emissions and most of the current deployment resources. Poor and middle-income countries have most of the future emission growth and less capacity to pay for the transition.

This is both a justice issue (fair allocation of transition costs) and a practical one (the transition only works if the whole world participates). Mechanisms include:

• Climate finance from rich to poor countries
• Technology transfer
• Carbon markets (including international)
• Border carbon adjustments

None of these are fully working yet. Honest transition analysis includes the international dimension.

What Could Accelerate

Several things could meaningfully accelerate the transition:

• Cheaper batteries: further cost drops make storage ubiquitous
• Cheaper hydrogen: enables electrolysis in volume, opens up industrial and shipping applications
• Better transmission: removes renewable integration bottlenecks
• Streamlined permitting: shortens project timelines meaningfully
• Policy certainty: carbon pricing, mandates, durable standards reduce investment risk
• Global coordination: sharing best practices, finance, technology

Predicting breakthroughs is unreliable. The cost curves we've already seen would have been dismissed as fanciful in 2010. Further acceleration is possible.

Realism vs Despair

Two failure modes common in energy transition discourse:

Techno-optimism

"Solar is cheap; we'll figure it out easily." Ignores real bottlenecks (transmission, permitting, industry, aviation, agriculture). Leads to underinvestment because "the market will handle it".

Doomerism

"We've already failed; nothing matters." Ignores real progress and real options. Leads to disengagement.

The realistic position: substantial progress is happening; real bottlenecks remain; the speed depends on decisions being made now. Neither complacency nor despair is earned by the data.

Common Pitfalls

"Renewables will solve everything." They'll handle most of the electricity sector. Other sectors need other solutions. The whole transition is more complex than electricity alone

"Renewables won't work." They demonstrably work at high penetrations. Scaling and storage are real problems, not showstoppers

"Nuclear should scale." Existing nuclear should stay; new nuclear depends on cost trajectories that haven't improved much in decades. SMRs and fusion may change this; not betting the decade on them is wise

"Fossil fuels are dead." They'll be important for decades yet. The transition is a trajectory, not a flip

"Carbon capture is a scam." Some is; some is legitimate technology for genuinely hard-to-abate sectors. The blanket position is wrong

Next Steps

Continue to 10-supply-chains.md for the material and logistical systems behind all of this.