Despite The Push for Clean Energy, Fossil Fuels Experienced Record Demand in 2023

Fossil fuels hit record consumption levels in 2023 and continue to dominate the global energy mix despite impressive gains recorded by renewable energy sources.[1] Increasing energy demand, particularly in developing economies, suggests that fossil fuels will likely remain a significant part of the global energy mix for longer than most expect.

Fossil Fuels Continue to Dominate

Despite a global push for green energy, fossil fuels still dominate the mix. Fossil fuels’ share of energy consumption only dropped 0.4% to 81.5% in 2023, even as renewable energy upped its share by 1%.

As Energy Demand Rises

In 2023, energy consumption increased by 2% over 2022’s levels. This was 0.6% above its ten-year average and 5% above pre-COVID demand.

Global electricity generation increased by 2.5% in 2023 over 2022 to reach a record 29,935 terawatt hours (TWh).

Increasing power demand has outpaced the deployment of renewable energy, necessitating an increase in fossil fuel production. 

Oil Gushed During 2023

Oil prices have surged 29% above pre-COVID levels, while production and consumption reached record highs.

Global oil consumption exceeded 100 million barrels per day (b/d) for the first time in 2023, fueled by strong demand for gas and diesel in China, which was 15% above its pre-Covid levels. China’s refining capacity surpassed that of the U.S. for the first time, making it the largest oil refining market by capacity. Asia-Pacific (which includes China) and North America saw impressive increases in oil consumption of 5% and 1%, respectively.

Coal Was Burning Hot

Global coal consumption reached its highest level in 2023, eclipsing its previous record set in 2022. Reductions in coal consumption in developed regions, like North America and Europe, were more than offset by increases in the Asia-Pacific region.

China, the largest market for coal, accounts for 56% of total coal consumption. For the first time, in 2023, India’s coal consumption exceeded the combined consumption of Europe and North America.

Natural Gas

After the surge in demand in 2022 prompted by Russia’s invasion of Ukraine, which disrupted global energy markets and forced Europe to seek alternatives to Russian fuel, natural gas consumption remained flat in 2023. However, demand for liquified natural gas (LNG) increased significantly in Asia-Pacific.

Why Consider Investing in Fossil Fuel Companies?

Despite the hype around renewables, their share of power generation has only increased by 1%, leaving a strong power demand gap. We believe investors are overestimating the decline of fossil fuels, which are likely to remain prevalent much longer than anticipated.

This indicates fossil fuel assets may be undervalued, presenting a potentially lucrative investment opportunity.

How May Investors Gain Exposure to Fossil Fuels?

Range ETFs aim to capitalize on the enduring importance of fossil fuels in the energy sector. These ETFs look to offer investors an opportunity to navigate the evolving energy landscape.

Explore our Range ETFs today as you consider your position in the energy sector.

• Range Global Coal Index ETF (COAL): seeks to provide exposure to companies involved in the metallurgical and thermal coal industry
• Range Global LNG Ecosystem Index ETF (LNGZ): seeks to provide investors with exposure to companies involved in the Liquified Natural Gas (“LNG”) ecosystem
• Range Global Offshore Oil Services Index ETF (OFOS): looks to provide exposure to companies in the offshore oil services ecosystem

[1] All data and charts sourced from: Statistical Review of World Energy 2024, Energy Institute, June 2024

Risk Disclosures:

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Exchange Traded Concepts, LLC serves as the investment advisor of the funds. NUKZ, LNGZ, COAL, and OFOS ETFs are distributed by SEI Investments Distribution Co. (SIDCO, 1 Freedom Valley Drive, Oaks, PA 19456), which is not affiliated with Exchange Traded Concepts, LLC, or any of its affiliates.