The production of fossil fuels — coal, oil and natural gas — jumped to a record high last year, with as much as 237 million barrels of oil equivalent produced each day. To avert a climate crisis, both the production and consumption of fossil fuels need to move in the opposite direction.

Fossil fuel production is dominated by oil, which accounted for about 40 per cent of the total output in 2022, followed by coal (31 per cent) and gas.

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The momentum for supply growth remains strong, with three factors driving it: Pandemic rebound, safeguarding energy security, and profitability, according to BloombergNEF oil analyst Claudio Lubis. 

Fossil fuel supply saw a year-on-year growth of 9.7 million barrels of oil equivalent per day in 2022.  The increase in oil supply was led by Saudi Arabia, while the boost in gas output came from the US. China and India led the growth in coal production.

India’s coal ministry aims to dispatch 1 billion tonnes of coal in the current financial year, and it managed to reach the 500 million tonnes mark in the first half of the year, setting a new record. Over 80 per cent of this supply was shipped to power plants.

There will be discussions and debate on limiting emissions and promoting cleaner technologies and their funding at COP28, the annual climate conference currently underway in Dubai. The President of COP28, Sultan Al Jaber, is also the head of Abu Dhabi National Oil Co.

Path to tripling 
 

The climate challenge needs hard decisions, funding and solid optimism — the three things that enabled the dramatic rescue of all 41 workers trapped in an under-construction tunnel in Uttarakhand for more than two weeks.

One option is to commit to a goal of tripling the installed capacity of renewable sources of power by 2030 to 11 terawatts. That would require a ramp-up in annual clean energy investment from $564 billion in 2022 to almost $1.2 trillion per year. It also requires boosting investments in the power grid to accommodate the new renewables capacity, as well as an expansion of energy storage capacity. 

Tripling will be hard, but achievable, according to BNEF. It entails a significant acceleration — the last tripling took 12 years, and the next must take eight. Yet, with wind and solar being the cheapest sources of new generation in most countries, and with over 90 per cent of global emissions covered or soon to be covered by some sort of a net-zero emissions target, such a goal looks more feasible than ever before. 

Battery prices
 

Battery prices are back on their downward trajectory after an uptick last year. Average lithium-ion battery pack prices in 2023 have fallen to $139 per kilowatt-hour, a 14 per cent decline from 2022, according to the latest survey by BNEF. Prices are expected to drop further over the next few years, helping to strengthen the economics of electric vehicles and energy storage. 

Easing prices of battery metals like lithium, nickel and cobalt helped bring overall prices down. Almost $10 trillion of metals will be needed for the world to hit net-zero emissions by 2050. There could be hiccups in supply, with mines and mining contracts facing increased surveillance. Widespread protests led to the recent decision of the Panama government to shut down a $10 billion copper mine. Authorities will start “the transition process for the orderly and safe closure of the mine,” President Laurentino Cortizo said in a post on X, but did not mention how long the process might take.

India’s Ministry of Mines is auctioning 20 blocks for mining critical and strategic minerals across the country, including lithium, nickel, graphite, molybdenum, and rare earth elements. The winning bids will be finalised early next year. 

The writer is New York-based senior editor — global policy for BloombergNEF, vgombar@bloomberg.net