The energy system is in the throes of a global phase shift in which incumbent fossil fuel industries will be completely disrupted and replaced by new energy technologies based on solar, wind and batteries over the next two to three decades due to economic factors.
This is one of the biggest and fastest disruptions in history, and all the best available data shows that it cannot be halted without completely derailing civilisation: but it can be delayed, degraded, accelerated or optimised based on societal choices.
In this post, we will explore how the most robust scientific forecasting methods show clearly that we have likely passed a global tipping point in the energy system, in which the exponential scaling of solar, wind and battery storage can no longer be prevented.
This means that, bar a civilisation-scale catastrophe, the fundamental transformation of the global energy system driven by a phase transition in the electricity system is not just well underway: we are passed the inflection point. The emergence of a new energy system is essentially inevitable.
While this is good news, it’s not the whole news, and it doesn’t mean we are out of the woods. The transformation, while inevitable, means that fossil fuels are bound to face disruption and economic obsolescence within the next decades (and most likely within the next). That threatens the livelihoods of up to tens of millions of people around the world, and we haven't even begun to look at disruptions in other sectors. There also remain many barriers to the next energy system being harnessed and designed as optimally as possible, and in a way that mitigates civil unrest as old industries enter their twilight. Absent a systems understanding of this coming transformation, the pathway to the next system will be littered with geopolitical instability, social breakdown and economic crisis on huge scales.
The task ahead is momentous: we need to not only recognise how to optimise the unfolding of the new system so that we can maximise its benefits and distribute them as widely as possible; we need to be aware of the wide ranging risks along the way which require us to rethink our approach to ‘environmental, social and governance’ (ESG) issues, and their potential social, economic and political consequences.
Yet armed with such knowledge, we can make better choices that allow us to thread the needle to the emerging new world far more smoothly.
The pattern of disruption
Academic researchers and complexity theorists are beginning to catch-up with the contention that the energy system is going to be transformed due to the way technology disruptions unfold.
One of the earliest proponents of this view, of course, was Tony Seba who about a decade ago predicted that exponential improvements in costs and capabilities of solar, wind and batteries would drive them along an exponential ‘S-curve’ adoption rate. The declining costs and escalating improvements in these technologies would lead them to eventually outcompete incumbent fossil fuel industries due to fundamental economics, he said.
I was among the first mainstream journalists to interview Seba about his book, Clean Disruption of Energy and Transportation, for VICE in 2014. At the time, Seba’s claims were largely seen as crazy. Electric vehicles outcompeting internal combustion engines? Becoming so cheap that they wipe them out within 10-15 years? Solar taking over the world by around 2030, and making fossil fuels bankrupt?
Yet much of what Seba forecasted is actually happening. His forecasts were based on the pattern of technology disruptions throughout history. This is a pattern so consistent that it can be mapped empirically and used to make empirically-robust projections about the future.
Many people don't realise how ubiquitous technology disruptions are across human history. From nylon to synthetic rubber, from ballpoint pens to birth control pills, from vaccines to videotape, from planes to photography, from the invention of the wheel to the printing press, technology disruptions throughout human history have always followed the same pattern. As costs decline and performance improves, the new technology becomes better and cheaper at meeting an important need or demand in society. The new technology then reaches a ‘take-off point’ after which it quickly displaces the old. Both the growth trajectory of the new technology and the decline path of the old, take the shape of S-curves.
Most importantly, the new technology does not represent a simple one-for-one substitution. It represents a ‘phase transition’ within that sector which changes the very rules and properties of the system, and how it works. This usually creates a larger market which operates in a totally different way to what went before.
Solar beyond the tipping point
Technological change is increasingly a subject of scientific research. There are now a number of empirically-grounded studies which attempt to take into account how the pattern of technology disruption works, using that to make highly plausible forecasts of coming technological change.
One recent such study was published by the University of Exeter’s Global Systems Institute (GSI) last year, and co-authored by researchers affiliated with the GSI, the World Bank, Cambridge University, UCL and Cambridge Econometrics.
Their conclusions are powerful:
We find that, due to technological trajectories set in motion by past policy, a global solar tipping point may have passed where solar energy gradually comes to dominate global electricity markets, even without additional climate policies.
The study uses a global, data-driven energy-technology-economy simulation model (E3ME-FTT) to forecast the deployment of solar photovoltaics (PV) up to 2060. It finds that:
By mid-century, according to E3ME-FTT, solar PV will have come to dominate the mix, even without any additional policies supporting renewables. This is due to solar costs declining far below the costs of all alternatives. Its scale expands, because of its current rapid and exponential diffusion trajectory and comparatively high learning rate.
Wind power and battery storage are following very similar exponential S-curve trajectories according to the paper, although these are scaling at a slower rate than solar.
The study points out that conventional forecasts by incumbent energy experts are consistently wrong because they are based on outdated data, linear assumptions, and a flawed understanding of how disruptive technologies actually evolve. Not only has the International Energy Agency’s World Energy Outlook been consistently wrong year after year, but this also means that the UN Intergovernmental Panel on Climate Change’s (IPCC) projections which see fossil fuels as a dominant energy source for most of the remaining twenty-first century simply cannot possibly be correct.
The model also suggests that due to the diffusion dynamics and “international spillover effects” of disruption, even poorer countries where there are significant domestic barriers to implementing proactive climate policies will be able to become players in the solar revolution. The paper finds that:
… most regions of the world are likely going to gain access to low-cost solar energy. As such, a region may reach cost parity between solar and the cheapest alternative through the influence of other countries on the scale of production and costs, even if cumulative investments in that region are modest. This implies that developing countries could become realistic markets for solar energy even when the capacity of their governments to implement climate policies remains limited.
The coming dominance of solar, of course, has major consequences from an energy investment perspective. It suggests that the overwhelming direction of travel for investors should be where this disruptive technology is scaling an exponential growth trajectory. But it also highlights massive risks to trillions of dollars of investment tied up in fossil fuel assets which, by the same analysis, are inevitably going to be written down over coming decades.
While incumbent industrialists might cling onto the idea that the process of solar reaching dominance will still take decades (though as we will see below it will be faster), solar's exponential inflection point kicks of in the 2020s, while the collapse of oil, gas and coal in particular begins to crash from the mid-2020s through to 2040. This poses huge risks to investors.
Solar alone can’t save us
It's worth noting that the model used by GSI is quite conservative. Although it attempts to take into account feedback loops in disruptive innovation which create a virtuous self-reinforcing cycle of investment, performance improvements, cost declines and adoption, it is not derived from any systematic framework based on the actual pattern of technology disruptions in history. It also ignores self-reinforcing feedback loops between disrupting emergent technologies and disrupted incumbent technologies. This means that the speed and interconnected complexity of this pattern is underestimated. Despite that very conservative approach, the paper arrives at the following arresting verdict:
Without any further energy policy changes, solar appears in a favourable position to become the future dominant source in power generation before mid-century. Due to the reinforcing co-evolution of technology costs and deployment, our analysis establishes quantitative evidence, from current and historical data trends, that a solar energy tipping point is likely to have passed. Once the combined cost of solar and storage crosses cost parity with all alternative technologies in several key markets, its widespread deployment and further costs declines globally could become irreversible.
What this means is that we have a solid, empirical basis to believe that the global energy system is already in the midst of a tremendous transformation, what in systems terms we would call a phase transition. Phase transitions are neutral; they don't imply something better or worse, but rather a fundamental change of state that is defined by different relationships structured according to new rules and properties.
Yet the study also emphasises that this technological transformation, in itself, will not save us:
A tipping point towards solar dominance however does not solve climate change mitigation or achieve climate targets, as it does not ensure a zero-carbon energy system.
The paper identifies a range of barriers and challenges which could result in a solar-dominated system that is “neither resilient nor sustainable”.
To get to real resilience and sustainability requires optimal choices: we need to think about grid stability; electrifying heating and industry; ensuring that financial capital flows to hard-to-reach regions and sectors; making sure we don’t mismanage critical minerals supplies; while also ensuring that the transition is a just one that doesn’t disenfranchise workers dependent on fossil fuel producers that will getting disrupted.
So the key takeaways here are as follows:
1. We’re in the midst of an accelerating global energy phase transition being driven by technology disruptions related to three key technologies, solar, wind and batteries, based on fundamental economic factors.
2. Robust empirical data shows that we are passed global tipping points in the deployment of solar PV, which means that solar power will become the dominant energy source for human civilisation within the next thirty years.
3. The inevitable transformation of the energy system in itself will not solve climate change. We still need a whole host of societal choices to leverage this energy phase transition to solve climate change.
Research groups are waking up to exponential change
These findings have been corroborated by several other research groups. Oxford University’s Institute for New Economic Thinking is behind new research which found that the exponential growth rates of solar, wind and batteries could rapidly and completely replace fossil fuels as early as 2040 – and save us $26 trillion in the process. The study modelled a range of scenarios, one of which demonstrated how the energy system could be transformed far earlier than the University of Exeter team found.
This research has since been peer-reviewed and published by Joule.
A separate research team involving scientists from the University of Cambridge, the University of Massachusetts, SOAS University of London, Open University, and University of Exeter published a peer-reviewed study in Nature Energy in 2021 reaching parallel conclusions.
The authors find that “the transformation of energy systems is well under way”, and will create a whole new “emerging energy geography” with startling economic and strategic implications “irrespective of new climate policies”, purely due to the exponential evolution of key technologies. The study finds that “a positive feedback of learning-by-doing and diffusion dynamics” sees solar panels becoming “the lowest-cost energy generation technology by 2025-2030… EVs display a similar type of winner-takes-all phenomenon, although at a later period. Heating technologies evolve as the carbon intensity of households gradually declines”.
Fossil fuels and nuclear will all “peak” by 2030, with solar taking “most of the market”, followed by “biomass” used for negative emissions and wind. Once again, this is going to happen due to fundamental economic dynamics, with or without government policies:
The transition is already underway, and some stranding will happen, irrespective of any new climate policies, in the present trajectory of the energy system, with critical distributional macroeconomic impacts worldwide.
The Exponential Roadmap report is another important study which points out that even without further policy, “the current exponential trajectories for wind, solar photovoltaics and battery storage will be enough to achieve a halving of energy-related emissions by 2030”. Similarly, it notes that electric vehicle and plug-in hybrid passenger vehicles will likely reach close to 100% of new sales by 2030 based on continuing “high current exponential growth curves”, even if those curves slow down.
Two recent reports published by the London-based system change consultancy, System IQ, also corroborate these findings. A report published in January 2023, The Breakthrough Effect, concludes that we’ve already crossed a tipping point in the electricity sector, allowing reinforcing feedback loops to become “the core driver” of behaviour. This will pave the way for the dominance of solar and wind. A tipping point is imminent in passenger electric vehicles, and also in alternative proteins and plant proteins which are very close to reaching parity with animal-based proteins in cost, taste and texture.
Importantly, the study explicitly points out the existence of what it calls ‘tipping cascades’ – which is when tipping points in one sector have cascading effects across other sectors which can then accelerate tipping points in those sectors too. This means that, just as climate tipping points in one ecosystem can accelerate and heighten the risk of crossing other dangerous tipping points, this can happen in a positive way across technological domains.
Kingsmill Bond of the Rocky Mountain Institute has compiled a wealth of data also showing that a global tipping point appears to have passed with the transformation of the global energy system. There is mounting evidence that fossil fuels demand is peaking, while clean energy has passed an inflection point.
Energy think-tank Ember in its 2023 Global Electricity Review also projects that fossil fuels are about to enter a new era of decline, the "beginning of the end of the fossil age".
Technology won’t save us
Despite the good news that exponential energy change is here and inevitable, a consistent theme across all these studies and reports is that even with the current pace of rapid transformation across the global energy and electricity system, left to its own devices that pace of change is just not fast enough.
The Nature Energy study, for instance, warns that even with the rapid technology diffusion dynamics of solar, wind, batteries and electric vehicles – which will transform the energy and transport systems within this decade and on into the next – we can still expect global average temperatures to rise up by 2.6 degrees Celsius (C).
This is not only well into the danger zone (nearly a whole degree above the 1.5C ‘safe limit’ which is not actually safe), it is widely believed to be potentially so catastrophic that it could endanger the viability of human societies and dramatically shrink the ‘safe operating space’ for civilisation.
This theme is echoed across the scientific literature discussed.
However, much of the research above is playing catch-up with the dynamics of non-linear systems, where conventional siloed thinking hampers an understanding of how rapidly disruptions can overturn the status quo. There are several limitations to the models mentioned above. Among them is that they don’t model very well the complex convergence between technological disruptions across multiple production sectors. They also are largely not well-grounded in an empirically-robust theoretical framework of how technology disruptions work. The SystemIQ research, for instance, puts a lot of stock in consumer sentiments as a driver or barrier of technology adoption. This assumption is wrong – it’s contradicted by the pattern of disruption in history in which consumer sentiments tend to be largely irrelevant, and are in fact influenced by a technology’s ability to meet key market needs at competitive and cheaper costs than incumbents, rather than playing a meaningful causal role. That’s because most of these studies (except for the Oxford models) use models that are not derived from the actual pattern of technology disruptions across dozens of historical cases.
In August 2021, I was contributing lead editor of Rethinking Climate Change: How Humanity Can Choose to Reduce Emissions 90% by 2035 through the Disruption of Energy, Transportation, and Food with Existing Technologies, published by RethinkX and co-authored by Adam Dorr, James Arbib and Tony Seba. This is in my view one of the most robust forecasting exercises available. It’s grounded in a far richer disruption framework that has been proven time and again.
Published before all the preceding studies, our report found – similar to them – that even without doing anything, the dynamics of disruption not just within energy, but also within the transport and food sectors, would lead key new technologies to scale up to mass adaption within the next two decades. The central disruptive technologies driving this transformation are solar, wind and batteries in energy, electric vehicles and transport-as-a-service in transport, as well as precision fermentation and cellular agriculture in food.
The report showed that the real pace of disruption is not only far faster than what conventional analysts believe, but it’s even faster than what the studies above say. One of the reasons for that is they fail to fully incorporate the convergences and cascading effects of these disruptions across sectors, and how that will lead to cross-sector feedback loops that further accelerate the combined transformation of our energy, transport and food systems.
But like the studies above, the RethinkX report found that we are currently on track to temporarily breach 2C global temperatures even with these unfolding disruptions. The 'Get Stuck' scenario showed that even with declining emissions, we would enter the climate danger zone for about a decade, which could have catastrophic consequences.
1.5C is already a goner, in other words. That's a pretty stark finding. But there's strong grounds for hope. The report showed that by removing key institutional barriers and mobilising governments to support a just transition, we can accelerate these disruptions and reduce emissions by as much as 90% by 2035.
And in the 'Accelerated Disruption' scenario illustrated above, we could move even faster than this with the right choices: with such a comprehensive transformation of the core industries within our energy, transport and food systems, we would be able to dramatically reduce the costs of carbon withdrawal to begin the task of restoring the climate to real stability.
Change is coming, so fasten your seatbelts
The upshot is that the global energy system is undergoing an inevitable transformation driven by economic dynamics that will reach their fruition before mid-century, and most likely well within the next two decades. This transformation is not confined to a phase transition in the energy system, however, but is also encompassing phase transitions in the transport and food systems. And as I’ve explained in detail in previous posts, we’re also witnessing a phase transition in information with the rise of artificial intelligence (AI).
This transformation raises many urgent questions about what civilisation and society will look like in the near future. As it’s accelerating, we are simultaneously witnessing the risk of multiple tipping points being breached in our relationship with the earth system, with climate change just one of several planetary boundaries being pushed out of equilibrium and into the danger zone.
That’s why I’ve referred to this momentous period as the ‘global phase shift’, because it entails that the entire global system is undergoing an unstoppable process of fundamental metamorphosis. Yet what’s most crucial to understand is that this metamorphosis in itself will not solve our deep global challenges, because it requires the right choices to be leveraged in the right direction. The wrong choices could turn this metamorphosis into a descent into a chaotic dark age. Better choices could leverage these dynamics into an evolutionary step toward a new system of abundance within planetary boundaries
Acceleration or delay?
All the studies discussed here emphasise that our global energy system is rapidly changing, moving into a new state. This phase transition cannot be stopped, which means we need to understand what the rules and properties of the new energy system will look like - and how we can navigate our way to it with the least complications, while also rolling it out in the best possible way.
All these studies also emphasise that S-curve trajectories can be either accelerated or delayed. While we can't really stop the current transformation process, we can slow it down with bad choices, or deploy it in ways which make it less effective. We could also speed it up. These studies also point to a wide range of different policy and institutional barriers which, if not addressed, will mean the exponential S-curve scaling effect of mass adoption could be dramatically prolonged and slowed down over time.
These include things like ongoing elevated fossil fuel subsidies, insufficient regulatory standards, and grid expansion bottlenecks.
One of the most crucial of these is a lack of investment in developing country adoption, which itself is rooted in wider entrenched political and economic structural barriers. While the economic diffusion dynamics of technologies like solar means, as the University of Exeter paper shows, that the spillover effects of the solar disruption will still drive penetration into developing countries, that process will be much slower without removing these barriers.
This means that if we want to avoid the catastrophic risks involved in breaching the 1.5C limit, we need to mobilise collectively on a global scale to deploy the most promising technologies with the most optimal designs, and with new fair and equitable organising and governance structures.
If we do that, we could unlock the keys to newfound prosperity based on leveraging the benefits of the emerging system for the whole of humanity.
If we don’t, we would not only end up with a suboptimal clean energy system, we would remain vulnerable to climate-induced ecological collapse amidst geopolitical chaos and social unrest as incumbent industries face inevitable economic disruption. Our societies would be unprepared for both the new system emerging, and the demise of the old. While the energy phase transition itself can't be derailed, its slow down could increase the chances of societal crisis and collapse.
If we want to keep up barriers, allow poorer countries to fester, hoard wealth among a tiny minority and cling on to the dying incumbent industrial paradigm, we will move so slowly and ineptly that we ultimate falter and fail in a half-baked ‘transition’ prone to crumbling under its own weight.
Yet if we wake up to the fact that our real prosperity is inherently bound up with that of others, we will be in prime position to remove barriers, open doors to facilitate diffusion of capital, knowledge and technology, increase and distribute wealth for all, and move more rapidly into an emerging Age of Abundance.
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