Politicians and diplomats talk frequently about the coming “energy transition.” But what they should highlight is something the planet must have: energy expansion.
More energy is necessary, because too many people still live in energy poverty. For example, more than 600 million people in Africa do not have access to electricity, even as the population on that continent may nearly double to 2.5 billion people by 2050. Asia’s Development Bank reports that more than 350 million people there have limited access to electricity, and 150 million people have no access. Reducing household energy poverty is a priority, but so too is providing the necessary power for emerging economies to develop.
More energy is necessary for greater energy security. Half a century after the 1973 oil crisis, energy security remains at the forefront of international dialogue. Russia’s invasion of Ukraine in 2022 reminded the world how energy can be weaponized and the Israel-Hamas war could have implications for energy production in the Middle East.
And more energy is necessary for greater productivity. Since energy is a necessary input for most industrial processes, businesses have an economic incentive to produce more with less. As the International Energy Agency puts it, “Improvements in energy efficiency over the past three decades have played a key role in limiting global increases in energy use and CO2 emissions.”
Still, new technologies will shift the supply and demand curves for energy. For instance, “by 2027 A.I. servers could use between 85 to 134 terawatt hours (Twh) annually,” the New York Times reported, citing a recent study. “That’s similar to what Argentina, the Netherlands and Sweden each use in a year, and is about 0.5 percent of the world's current electricity use.”
Solving these challenges will require more energy. “This outcome is largely due to population growth, regional economic shifts toward more manufacturing, and increased energy consumption as living standards improve,” as the U.S. Energy Information Administration projects in its latest International Energy Outlook. Thus, fossil fuels and non-fossil fuels will be essential to meet future demand.
EIA also points out that higher living standards and levels of prosperity will lead to short-term increases in CO2 emissions. Most people would say that’s a worthwhile tradeoff.
Expanding energy access, even if it comes at the cost of increasing emissions, should be a global priority. Access to energy is a taken-for-granted privilege in many places. In a given year, a household refrigerator in the U.S. uses more power than the average individual in Kenya, Nigeria, Tanzania, the Democratic Republic of Congo, or Ethiopia is able to. Policymakers and western societies must be cognizant of these realities and promote climate solutions that lower costs and improve livelihoods for emerging economies around the world.
That is not to suggest, however, that we should summarily dismiss the risks and costs of rising emissions. Driving economic growth while reducing emissions is happening in many developed countries, and it can happen faster if lawmakers take aggressive action. For example, despite some marginal reforms, Congress has not come close to addressing regulatory (and litigative) bottlenecks that make it more difficult to roll out new energy technology. Doing so could help improve outcomes on a wide range of energy and environmental priorities: everything from small modular reactors to forest management.
Successful energy and climate policies should liberate producers and innovators to provide consumers with what they want as opposed to policymakers and regulators dictating to consumers what they think they should have. Pro-growth tax policy, permitting reform, and enabling more investment and trade will drive bottom-up solutions that increase energy supplies and reduce the risks of climate change.
Encouragingly, global energy transition investments in 2022 totaled $1.1 trillion, the first time that such investment equaled the amount invested in fossil fuels. Whether it is renewables, batteries, geothermal or nuclear, making these energy sources cost-competitive will be essential to their wide scale global deployment. We can expect CO2 reductions in developing countries as the cost of low- and zero-emission technologies decline.
Being conscious of future energy needs while tackling climate ambitions is a matter of policy debate. The world will have fewer emissions, but it must have more energy.
