In today’s Finshots, we discuss whether renewable energy can completely replace fossil fuels.

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The Story

There’s so much talk about renewable energy these days that it seems the green future is already here. Nations, businesses, and even everyday consumers seem convinced the world is on track to ditch oil for good.

But just then, ExxonMobil, the world’s top publicly traded oil company, throws a curveball. They predict that even if every new car sold by 2035 were electric, the world would still be chugging on 85 million barrels of oil per day by 2050 - the same as in 2010.

Yep, you read that right!

And Exxon isn’t alone. Even BP, known for all its green ambitions, expects oil demand to peak by 2025 but still expects 75 million barrels per day by mid-century.

So why isn’t oil going anywhere anytime soon? Especially when more electric vehicles (EVs) hit the roads every day.

Let’s break it down.

Sure, EVs are taking over. India wants 30% of its vehicles to be electric by 2030, and other countries like Norway are already there, with 80% of new car sales being EVs last year.

But the kicker is that road transport is only part of the story.

Oil powers much more than cars. Think about planes, cargo ships, and heavy industries like steel and cement. These sectors are tough to electrify. For example, a Boeing 747 burns 30,000 gallons of jet fuel on a 10-hour flight. But imagine trying to power that with a battery. It would need to be so large and heavy that the plane might not even take off.

The same goes for cargo ships. These giants burn tons of fuel daily. But having powerful batteries to move them across oceans is still a far-off dream.

And while hydrogen and biofuels are being explored, they’re far from mainstream. Companies like Airbus are working on hydrogen-powered planes, but we’re talking about prototype stages. The shipping industry is also eyeing alternatives like hydrogen, ammonia, and electricity, but full-scale adoption has yet to occur.

Plus, oil isn’t just fuel. You see it in plastics, chemicals, and pretty much every other product we use daily. So moving away from oil means reimagining entire industries, and that takes time.

And then, there’s the digital revolution, which we tend to think of as clean and futuristic. But Artificial Intelligence (AI) and digital services are gobbling up energy faster than we realise. Yup! By 2030, power consumption from data centers could jump 160%. Every time you search on Google or ChatGPT, you’re burning electricity. Multiply that by billions of users across the globe, and suddenly, the digital world isn’t as “green” as you’d like.

And guess what powers a lot of that electricity today? Oil!!!

Of course, with climate change looming, renewables seem like the perfect solution. In fact, solar energy is now 90% cheaper than a decade ago, and wind farms are popping up everywhere.

But here’s the catch: they’re not always reliable.

Take North America’s solar farms. They only generate power just about 20% of the time because the sun doesn’t always shine, and clouds can block it out. The same goes for wind energy. No wind, no power. Even countries like Germany, which has invested heavily in wind and solar, still rely on backup fossil fuel plants to prevent blackouts when renewables fall short. And while battery storage is improving, we’re still far from being able to store enough energy to power cities during long stretches of bad weather.

Now, the solution to this whole mess could be nuclear energy! And it’s already gaining some popularity.

Countries like China are expanding nuclear power to cut down on coal and gas, and the US is exploring Small Modular Reactors (SMRs)—a safer, cheaper form of nuclear technology. And France has been a nuclear power success story for decades, with 70% of its electricity today coming from nuclear plants.

So yes, unlike solar and wind, nuclear energy provides consistent, reliable power - rain or shine.

Yet again, there’s a downside. Building nuclear plants is expensive, and safety concerns linger, especially after incidents like Chernobyl and Fukushima. Still, France shows that when done right, nuclear energy can be a game-changer in reducing reliance on fossil fuels.

But the interesting bit is that even with all this growth in renewables and nuclear, oil will remain crucial.

In fact, ExxonMobil has sounded the alarm: without ongoing investment, global oil supply could fall by 15 million barrels per day within a year. That’s a big gap. And if that happens, oil prices could skyrocket by 2030.

Plus, keeping oil flowing isn’t cheap. Exploration costs have doubled, and oil-producing countries have had to raise prices to cover the expense. Without investment, existing oil fields could dry up faster than expected, leaving the world scrambling for alternatives.

So, what's the answer then?

See, transitioning to renewables and EVs is a great idea. But it can’t solve everything.

We still need reliable, clean, and affordable energy. And right now, no single source checks all those boxes.

The future will likely be a mix of energy sources—oil, renewables, and nuclear. Renewables will take a bigger role, especially in electricity and transportation, but oil will still be critical for industries that can’t easily switch to cleaner alternatives.

So, while an all-renewable future sounds tempting, the reality is far more complex. ExxonMobil’s predictions may seem gloomy. But they remind us that oil still has a role to play, at least for now.

The real question isn’t whether we’ll move away from oil. But how fast, and which energy sources will step up when we do.

What do you think?

Until then…

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