For the UK’s liquid fuel industry, the message is clear: the energy transition is accelerating but not yet touching all sectors equally. Liquid fuels remain essential today, but the window to adapt and reposition in a decarbonising economy is narrowing.
Global energy use hits new highs – and emissions follow
In 2024, global primary energy supply rose by 2% to 592 exajoules (EJ), the highest ever recorded. Electricity demand alone jumped nearly 4%, outpacing total energy demand growth – a clear indication that the world’s energy system continues to electrify.
And yet, despite strong renewable expansion, fossil fuels held their ground. Oil, gas and coal collectively, still met 87% of global energy needs with each experiencing absolute demand growth:
- Oil demand reached a record 101.3 million barrels per day.
- Coal use rose to 165 EJ, buoyed by demand in Asia.
- Natural gas consumption grew 2.5%, largely driven by non-OECD countries.
The result: global, energy-related CO2-equivalent emissions rose by 1%, reaching 40.8 gigatonnes – the fourth consecutive year of record emissions.
This year’s review introduced its own shift away from fossils fuels in an updated metric. Calculating total energy supply in terms of physical energy content has replaced the previous use of fossil-fuel‑equivalence.
Energy sources that are converted into fuels or electricity for final consumption are impacted by transmission, distribution, and efficiency losses. As a result, significantly less clean energy (from technologies such as wind, solar and hydrogen) is required to power the same amount of work as fossil fuels. This means that growth in renewables and nuclear reduce fossil fuel dependency and increase energy system efficiency.
In 2024 the energy system was 7% more efficient.
Since 2010, renewables and nuclear have avoided the use of 1,371EJ of fossil fuels – nearly two and a half times the entire energy supplied globally in 2024.
However, the world isn’t replacing fossil fuels with clean energy. It is adding clean sources while fossil fuel use also grows. The transition is real – but uneven and incomplete.
The UK: Leading in power, lagging in transport and heat
For liquid fuel suppliers, this two-speed transition means supporting a grid in flux while continuing to serve transport and heating sectors where decarbonisation is slower and policy clarity is limited. June’s government report on the UK energy profile “Energy Trends and Prices” indicates a continued transition in 2024:
- Overall fossil fuel consumption declined by 3.7%, continuing a decade-long downward trend but liquid fossil fuel remains dominant in transport and heavy goods movement.
- Coal-fired electricity ended in September, with the closure of Ratcliffe-on-Soar power station – the country’s last coal power plant. But natural gas and petroleum products still support the grid and off-grid sectors.
- Renewables and nuclear met over 50% of electricity demand but heat and transport, both fossil-fuel reliant, remain challenging to electrify.
The UK is ahead of many in phasing out coal and expanding renewables. But challenges remain:
- Energy efficiency progress is slowing.
- Grid infrastructure may struggle to support full electrification.
- Transport, rural heating, and industry all remain dependent on liquid fuels. Viable alternatives remain limited or expensive.
Security and affordability
The Energy Institute review makes clear that the power sector is not the whole energy system. While renewables are expanding rapidly the growth is not counterbalancing demand elsewhere.
Wind and solar energy alone expanded by an impressive 16% in 2024, nine times faster than total energy demand, yet total fossil fuel use grew by just over 1%, highlighting a transition that the EI describes as “defined as much by disorder as by progress”.
Faster progress is needed in the UK’s harder-to-electrify sectors, but Dr Nick Wayth, CEO of the Energy Institute, acknowledges the challenges:
“Energy security and affordability remain central concerns, competing with the need for climate action.
“What remains clear is, to decarbonise the energy system, we will need to electrify. The record growth in electricity demand is an encouraging sign of this trend, with much of this growth satisfied by renewables.”
Industry implications
Without a more rapid pivot to clean alternatives, there is no assurance that the liquid fuel sector will retain its current role in the long term.
- Demand is beginning to decline in key segments, particularly light-duty road transport, as electrification accelerates.
- There are rising regulatory expectations, from net-zero targets to clean fuel mandates.
- Investor scrutiny and changing customer preferences.
At the same time, alternatives to fossil-derived liquids are not yet fully in place. Biofuels, HVO, and sustainable aviation fuels (SAF) show potential – but clear policy support, availability, scale, and cost remain major barriers.
Fuel distributors are therefore in a strategic squeeze: expected to support continuity of supply and resilience, while simultaneously adapting to a system that may not need them in the same way in two decades.
EI warns: Progress is not yet displacement
While renewable energy is scaling faster than ever, global demand is rising even faster.
As Dr Nick Wayth observes: “The world is consuming more energy than ever. In many ways, the energy transition is happening – just not yet at the expense of fossil fuel use.”
President of the Energy Institute Andy Brown adds: “We are living in a time of energy addition, sustained by an increasingly disorderly transition. Rapid advances in clean energy coexist with ongoing fossil fuel dependencies, with coal, oil and gas, as well as renewables, all reaching record highs.”
This “age of energy additions” won’t last. Policy, markets, and climate pressures will eventually force displacement. The additions must soon become substitutions and liquid fuel sectors will not be insulated from that shift.
Transitional not residual
Fuel distributors are at the centre of a complex, evolving energy story. The industry’s future will depend on how it positions itself – not only to supply today’s fuels, but to invest in tomorrow’s alternatives.
Strategic irrelevance is not inevitable – but adaptation cannot wait.
Image credit: Energy Institute, Nick Smith
