A simple solution to the global warming challenge would be to use less energy. However, this is not actually so simple because energy means the ability to do work. Technological progress depends on access to reliable energy sources. The development of cryptocurrencies and artificial intelligence are great examples of that dependence, as these technologies are incredibly energy-hungry.
The Global Innovation Index is complemented by the Innovation Dashboard, which presents innovation across several dimensions worldwide. One of these areas is technological progress, where energy efficiency is a significant component.
Energy Progress and the Three Pillars of Deep Decarbonization
Energy progress addresses three "pillars" of a "deep decarbonization" (Sachs, 2015):
Energy Efficiency: Measured in the Innovation Index by Green Supercomputers—a metric that assesses how many gigaflops (see Note 1) are achieved per watt of energy consumed.
Low-Carbon Electricity: Measured by the cost of renewable energy for two major sources—solar photovoltaic and wind.
Shift to Electrically Powered Devices: Measured by the price of electric batteries.
These steps are interconnected. For example, buying an electric vehicle in a country where power is generated by traditional fossil fuel plants does not really support the environment. Tesla is trying to address this by combining car offerings with photovoltaic installations and energy storage solutions.
"Tesla is more than car producer. This is the company, which deals with energy innovation" - Elon Musk.
Below you can find a snapshot of the Innovation Dashboard. The level of progress achieved between 2012 and 2022 is absolutely amazing.
Source: Global Innovation Index, 2024
Energy Efficiency
The Green Supercomputers measure proposed in the Innovation Dashboard is too narrow, in my opinion. Given the emergence of energy-hungry technologies, I doubt this measure effectively captures the energy efficiency of the global economy.
An intuitive measure of energy intensity is energy use in kilograms of oil equivalent per $1,000 of total production. However, this measure is not tracked recently at the global level. It seems that megajoules per dollar has replaced it and is therefore available for more recent periods.
In the chart below, you can find the journey of the global economy from 2000 to 2021.
The world has reduced megajoules consumption per dollar of GDP from 5.95 in 2000 to 4.54 in 2020, which is roughly a 24% decrease. This is significant, although the 42% decrease in Poland, which puts the country ahead of Sweden and far below the global average, is much more impressive. One should be careful however with the evaluation of individual countries—the change at a country level may be driven by factors other than efficiency, such as a mere shift towards less energy-intensive sectors. Still, it's good to see such impressive figures at home 🙂
Advancements in Renewable Energy
Solar and wind power release zero CO₂ and are highly desirable from a global warming challenge perspective.
Between 2021 and 2022, the global weighted-average levelized cost of electricity (LCOE) from newly commissioned solar photovoltaic (PV) and wind power witnessed a reduction of 3.9% and 3.5%, respectively. Yet, this rate of reduction is substantially lower than the past decade’s compound annual rate of 15% for solar and 9% for wind. In 2010, the global weighted-average cost of onshore wind was 95% higher than the lowest cost of fossil fuel-fired power. However, by 2022, it was 52% lower than the cheapest fossil fuel-fired solutions.
Similarly, solar PV, which was 710% more expensive than the cheapest fossil fuel-fired solution in 2010, became 29% less expensive by 2022, marking a remarkable reduction in cost (IRENA, 2023).
This is a very important development, as the cost savings fuel the spread of these technologies much more effectively than climate change fears.
In 2022, approximately 300 GW of renewable capacity was added globally, accounting for 83% of new capacity compared to a 17% share combined for fossil fuel and nuclear additions. In 2002, it was only 15%. This is driving the increase of the share of renewables in electricity generation, which in 2022 grew to 28% (IRENA, 2023).
These figures are nothing less than extremely impressive, even though these achievements fall short of the ambitious climate change agenda.
Electric Batteries and the Shift to Electrically Powered Devices
The last pillar of the energy transition is the switch to electrical devices, and this area is measured by the cost of lithium-ion batteries.
Technological progress has persistently driven down the cost of lithium-ion batteries for over a decade by an average of 15.8%, despite a 7% increase in 2022. In 2023, prices returned to the reduction trajectory with a 13.7% reduction compared to 2022.
Three out of every 100 cars in 2023 (compared to 0.04 in 2013) were electric vehicles. This is still a relatively small part of the total market, but the growth is extraordinary and is driven to a large extent by price developments.
Conclusion
A resilient future requires access to large energy sources. One of the features of resilient systems is some level of abundance. Systems that are very efficient tend to be fragile; they don't have the ability to respond to changes that require additional effort.
The energy requirements of artificial intelligence are, for me, a clear sign that the future energy footprint must assume the growth of energy consumption. Green energy, which is both efficient and abundant, is the most likely resilient future scenario.
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References and Notes
Isaacson W. (2023) - Elon Musk.
Sachs, Jeffrey. (2015) The Age of Sustainable Development.
Note 1: Gigaflop: a unit for measuring a computer's speed, equal to approximately one billion (= 1,000,000,000) operations (= processes) per second
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