The International Energy Agency (IEA) has released its 2024 World Energy Outlook, an annual market forecast regarded as the authoritative standard for global energy analysis. This year’s report predicts that fossil fuel demand will peak by 2030, that clean energy sources will generate more than half of the world’s energy by the end of the decade, and that global energy prices will decline as traditional energy use phases out.
As many cheered the IEA’s report, the U.S. Department of Energy (DOE) quickly tempered expectations with its own study identifying natural gas as the cheapest residential energy source available. Electricity (energy derived from an electrical current rather than a pipeline) was the most expensive, costing 3.5 times more than natural gas. In real-world terms, households that heat their homes with electricity this winter will pay 75 percent more than those that use natural gas.
The DOE’s report tells an inconvenient truth that many governments, including the Biden administration, want to ignore: Fossil fuels are cheap, abundant, and critical to meeting the world’s energy needs. Restricting access to these sources will increase costs for consumers, stifle global economic development, and do little to curb greenhouse gas emissions.
Fossil fuels meet more than 80 percent of global energy demand, a dominant position that they will likely hold as emerging economies become more industrialized. As people become more prosperous, they will be able to transition away from heating and cooking with dung, which is estimated to prematurely kill 3.7 million people per year through indoor air pollution. Higher levels of wealth allow societies to focus on basic needs, such as sanitation and infrastructure.
Forcing countries to use more expensive forms of energy will keep poor nations poor and hurt industrialized ones too.
In the U.S., consumers are beginning to feel the impacts of state and federal policies that favor certain technologies over cost and reliability. In July, PJM Interconnection, the organization that regulates electricity in the Midwest and Mid-Atlantic regions, announced it was increasing its rates by more than 800 percent. Dwindling supply is driving these cost increases: Baseload power sources have been forced to close because of state-implemented green energy mandates and steep demand forecasts from electric vehicles and data centers.
The U.S. electric grid is not the only one experiencing supply shortfalls. The European Union (E.U.) is expecting total electricity consumption to rise by 60 percent through 2030. To meet demand, the E.U. says it needs to invest 584 billion euros ($632 billion) by the end of the decade. The IEA, meanwhile, projects global consumption will increase by as much as 34 percent. Without access to abundant and affordable energy, consumers will be left paying more for less reliable electricity.
The steep cost of government preferences for renewable energy sources will come with negligible environmental benefits. European countries whose penchant for solar and wind led to the forced closure of nuclear power plants are increasingly turning to coal to provide backup generation when the sun isn’t shining and wind isn’t blowing.
While the IEA’s utopian world may seem nice, the DOE’s report shows that natural gas is still the most affordable energy source available. A rushed transition to renewable sources will increase energy costs while hurting grid reliability and economic mobility.
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