A new study has found that increasing renewable energy may not necessarily reduce fossil fuel production in the United States. Published in the Journal of Environmental Studies and Sciences, the study found no correlation between the production of fossil fuels and renewable energy, suggesting that producing more renewable energy does not automatically mean that fossil fuel production will decline. 

Ryan Thombs, the author of the study, analyzed data spanning 1997 to 2020 from the 33 American states that produce fossil fuels. Thombs, however, found that more than 96% of the variation in fossil fuel production trends across the states depended on factors such as available deposits in each state.

According to Thombs, additional policies may be required if the United States is to lower its reliance on fossil fuels, with the ongoing myth that ramping up renewable energy investments naturally leads to less fossil fuel production debunked.

“Policies could include ones that directly limit fossil fuel production through carbon taxes, setting production caps on fossil fuels and keeping fossil fuel reserves in the ground,” he said. “Future research could consider other geographical contexts to see if the findings from this study are generalizable elsewhere and should also consider the effectiveness of specific policies that have been implemented.”

According to the United Nations, fossil fuels account for almost 90% of carbon dioxide emissions and more than 75% of greenhouse gas emissions. Transitioning away from fossil fuels to renewable energy  fossil fuels is frequently touted as the best way to mitigate climate change.

Thombs might have a valid point.

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Favorable policies in Europe have accelerated the transition to renewable energy, with fossil fuels gradually phasing out fossil fuel power generation. In 2022, Europe suffered its biggest energy crisis, with the weaponization of natural gas supplies by Russia aggravating its energy security, leading to a massive spike in gas prices. Consequently, the European Commission launched the REPowerEU Plan in a bid to produce more clean energy, diversify energy supplies and phase out Russian fossil fuel imports.

The implementation of the REPowerEU Plan has been a success, allowing the continent to drastically phase down Russian fossil fuel imports and diversify supplies. Europe has cut Russian gas from 45% of total imports before the invasion to just 15% currently. Meanwhile, Europe has ramped up LNG imports from the United States to ~100 billion cubic feet per month, up less than 50 billion cubic feet per month before the invasion.

But here’s the kicker: Fossil fuels are losing their place in Europe’s energy mix. Last year, renewables accounted for 48% of the EU power generation mix, with nuclear coming in second at 24%. Meanwhile, Oil and Gas contributed a combined 28%–their lowest share ever. Nuclear remains Europe’s single leading power source; however, wind power now leads over natural gas while Europe’s solar generation surpassed coal for the first time ever in 2024.

Not surprisingly, Europe is now enjoying cleaner air, with greenhouse gas emissions dropping 13% Y/Y in 2024.

This trend actually predates Russia’s war in Ukraine, with wind and solar gradually pushing coal to the margins, including forcing natural gas into a structural decline, since the enactment of the European Green Deal in 2019. However, Russia’s war has only added momentum to Europe’s green energy transition.

The European Union has also implemented several measures to significantly cut the permit-granting process for clean energy projects. Some of these include designating specific regions as “Renewable Energy Acceleration Areas” thus allowing for simplified and faster permitting procedures for solar and wind power projects and facilitating power purchase agreements. across the bloc.

That said, Europe is highly unlikely to ditch natural gas and fossil fuels any time soon. European natural gas futures have been rallying again, climbing towards the highest level in over six weeks, driven by supply concerns. Previously, Europe’s gas prices declined on optimism around a potential Ukraine peace deal. Unfortunately, little progress has been made on that front, with a two-hour call between Trump and Putin failing to deliver anything.

Russia has repeatedly refused an immediate cease-fire despite both sides agreeing to resume talks, cutting the likelihood of Russian gas returning to Europe. Further, gas flows from Norway are projected to tighten further due to maintenance work at the Kollsnes gas plant. Meanwhile, whereas LNG cargoes are increasingly being diverted from Asia due to weakening demand, new uncontracted buyers such as Vietnam, Thailand and the Philippines are emerging, boosting overall global LNG demand.

By Alex Kimani for Oilprice.com

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