Why the World is Not Moving Away from Fossil Fuels—And What Australia Must Do
With recent announcements from high-profile Australians, including Twiggy Forrest and others, about the massive move to renewables, we look at how renewables have affected the world’s energy sources and what Australia should be concentrating its efforts on. One advantage Australia has in being so isolated is that Australians are resourceful and innovative.
For years, the global conversation around energy has been dominated by the push toward renewable sources such as wind and solar. However, despite significant investment and policy initiatives, the world remains heavily reliant on fossil fuels. In reality, the transition from coal, oil, and gas is far slower than many had anticipated, and substantial economic and practical reasons exist for this ongoing reliance.
The Enduring Role of Fossil Fuels
Despite global initiatives to transition to renewable energy, fossil fuels—namely coal, oil, and natural gas—continue to dominate global energy production.
Fossil fuels accounted for approximately 81.5% of the global energy supply in 2023, a slight decrease from 81.9% in 2022. This trend highlights that despite increasing investment in renewables, they have not yet replaced fossil fuels at scale.
Key reasons for this include:
- Energy Reliability: – Solar and wind energy depend on weather conditions, making them intermittent power sources. Battery storage technology is still developing and remains expensive.
- Global Demand: – Emerging economies, particularly in Asia, continue to expand their energy needs. Many developing nations rely on coal and natural gas to fuel their growth due to affordability and accessibility.
- Infrastructure and Investment: – Existing power grids and industrial processes are built around fossil fuel use. The cost and time required to transition these systems to renewable energy are substantial.
- Geopolitical and Economic Factors: – Countries with large fossil fuel reserves, such as the United States, China, and the Middle East, are unlikely to abandon these resources entirely due to economic and strategic interests.
In addition, global fossil fuel consumption has continued to rise. In 2023, global primary energy consumption grew by 2%, totalling 620 exajoules (EJ). Fossil fuels contributed 505 EJ, marking a 1.5% increase from the previous year. Oil consumption surpassed 100 million barrels per day for the first time, and fossil fuel demand is expected to reach new record highs in 2025.
Australia’s Need for Economic Diversification
While Australia has made significant commitments to green energy, it must also recognise the limitations of renewables and prioritise economic diversification. A singular focus on renewables risks missing out on more significant opportunities in other sectors, such as:
- Downstream Processing of Resources: – Australia is rich in raw materials like lithium, iron ore, and rare earth elements. Instead of merely exporting these materials, we should invest in refining and manufacturing capabilities to create higher-value products domestically. Exporting steel sheet metal and steel profiles, rather than just iron ore, would significantly enhance Australia’s economic position.
Labour constraints are the primary reason Australia has not been able to establish sustainable manufacturing industries. However, with the investment in technologies and AI-assisted robotics, Australia is likely to find cost-effective solutions to establish and build more downstream processing capabilities.
- Advanced Manufacturing and Economic Complexity: – According to the Harvard Atlas of Economic Complexity, Australia’s ranking has dropped from 57th in 1995 to 102nd in 2022—placing it just above Ethiopia and below Bangladesh. This decline highlights the urgent need to shift from being a commodity-exporting nation to one that produces and exports more complex goods. Manufacturing nuclear power station fuel rods instead of just exporting yellowcake uranium is one example of how Australia could add value to its exports.
The only way to achieve this is for Australian Governments (both Federal and State) to promote the use of uranium. The fear of another nuclear disaster has continued to inhibit the use of uranium and nuclear energy usage in Australia.
- Traditional and Emerging Energy Sectors: – Rather than dismissing fossil fuels, Australia should leverage its expertise in energy production while exploring cleaner methods, such as carbon capture and storage (CCS) and natural gas as a transition fuel.
- Technology and Infrastructure Investment: – Investing in infrastructure to support multiple industries—including transportation, logistics, and digital technologies—will strengthen Australia’s economy far more than a single-minded approach to renewables.
A Balanced Approach for a Stronger Future
The reality is that the world will not abandon fossil fuels anytime soon, and Australia must be pragmatic in its economic strategy. While supporting renewable energy development is important, it should not come at the cost of other industries that could secure long-term economic growth. By focusing on downstream processing, advanced manufacturing, and a balanced energy policy, Australia can position itself as a leader in the global economy without placing all its bets on green energy.
Instead of following a one-track agenda, Australia should recognise that true economic and environmental sustainability comes from diversification, innovation, and strategic investment across multiple industries. Strengthening the country’s economic complexity is key to ensuring long-term prosperity and resilience in a rapidly evolving global landscape.
We are here to help
If you’d like to discuss how these changes could impact your financial strategy, feel free to reach out —we’re here to help!
