Energy transition forecasts often rely on the assumption that current market structures will persist into the future. This approach risks overestimating the scale of necessary replacements by ignoring how industries evolve, how demand shifts with prices, and how technologies compete across sectors.
Shipping serves as a primary example of this analytical challenge. Coal, oil, and gas currently account for 40% of maritime freight tonnage, with iron ore making up another 15%. As energy systems electrify and steel production methods change, the demand for liquid fuels in shipping will likely decline.
Projections for annual shipping fuel demand by 2100 vary significantly, ranging from 70 million tonnes to several hundred million tonnes. This discrepancy creates major investment uncertainty regarding the required infrastructure and the allocation of synthetic fuels, biomass, and renewable electricity.
The hydrogen market also illustrates how initial assumptions shape investment. Early expectations of a massive hydrogen economy led to significant commitments in subsidies and corporate planning, even as economic analysis suggested a much smaller addressable market for expensive hydrogen.
Data center energy requirements are frequently projected based on current computing needs, often overlooking potential gains in software, chip efficiency, and system architecture. Such improvements can significantly alter the electricity consumption required for future computing tasks.
Effective capital allocation requires analysts to scrutinize the underlying assumptions of transition models. By focusing on the evolving nature of societal demand rather than just the capabilities of new technologies, stakeholders can better evaluate the actual infrastructure and fuel needs.
