Wanted to re-surface a piece my colleague Michelle Foss and I wrote in January, which has become even more relevant given events in Ukraine, China, at COP27, and beyond over the past 10 months.
Online report accessible here
PDF downloadable here
Summary
In this January 2022 Baker Institute report, Gabriel Collins and Michelle Michot Foss argue that pushing to defund fossil fuels before lower-carbon sources can fill the gap risks stranding the energy transition in a “valley of death.” Alternative-energy developers invested nearly $3 trillion between 2010 and 2020, yet oil and gas still supplied nearly 60% of global primary energy in 2020, coal 27%, and wind and solar about 4%. The authors describe three stages: rapid early progress over the past decade, a “valley floor” of disruptions and public backlash now unfolding, and a climb after 2025 that will depend on technologies such as small modular reactors and policy resets such as carbon taxes. Because infrastructural inertia keeps vehicles, ships and power plants in service for decades, they warn that underinvestment in incumbent energy can create and prolong energy crises, with knock-on effects on food prices and energy poverty.
“The past 10 years marked stage 1 of the global energy system’s mega-transect through the energy transition valley of death—initial scale up and fast progress downhill to the valley floor. Stage 2, the “valley floor”—which includes system disruptions and more complete public understanding of (and potential backlash to) the economic costs of the energy transition— is unfolding now and will intensify during the next several years.
Stage 3, ascending the valley’s far wall, begins beyond 2025 and will feature an uncertain confluence of new technologies (such as small modular nuclear reactors) reaching commerciality, policy resets such as carbon taxes, and economic and supply chain burdens that, by that point, will have already imprinted their tangible and psychological impacts firmly into energy consumers and producers alike. Accordingly, what happens between now and the late 2020s, in all likelihood, will fundamentally determine the failure or success of an accelerated energy transition.”
Suggested Citation: Collins, Gabriel and Michelle Michot Foss. 2022. The Global Energy Transition’s Looming Valley of Death. Baker Institute Report no. 01.27.22. Rice University’s Baker Institute for Public Policy, Houston, Texas.
Frequently asked questions
What is the energy transition valley of death?
The energy transition valley of death is Gabriel Collins and Michelle Michot Foss’s metaphor for a three-stage journey of the global energy system. After fast early progress, the transition hits a difficult valley floor of disruptions and cost backlash, then must climb a far wall that depends on new technologies, policy resets and economic burdens.
What are the three stages of the energy transition valley of death?
Stage 1, covering the past 10 years, was initial scale-up and fast progress downhill. Stage 2, the valley floor, involves system disruptions and public backlash to costs and is unfolding now. Stage 3, beginning beyond 2025, is the ascent of the far wall, shaped by new technologies, policy resets and accumulated economic burdens.
Why could public backlash slow the energy transition?
Collins and Foss expect public understanding of the energy transition’s economic costs to become more complete during the valley-floor stage, which could produce backlash. They argue these economic and supply chain burdens will leave tangible and psychological impacts on energy consumers and producers before new technologies and policies mature.
Why do the late 2020s matter for the energy transition?
The authors argue the late 2020s will, in all likelihood, fundamentally determine whether an accelerated energy transition fails or succeeds. That period spans the disruptive valley floor and the start of the climb beyond 2025, when small modular reactors, carbon taxes and supply chain strains will converge in uncertain ways.
Who wrote The Global Energy Transition’s Looming Valley of Death?
Gabriel Collins and Michelle Michot Foss wrote the report, published in 2022 by Rice University’s Baker Institute for Public Policy in Houston, Texas, as Baker Institute Report no. 01.27.22. Collins re-surfaced it in November 2022, citing events in Ukraine, China and at COP27 that made it more relevant.
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