posts: 45839
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| 45839 | Primary energy production is not final energy use: what are the different ways of measuring energy? | energy-substitution-method | post | publish | <!-- wp:paragraph --> <p>Understanding the breakdown of our energy systems – how much energy we get from coal, oil or gas, how much from nuclear, solar or wind – is crucial. It allows us to compare energy mixes across the world; track whether we are making progress on decarbonizing our energy systems; and plan and manage demands for natural resources. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>But what seems like a simple exercise – adding up the produced energy from all the different sources – is in fact not straightforward at all. These difficulties result in different approaches for ‘energy accounting’ and present a different picture of the energy mix.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Below, we take a look at the two key methodologies applied to primary energy accounting: ‘direct’ primary energy and primary energy via the ‘substitution method’. These methods are discussed (or debated) often, but I couldn’t find particularly clear or simple explanations of how they differ and what this means for understanding our energy mix. The aim here is to fill that gap.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>What’s important is to understand why there are two different methods and how they affect our perspective on the energy mix.</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>Direct vs. substituted primary energy: what’s the difference?</h4> <!-- /wp:heading --> <!-- wp:paragraph --> <p>‘Primary energy’ refers to energy in its raw form, before it has been converted by humans into other forms of energy like electricity, heat or transport fuels. Think of this as inputs into an energy system: coal, oil or gas before we burn them; or solar or wind energy before we convert them to electricity.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>When we are asking how much energy is consumed or what the breakdown of the sources of energy is we are asking about primary energy.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Here we look at two ways in which ‘primary energy’ is calculated: the ‘direct’ and the ‘substituted’ method. The simplest way to think of the difference between these methods is that ‘direct’ primary energy <em>does not</em> take account of the energy lost in the conversion of fossil fuels to usable energy. The substitution method <em>does</em> attempt to correct for this loss.</p> <!-- /wp:paragraph --> <!-- wp:heading {"level":4} --> <h4>An example of the difference between ‘direct’ and ‘substituted’ energy</h4> <!-- /wp:heading --> <!-- wp:columns --> <div class="wp-block-columns"><!-- wp:column --> <div class="wp-block-column"><!-- wp:paragraph --> <p>To understand why this distinction is important we need to first consider the process of energy production.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>When we burn fuel in a thermal power plant most of the energy we put into the process is lost – primarily in the form of heat. Most fossil fuel plants run with an efficiency of around 33% to 40%.{ref}This can vary from plant-to-plant, and by fuel type. We look in more detail at the assumed efficiencies of power plants later.{/ref} The remaining 60% to 67% of energy is wasted as heat. This means for every unit of energy that we can use, another two are wasted.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>When we measure electricity generation from renewables, we’re measuring the direct <em>output</em>, with no losses or waste to consider.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>For nuclear, while it's true that thermal losses apply – just as they do for fossil fuels – in energy reporting, they are given as<em> electricity output</em>, so the losses have already been accounted for.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Let’s take an example – shown in the graphic here. Imagine we have a country that needs 100 terawatt-hours (TWh) of energy. We have three different energy mixes: only fossil fuels; only renewable or nuclear energy; and a mix of both. </p> <!-- /wp:paragraph --> <!-- wp:list {"ordered":true} --> <ol><li>If we only rely on <strong>fossil fuels</strong> we need 263 TWh of energy input. This is because only around 38% of these inputs are converted into ‘useful’ energy.{ref}We can calculate this by dividing our 100 TWh demand by 0.38.{/ref} 163 TWh is energy lost as heat.</li><li><strong>If we only rely on either renewable or nuclear energy</strong> these we do not need to adjust for these losses – they are already reported in terms of electricity <em>outputs</em>. So the figure is still 100 TWh.</li><li><strong><strong>If we rely on renewables/nuclear and fossil fuels</strong> it depends on the mix: </strong>let’s say we produce 50 TWh from renewables or nuclear sources. We need another 50 TWh from fossil fuels. But to produce the additional 50 TWh from fossil fuels, we actually need 132 TWh, because we lose 82 TWh as heat <em>[50 TWh / 0.38 = 132 TWh]</em>. Combined, we need 182 TWh of energy input <em>[50 TWh from renewables/nuclear + 50 TWh ‘useful’ fossil fuel energy + 82 TWh wasted]</em>.</li></ol> <!-- /wp:list --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:image {"id":36081,"sizeSlug":"large"} --> <figure class="wp-block-image size-large"><img src="https://owid.cloud/app/uploads/2020/08/Three-scenarios-to-supply-100TWh-of-energy-800x500.png" alt="" class="wp-image-36081"/></figure> <!-- /wp:image --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:columns --> <div class="wp-block-columns"><!-- wp:column --> <div class="wp-block-column"><!-- wp:paragraph --> <p>Based on this example we can understand the difference between direct primary energy and the substitution method. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Let’s take the third scenario – a mixture of fossil fuels and low-carbon energy – and see how the low-carbon share differs between the two methods. This is shown in the figure.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>From the direct method we get 50 TWh / 182 TWh = 27%. From the substitution method we get 50 TWh / 100 TWh = 50%.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>I find it helpful to think of the distinction as:</p> <!-- /wp:paragraph --> <!-- wp:list --> <ul><li>Low-carbon’s share in <strong>direct primary energy</strong> = % of <strong>total primary energy</strong> consumption (including all of the inefficiencies of fossil fuel production)</li></ul> <!-- /wp:list --> <!-- wp:list --> <ul><li>Low carbon’s share in <strong>substituted primary energy = </strong>% of <strong>useful energy </strong>(once we subtract all of the wasted energy in the burning of fossil fuels)</li></ul> <!-- /wp:list --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:image {"id":36082,"sizeSlug":"large"} --> <figure class="wp-block-image size-large"><img src="https://owid.cloud/app/uploads/2020/08/How-are-energy-mixes-calculated-800x490.png" alt="" class="wp-image-36082"/></figure> <!-- /wp:image --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:heading {"level":4} --> <h4>What effect does our choice of accounting method have on the breakdown of the global energy mix?</h4> <!-- /wp:heading --> <!-- wp:columns --> <div class="wp-block-columns"><!-- wp:column --> <div class="wp-block-column"><!-- wp:paragraph --> <p>A question many want the answer to is, how much of our energy comes from low-carbon sources? How close are we to getting rid of fossil fuels?</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>As we now know, it depends on whether we’re using the direct or substitution method. In the chart here we show the breakdown of the global primary energy mix in 2019 to compare the two methods.{ref}This is based on data from the <em>BP Statistical Review of World Energy</em>; it considers only commercially-traded fuels, so traditional biomass is not included.{/ref}</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>As we should expect from the example we worked through, when we calculate the share of energy from low-carbon sources via the substitution method we get a higher figure: 16% vs. only 7% from the direct method. When we strip away the differences in efficiencies between the sources, both renewables and nuclear make a larger contribution. </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In the interactive charts you can also compare each source’s share of energy based on the two methods. Using the “change country” button in the bottom-left of each chart, you can also see this for different countries.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>Most sources tend to prefer and report on the substitution method (or a similar approach – the ‘physical content’ method – which we don’t discuss here but which gives similar results) rather than the direct method. The substitution method is also the preferred approach of the <em>Intergovernmental Panel on Climate Change (IPCC)</em>, for example.{ref}Krey V., O. Masera, G. Blanford, T. Bruckner, R. Cooke, K. Fisher-Vanden, H. Haberl, E. Hertwich, E. Kriegler, D. Mueller, S. Paltsev, L. Price, S. Schlömer, D. Ürge-Vorsatz, D. van Vuuren, and T. Zwickel, 2014: <a href="https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_annex-ii.pdf">Annex II: Metrics & Methodology</a>. In: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Edenhofer, O., R. Pichs-Madruga, Y. Sokona, E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S. Schlömer, C. von Stechow, T. Zwickel and J.C. Minx (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.{/ref}</p> <!-- /wp:paragraph --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:image {"id":51678,"sizeSlug":"full","linkDestination":"none"} --> <figure class="wp-block-image size-full"><img src="https://owid.cloud/app/uploads/2022/06/Global-primary-energy-breakdown-–-sub-vs.-direct-1.png" alt="" class="wp-image-51678"/></figure> <!-- /wp:image --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:columns {"className":"is-style-side-by-side"} --> <div class="wp-block-columns is-style-side-by-side"><!-- wp:column --> <div class="wp-block-column"><!-- wp:html --> <iframe src="https://ourworldindata.org/grapher/share-of-primary-energy-consumption-by-source" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> <!-- /wp:html --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:html --> <iframe src="https://ourworldindata.org/grapher/share-energy-source-sub" loading="lazy" style="width: 100%; height: 600px; border: 0px none;"></iframe> <!-- /wp:html --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:heading {"level":4} --> <h4>How do we convert from direct to substituted primary energy?</h4> <!-- /wp:heading --> <!-- wp:columns --> <div class="wp-block-columns"><!-- wp:column --> <div class="wp-block-column"><!-- wp:paragraph --> <p>At Our World in Data we get most of our energy data from BP; each year it publishes its <em>Statistical Review of World Energy </em>report. It applies the substitution method to its primary energy data <em>[you can read its methodology </em><a href="https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/using-the-review/methodology.html#accordion_primary-energy-methodology"><strong><em>here</em></strong></a><em>]</em>.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>How does it convert from direct primary energy – that we can measure – into the substitution breakdown? </p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>In the schematic explanation above, we looked at calculating the share of energy from low-carbon energy sources by comparing it with the amount of useful energy (subtracting the wasted energy) from fossil fuels.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>But we can also do the opposite of this to get the same result. In fact, this inverse approach is what is most commonly applied by BP and others who use the ‘substitution method’. So, instead of assuming fossil fuels have the same efficiency as renewables/nuclear, we do the opposite: we assume renewables/nuclear are as inefficient as fossil fuels. We calculate the equivalent amount of fossil fuels that would be required to produce the amount of electricity we get from non-fossil based sources.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>So, let’s say we produce 100 TWh of electricity from wind. And we assume the efficiency of a fossil fuel plant is 38%. We would convert this wind electricity into ‘input-equivalent’ primary energy by dividing by this efficiency <em>[100 / 0.38 = 263 TWh]</em>. This would be the amount of primary energy that would be required from fossil fuels to produce the same amount of electricity as wind.</p> <!-- /wp:paragraph --> <!-- wp:paragraph --> <p>We should note that this conversion is used as an approximation – a standard ‘efficiency’ factor is applied across-the-board. But we know that some power plants have a slightly lower or higher efficiency and it can change over time. In fact, BP changed its methodology in its 2020 assessment to reflect this change over time. Previously it assumed a 38% efficiency factor consistently. But it now applies a ‘time-dependent’ model to build in improvements over time. Changes in this conversion factor are summarised in the table below.<br>The substitution method gives us a more accurate understanding of how low-carbon energy is competing with fossil fuels. For this reason: when we look at the breakdowns of energy mix on <em>Our World in Data</em> we have tried wherever possible to use primary energy measured by the substitution method.</p> <!-- /wp:paragraph --></div> <!-- /wp:column --> <!-- wp:column --> <div class="wp-block-column"><!-- wp:heading {"level":6} --> <h6>Conversion factors applied in converting renewable and nuclear electricity outputs to primary energy{ref}BP Statistical Review of World Energy, <em><a href="https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/using-the-review/definitions-and-explanatory-notes.html">Definitions and Exploratory Notes</a></em> (2020){/ref}</h6> <!-- /wp:heading --> <!-- wp:image {"id":36086,"sizeSlug":"large"} --> <figure class="wp-block-image size-large"><img src="https://owid.cloud/app/uploads/2020/08/BP-Primary-Energy-Conversion-Factors-551x550.png" alt="" class="wp-image-36086"/></figure> <!-- /wp:image --></div> <!-- /wp:column --></div> <!-- /wp:columns --> <!-- wp:separator --> <hr class="wp-block-separator"/> <!-- /wp:separator --> <!-- wp:heading {"level":4} --> <h4>Related</h4> <!-- /wp:heading --> <!-- wp:owid/prominent-link {"title":"","linkUrl":"https://ourworldindata.org/sources-global-energy","className":"is-style-thin"} /--> <!-- wp:owid/prominent-link {"title":"","linkUrl":"https://ourworldindata.org/decarbonizing-energy-progress","className":"is-style-thin"} /--> <!-- wp:owid/prominent-link {"title":"","linkUrl":"https://ourworldindata.org/energy","className":"is-style-thin"} /--> <!-- wp:paragraph --> <p></p> <!-- /wp:paragraph --> | {
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"text": "Understanding the breakdown of our energy systems \u2013 how much energy we get from coal, oil or gas, how much from nuclear, solar or wind \u2013 is crucial. It allows us to compare energy mixes across the world; track whether we are making progress on decarbonizing our energy systems; and plan and manage demands for natural resources.\u00a0",
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"text": "\u2018Primary energy\u2019\u00a0 refers to energy in its raw form, before it has been converted by humans into other forms of energy like electricity, heat or transport fuels. Think of this as inputs into an energy system: coal, oil or gas before we burn them; or solar or wind energy before we convert them to electricity.",
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"text": " we need 263 TWh of energy input. This is because only around 38% of these inputs are converted into \u2018useful\u2019 energy.{ref}We can calculate this by dividing our 100 TWh demand by 0.38.{/ref} 163 TWh is energy lost as heat.",
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"text": "Let\u2019s take the third scenario \u2013 a mixture of fossil fuels and low-carbon energy \u2013 and see how the low-carbon share differs between the two methods. This is shown in the figure.",
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2021-11-09 08:51:14 | 2024-02-16 14:22:52 | 1GIW9wdZxEVlCp76-UD86ZgnMmzztgC3aIN3Y33qb3fM | [
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2021-11-09 08:51:14 | 2023-09-06 17:26:55 | https://ourworldindata.org/wp-content/uploads/2021/11/primary-final-energy-thumbnail-01.png | {} |
Understanding the breakdown of our energy systems – how much energy we get from coal, oil or gas, how much from nuclear, solar or wind – is crucial. It allows us to compare energy mixes across the world; track whether we are making progress on decarbonizing our energy systems; and plan and manage demands for natural resources. But what seems like a simple exercise – adding up the produced energy from all the different sources – is in fact not straightforward at all. These difficulties result in different approaches for ‘energy accounting’ and present a different picture of the energy mix. Below, we take a look at the two key methodologies applied to primary energy accounting: ‘direct’ primary energy and primary energy via the ‘substitution method’. These methods are discussed (or debated) often, but I couldn’t find particularly clear or simple explanations of how they differ and what this means for understanding our energy mix. The aim here is to fill that gap. What’s important is to understand why there are two different methods and how they affect our perspective on the energy mix. ## Direct vs. substituted primary energy: what’s the difference? ‘Primary energy’ refers to energy in its raw form, before it has been converted by humans into other forms of energy like electricity, heat or transport fuels. Think of this as inputs into an energy system: coal, oil or gas before we burn them; or solar or wind energy before we convert them to electricity. When we are asking how much energy is consumed or what the breakdown of the sources of energy is we are asking about primary energy. Here we look at two ways in which ‘primary energy’ is calculated: the ‘direct’ and the ‘substituted’ method. The simplest way to think of the difference between these methods is that ‘direct’ primary energy _does not_ take account of the energy lost in the conversion of fossil fuels to usable energy. The substitution method _does_ attempt to correct for this loss. ## An example of the difference between ‘direct’ and ‘substituted’ energy To understand why this distinction is important we need to first consider the process of energy production. When we burn fuel in a thermal power plant most of the energy we put into the process is lost – primarily in the form of heat. Most fossil fuel plants run with an efficiency of around 33% to 40%.{ref}This can vary from plant-to-plant, and by fuel type. We look in more detail at the assumed efficiencies of power plants later.{/ref} The remaining 60% to 67% of energy is wasted as heat. This means for every unit of energy that we can use, another two are wasted. When we measure electricity generation from renewables, we’re measuring the direct _output_, with no losses or waste to consider. For nuclear, while it's true that thermal losses apply – just as they do for fossil fuels – in energy reporting, they are given as_ electricity output_, so the losses have already been accounted for. Let’s take an example – shown in the graphic here. Imagine we have a country that needs 100 terawatt-hours (TWh) of energy. We have three different energy mixes: only fossil fuels; only renewable or nuclear energy; and a mix of both. 0. If we only rely on **fossil fuels** we need 263 TWh of energy input. This is because only around 38% of these inputs are converted into ‘useful’ energy.{ref}We can calculate this by dividing our 100 TWh demand by 0.38.{/ref} 163 TWh is energy lost as heat. 1. **If we only rely on either renewable or nuclear energy** these we do not need to adjust for these losses – they are already reported in terms of electricity _outputs_. So the figure is still 100 TWh. 2. ****If we rely on renewables/nuclear and fossil fuels** it depends on the mix: **let’s say we produce 50 TWh from renewables or nuclear sources. We need another 50 TWh from fossil fuels. But to produce the additional 50 TWh from fossil fuels, we actually need 132 TWh, because we lose 82 TWh as heat _[50 TWh / 0.38 = 132 TWh]_. Combined, we need 182 TWh of energy input _[50 TWh from renewables/nuclear + 50 TWh ‘useful’ fossil fuel energy + 82 TWh wasted]_. <Image filename="Three-scenarios-to-supply-100TWh-of-energy.png" alt=""/> Based on this example we can understand the difference between direct primary energy and the substitution method. Let’s take the third scenario – a mixture of fossil fuels and low-carbon energy – and see how the low-carbon share differs between the two methods. This is shown in the figure. From the direct method we get 50 TWh / 182 TWh = 27%. From the substitution method we get 50 TWh / 100 TWh = 50%. I find it helpful to think of the distinction as: * Low-carbon’s share in **direct primary energy** = % of **total primary energy** consumption (including all of the inefficiencies of fossil fuel production) * Low carbon’s share in **substituted primary energy = **% of **useful energy **(once we subtract all of the wasted energy in the burning of fossil fuels) <Image filename="How-are-energy-mixes-calculated.png" alt=""/> ## What effect does our choice of accounting method have on the breakdown of the global energy mix? A question many want the answer to is, how much of our energy comes from low-carbon sources? How close are we to getting rid of fossil fuels? As we now know, it depends on whether we’re using the direct or substitution method. In the chart here we show the breakdown of the global primary energy mix in 2019 to compare the two methods.{ref}This is based on data from the _BP Statistical Review of World Energy_; it considers only commercially-traded fuels, so traditional biomass is not included.{/ref} As we should expect from the example we worked through, when we calculate the share of energy from low-carbon sources via the substitution method we get a higher figure: 16% vs. only 7% from the direct method. When we strip away the differences in efficiencies between the sources, both renewables and nuclear make a larger contribution. In the interactive charts you can also compare each source’s share of energy based on the two methods. Using the “change country” button in the bottom-left of each chart, you can also see this for different countries. Most sources tend to prefer and report on the substitution method (or a similar approach – the ‘physical content’ method – which we don’t discuss here but which gives similar results) rather than the direct method. The substitution method is also the preferred approach of the _Intergovernmental Panel on Climate Change (IPCC)_, for example.{ref}Krey V., O. Masera, G. Blanford, T. Bruckner, R. Cooke, K. Fisher-Vanden, H. Haberl, E. Hertwich, E. Kriegler, D. Mueller, S. Paltsev, L. Price, S. Schlömer, D. Ürge-Vorsatz, D. van Vuuren, and T. Zwickel, 2014: [Annex II: Metrics & Methodology](https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_annex-ii.pdf). In: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Edenhofer, O., R. Pichs-Madruga, Y. Sokona, E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S. Schlömer, C. von Stechow, T. Zwickel and J.C. Minx (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.{/ref} <Image filename="Global-primary-energy-breakdown-–-sub-vs.-direct-1.png" alt=""/> <Chart url="https://ourworldindata.org/grapher/share-of-primary-energy-consumption-by-source"/> <Chart url="https://ourworldindata.org/grapher/share-energy-source-sub"/> ## How do we convert from direct to substituted primary energy? At Our World in Data we get most of our energy data from BP; each year it publishes its _Statistical Review of World Energy _report. It applies the substitution method to its primary energy data _[you can read its methodology _[**_here_**](https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/using-the-review/methodology.html#accordion_primary-energy-methodology)_]_. How does it convert from direct primary energy – that we can measure – into the substitution breakdown? In the schematic explanation above, we looked at calculating the share of energy from low-carbon energy sources by comparing it with the amount of useful energy (subtracting the wasted energy) from fossil fuels. But we can also do the opposite of this to get the same result. In fact, this inverse approach is what is most commonly applied by BP and others who use the ‘substitution method’. So, instead of assuming fossil fuels have the same efficiency as renewables/nuclear, we do the opposite: we assume renewables/nuclear are as inefficient as fossil fuels. We calculate the equivalent amount of fossil fuels that would be required to produce the amount of electricity we get from non-fossil based sources. So, let’s say we produce 100 TWh of electricity from wind. And we assume the efficiency of a fossil fuel plant is 38%. We would convert this wind electricity into ‘input-equivalent’ primary energy by dividing by this efficiency _[100 / 0.38 = 263 TWh]_. This would be the amount of primary energy that would be required from fossil fuels to produce the same amount of electricity as wind. We should note that this conversion is used as an approximation – a standard ‘efficiency’ factor is applied across-the-board. But we know that some power plants have a slightly lower or higher efficiency and it can change over time. In fact, BP changed its methodology in its 2020 assessment to reflect this change over time. Previously it assumed a 38% efficiency factor consistently. But it now applies a ‘time-dependent’ model to build in improvements over time. Changes in this conversion factor are summarised in the table below. The substitution method gives us a more accurate understanding of how low-carbon energy is competing with fossil fuels. For this reason: when we look at the breakdowns of energy mix on _Our World in Data_ we have tried wherever possible to use primary energy measured by the substitution method. ###### Conversion factors applied in converting renewable and nuclear electricity outputs to primary energy{ref}BP Statistical Review of World Energy, _[Definitions and Exploratory Notes](https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/using-the-review/definitions-and-explanatory-notes.html)_ (2020){/ref} <Image filename="BP-Primary-Energy-Conversion-Factors.png" alt=""/> ## Related ### https://ourworldindata.org/sources-global-energy ### https://ourworldindata.org/decarbonizing-energy-progress ### https://ourworldindata.org/energy | {
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"rendered": "\n<p>Understanding the breakdown of our energy systems \u2013 how much energy we get from coal, oil or gas, how much from nuclear, solar or wind \u2013 is crucial. It allows us to compare energy mixes across the world; track whether we are making progress on decarbonizing our energy systems; and plan and manage demands for natural resources. </p>\n\n\n\n<p>But what seems like a simple exercise \u2013 adding up the produced energy from all the different sources \u2013 is in fact not straightforward at all. These difficulties result in different approaches for \u2018energy accounting\u2019 and present a different picture of the energy mix.</p>\n\n\n\n<p>Below, we take a look at the two key methodologies applied to primary energy accounting: \u2018direct\u2019 primary energy and primary energy via the \u2018substitution method\u2019. These methods are discussed (or debated) often, but I couldn\u2019t find particularly clear or simple explanations of how they differ and what this means for understanding our energy mix. The aim here is to fill that gap.</p>\n\n\n\n<p>What\u2019s important is to understand why there are two different methods and how they affect our perspective on the energy mix.</p>\n\n\n\n<h4>Direct vs. substituted primary energy: what\u2019s the difference?</h4>\n\n\n\n<p>\u2018Primary energy\u2019 refers to energy in its raw form, before it has been converted by humans into other forms of energy like electricity, heat or transport fuels. Think of this as inputs into an energy system: coal, oil or gas before we burn them; or solar or wind energy before we convert them to electricity.</p>\n\n\n\n<p>When we are asking how much energy is consumed or what the breakdown of the sources of energy is we are asking about primary energy.</p>\n\n\n\n<p>Here we look at two ways in which \u2018primary energy\u2019 is calculated: the \u2018direct\u2019 and the \u2018substituted\u2019 method. The simplest way to think of the difference between these methods is that \u2018direct\u2019 primary energy <em>does not</em> take account of the energy lost in the conversion of fossil fuels to usable energy. The substitution method <em>does</em> attempt to correct for this loss.</p>\n\n\n\n<h4>An example of the difference between \u2018direct\u2019 and \u2018substituted\u2019 energy</h4>\n\n\n\n<div class=\"wp-block-columns\">\n<div class=\"wp-block-column\">\n<p>To understand why this distinction is important we need to first consider the process of energy production.</p>\n\n\n\n<p>When we burn fuel in a thermal power plant most of the energy we put into the process is lost \u2013 primarily in the form of heat. Most fossil fuel plants run with an efficiency of around 33% to 40%.{ref}This can vary from plant-to-plant, and by fuel type. We look in more detail at the assumed efficiencies of power plants later.{/ref} The remaining 60% to 67% of energy is wasted as heat. This means for every unit of energy that we can use, another two are wasted.</p>\n\n\n\n<p>When we measure electricity\u00a0generation from renewables, we\u2019re measuring the direct\u00a0<em>output</em>, with no losses or waste to consider.</p>\n\n\n\n<p>For nuclear, while it’s true that thermal losses apply \u2013 just as they do for fossil fuels \u2013 in energy reporting, they are given as<em> electricity output</em>, so the losses have already been accounted for.</p>\n\n\n\n<p>Let\u2019s take an example \u2013 shown in the graphic here. Imagine we have a country that needs 100 terawatt-hours (TWh) of energy. We have three different energy mixes: only fossil fuels; only renewable or nuclear energy; and a mix of both. </p>\n\n\n\n<ol><li>If we only rely on <strong>fossil fuels</strong> we need 263 TWh of energy input. This is because only around 38% of these inputs are converted into \u2018useful\u2019 energy.{ref}We can calculate this by dividing our 100 TWh demand by 0.38.{/ref} 163 TWh is energy lost as heat.</li><li><strong>If we only rely on either renewable or nuclear energy</strong> these we do not need to adjust for these losses \u2013 they are already reported in terms of electricity <em>outputs</em>. So the figure is still 100 TWh.</li><li><strong><strong>If we rely on renewables/nuclear and fossil fuels</strong> it depends on the mix: </strong>let\u2019s say we produce 50 TWh from renewables or nuclear sources. We need another 50 TWh from fossil fuels. But to produce the additional 50 TWh from fossil fuels, we actually need 132 TWh, because we lose 82 TWh as heat <em>[50 TWh / 0.38 = 132 TWh]</em>. Combined, we need 182 TWh of energy input <em>[50 TWh from renewables/nuclear + 50 TWh \u2018useful\u2019 fossil fuel energy + 82 TWh wasted]</em>.</li></ol>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" width=\"800\" height=\"500\" src=\"https://owid.cloud/app/uploads/2020/08/Three-scenarios-to-supply-100TWh-of-energy-800x500.png\" alt=\"\" class=\"wp-image-36081\" srcset=\"https://owid.cloud/app/uploads/2020/08/Three-scenarios-to-supply-100TWh-of-energy-800x500.png 800w, https://owid.cloud/app/uploads/2020/08/Three-scenarios-to-supply-100TWh-of-energy-400x250.png 400w, https://owid.cloud/app/uploads/2020/08/Three-scenarios-to-supply-100TWh-of-energy-150x94.png 150w, https://owid.cloud/app/uploads/2020/08/Three-scenarios-to-supply-100TWh-of-energy-768x480.png 768w, https://owid.cloud/app/uploads/2020/08/Three-scenarios-to-supply-100TWh-of-energy-1536x961.png 1536w, https://owid.cloud/app/uploads/2020/08/Three-scenarios-to-supply-100TWh-of-energy.png 1765w\" sizes=\"(max-width: 800px) 100vw, 800px\" /></figure>\n</div>\n</div>\n\n\n\n<div class=\"wp-block-columns\">\n<div class=\"wp-block-column\">\n<p>Based on this example we can understand the difference between direct primary energy and the substitution method. </p>\n\n\n\n<p>Let\u2019s take the third scenario \u2013 a mixture of fossil fuels and low-carbon energy \u2013 and see how the low-carbon share differs between the two methods. This is shown in the figure.</p>\n\n\n\n<p>From the direct method we get 50 TWh / 182 TWh = 27%. From the substitution method we get 50 TWh / 100 TWh = 50%.</p>\n\n\n\n<p>I find it helpful to think of the distinction as:</p>\n\n\n\n<ul><li>Low-carbon\u2019s share in <strong>direct primary energy</strong> = % of <strong>total primary energy</strong> consumption (including all of the inefficiencies of fossil fuel production)</li></ul>\n\n\n\n<ul><li>Low carbon\u2019s share in <strong>substituted primary energy = </strong>% of <strong>useful energy </strong>(once we subtract all of the wasted energy in the burning of fossil fuels)</li></ul>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" width=\"800\" height=\"490\" src=\"https://owid.cloud/app/uploads/2020/08/How-are-energy-mixes-calculated-800x490.png\" alt=\"\" class=\"wp-image-36082\" srcset=\"https://owid.cloud/app/uploads/2020/08/How-are-energy-mixes-calculated-800x490.png 800w, https://owid.cloud/app/uploads/2020/08/How-are-energy-mixes-calculated-400x245.png 400w, https://owid.cloud/app/uploads/2020/08/How-are-energy-mixes-calculated-150x92.png 150w, https://owid.cloud/app/uploads/2020/08/How-are-energy-mixes-calculated-768x470.png 768w, https://owid.cloud/app/uploads/2020/08/How-are-energy-mixes-calculated-1536x941.png 1536w, https://owid.cloud/app/uploads/2020/08/How-are-energy-mixes-calculated.png 1763w\" sizes=\"(max-width: 800px) 100vw, 800px\" /></figure>\n</div>\n</div>\n\n\n\n<h4>What effect does our choice of accounting method have on the breakdown of the global energy mix?</h4>\n\n\n\n<div class=\"wp-block-columns\">\n<div class=\"wp-block-column\">\n<p>A question many want the answer to is, how much of our energy comes from low-carbon sources? How close are we to getting rid of fossil fuels?</p>\n\n\n\n<p>As we now know, it depends on whether we\u2019re using the direct or substitution method. In the chart here we show the breakdown of the global primary energy mix in 2019 to compare the two methods.{ref}This is based on data from the <em>BP Statistical Review of World Energy</em>; it considers only commercially-traded fuels, so traditional biomass is not included.{/ref}</p>\n\n\n\n<p>As we should expect from the example we worked through, when we calculate the share of energy from low-carbon sources via the substitution method we get a higher figure: 16% vs. only 7% from the direct method. When we strip away the differences in efficiencies between the sources, both renewables and nuclear make a larger contribution. </p>\n\n\n\n<p>In the interactive charts you can also compare each source\u2019s share of energy based on the two methods. Using the \u201cchange country\u201d button in the bottom-left of each chart, you can also see this for different countries.</p>\n\n\n\n<p>Most sources tend to prefer and report on the substitution method (or a similar approach \u2013 the \u2018physical content\u2019 method \u2013 which we don\u2019t discuss here but which gives similar results) rather than the direct method. The substitution method is also the preferred approach of the <em>Intergovernmental Panel on Climate Change (IPCC)</em>, for example.{ref}Krey V., O. Masera, G. Blanford, T. Bruckner, R. Cooke, K. Fisher-Vanden, H. Haberl, E. Hertwich, E. Kriegler, D. Mueller, S. Paltsev, L. Price, S. Schl\u00f6mer, D. \u00dcrge-Vorsatz, D. van Vuuren, and T. Zwickel, 2014: <a href=\"https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_annex-ii.pdf\">Annex II: Metrics & Methodology</a>. In: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Edenhofer, O., R. Pichs-Madruga, Y. Sokona, E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J. Savolainen, S. Schl\u00f6mer, C. von Stechow, T. Zwickel and J.C. Minx (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.{/ref}</p>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" width=\"2127\" height=\"1132\" src=\"https://owid.cloud/app/uploads/2022/06/Global-primary-energy-breakdown-\u2013-sub-vs.-direct-1.png\" alt=\"\" class=\"wp-image-51678\" srcset=\"https://owid.cloud/app/uploads/2022/06/Global-primary-energy-breakdown-\u2013-sub-vs.-direct-1.png 2127w, https://owid.cloud/app/uploads/2022/06/Global-primary-energy-breakdown-\u2013-sub-vs.-direct-1-400x213.png 400w, https://owid.cloud/app/uploads/2022/06/Global-primary-energy-breakdown-\u2013-sub-vs.-direct-1-800x426.png 800w, https://owid.cloud/app/uploads/2022/06/Global-primary-energy-breakdown-\u2013-sub-vs.-direct-1-150x80.png 150w, https://owid.cloud/app/uploads/2022/06/Global-primary-energy-breakdown-\u2013-sub-vs.-direct-1-768x409.png 768w, https://owid.cloud/app/uploads/2022/06/Global-primary-energy-breakdown-\u2013-sub-vs.-direct-1-1536x817.png 1536w, https://owid.cloud/app/uploads/2022/06/Global-primary-energy-breakdown-\u2013-sub-vs.-direct-1-2048x1090.png 2048w\" sizes=\"(max-width: 2127px) 100vw, 2127px\" /></figure>\n</div>\n</div>\n\n\n\n<div class=\"wp-block-columns is-style-side-by-side\">\n<div class=\"wp-block-column\">\n<iframe src=\"https://ourworldindata.org/grapher/share-of-primary-energy-consumption-by-source\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<iframe src=\"https://ourworldindata.org/grapher/share-energy-source-sub\" loading=\"lazy\" style=\"width: 100%; height: 600px; border: 0px none;\"></iframe>\n</div>\n</div>\n\n\n\n<h4>How do we convert from direct to substituted primary energy?</h4>\n\n\n\n<div class=\"wp-block-columns\">\n<div class=\"wp-block-column\">\n<p>At Our World in Data we get most of our energy data from BP; each year it publishes its <em>Statistical Review of World Energy </em>report. It applies the substitution method to its primary energy data <em>[you can read its methodology </em><a href=\"https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/using-the-review/methodology.html#accordion_primary-energy-methodology\"><strong><em>here</em></strong></a><em>]</em>.</p>\n\n\n\n<p>How does it convert from direct primary energy \u2013 that we can measure \u2013 into the substitution breakdown? </p>\n\n\n\n<p>In the schematic explanation above, we looked at calculating the share of energy from low-carbon energy sources by comparing it with the amount of useful energy (subtracting the wasted energy) from fossil fuels.</p>\n\n\n\n<p>But we can also do the opposite of this to get the same result. In fact, this inverse approach is what is most commonly applied by BP and others who use the \u2018substitution method\u2019. So, instead of assuming fossil fuels have the same efficiency as renewables/nuclear, we do the opposite: we assume renewables/nuclear are as inefficient as fossil fuels. We calculate the equivalent amount of fossil fuels that would be required to produce the amount of electricity we get from non-fossil based sources.</p>\n\n\n\n<p>So, let\u2019s say we produce 100 TWh of electricity from wind. And we assume the efficiency of a fossil fuel plant is 38%. We would convert this wind electricity into \u2018input-equivalent\u2019 primary energy by dividing by this efficiency <em>[100 / 0.38 = 263 TWh]</em>. This would be the amount of primary energy that would be required from fossil fuels to produce the same amount of electricity as wind.</p>\n\n\n\n<p>We should note that this conversion is used as an approximation \u2013 a standard \u2018efficiency\u2019 factor is applied across-the-board. But we know that some power plants have a slightly lower or higher efficiency and it can change over time. In fact, BP changed its methodology in its 2020 assessment to reflect this change over time. Previously it assumed a 38% efficiency factor consistently. But it now applies a \u2018time-dependent\u2019 model to build in improvements over time. Changes in this conversion factor are summarised in the table below.<br>The substitution method gives us a more accurate understanding of how low-carbon energy is competing with fossil fuels. For this reason: when we look at the breakdowns of energy mix on <em>Our World in Data</em> we have tried wherever possible to use primary energy measured by the substitution method.</p>\n</div>\n\n\n\n<div class=\"wp-block-column\">\n<h6>Conversion factors applied in converting renewable and nuclear electricity outputs to primary energy{ref}BP Statistical Review of World Energy, <em><a href=\"https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/using-the-review/definitions-and-explanatory-notes.html\">Definitions and Exploratory Notes</a></em> (2020){/ref}</h6>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" width=\"551\" height=\"550\" src=\"https://owid.cloud/app/uploads/2020/08/BP-Primary-Energy-Conversion-Factors-551x550.png\" alt=\"\" class=\"wp-image-36086\" srcset=\"https://owid.cloud/app/uploads/2020/08/BP-Primary-Energy-Conversion-Factors-551x550.png 551w, https://owid.cloud/app/uploads/2020/08/BP-Primary-Energy-Conversion-Factors-400x400.png 400w, https://owid.cloud/app/uploads/2020/08/BP-Primary-Energy-Conversion-Factors-150x150.png 150w, https://owid.cloud/app/uploads/2020/08/BP-Primary-Energy-Conversion-Factors-768x766.png 768w, https://owid.cloud/app/uploads/2020/08/BP-Primary-Energy-Conversion-Factors.png 770w\" sizes=\"(max-width: 551px) 100vw, 551px\" /></figure>\n</div>\n</div>\n\n\n\n<hr class=\"wp-block-separator\"/>\n\n\n\n<h4>Related</h4>\n\n\n <block type=\"prominent-link\" style=\"is-style-thin\">\n <link-url>https://ourworldindata.org/sources-global-energy</link-url>\n <title></title>\n <content></content>\n <figure></figure>\n </block>\n\n <block type=\"prominent-link\" style=\"is-style-thin\">\n <link-url>https://ourworldindata.org/decarbonizing-energy-progress</link-url>\n <title></title>\n <content></content>\n <figure></figure>\n </block>\n\n <block type=\"prominent-link\" style=\"is-style-thin\">\n <link-url>https://ourworldindata.org/energy</link-url>\n <title></title>\n <content></content>\n <figure></figure>\n </block>\n\n\n<p></p>\n",
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