Fossil fuels markets in the "energy transition" era

Abstract

The global energy sector is undergoing a global transformation under the influence of technological breakthroughs in several sectors of production and consumption, as well as profound socioeconomic changes in approaches to energy use. This process became known as "energy transition." In this paper, the authors investigate the long-term impact of the energy transition and related processes on the markets of key fossil fuels: oil, natural gas, and coal. Research shows that all fossil fuel sectors will face a significant increase in competition, both within traditional markets and from other energy sources, due to the development of inter-fuel competition. At the same time, energy policies and efforts to combat greenhouse gas emissions will mostly determine the energy balances of the largest countries, and will have an even greater impact on the market. Natural gas, as the most environmentally friendly of fossil fuels, with a large potential to supplement the generation of new renewable energy sources (NRES), will be the least impaired by the energy transition. In the next 20 years, its consumption and production are expected to grow significantly. Oil is under serious pressure from environmental legislation and growing inter-fuel competition in the transport sector. It is highly likely that consumption will peak before 2040, yet the depletion of traditional resources is supporting prices. The coal market is set for an almost inevitable reduction in consumption. New technologies for capturing emissions can only partially mitigate the rate of coal use decline.