A lot of energy-transition analysis begins with an assumption that is easy to miss: the size and shape of today’s market are carried into the future. Once that happens, the analytical task becomes finding a low-carbon substitute for everything the incumbent system currently supplies.
📌 The Core Development
That approach can make the replacement problem much larger than it needs to be. Industries change as the energy transition proceeds, technologies compete across sector boundaries, demand responds to price, and some of the commodities that dominate today’s energy system shrink for reasons that have little to do with the technology being proposed as their replacement.
I discussed this recently with Amy Rennison at an Earth Set event at Octopus Energy’s London headquarters. The conversation covered shipping, hydrogen, grids, heat pumps, aviation, carbon removal and data centres, with questions from the audience repeatedly pulling us back to the assumptions underneath apparently confident transition forecasts. I expanded the discussion in The Energy Transition Has An Assumptions Problem .
🔍 Background & Sector Context
Shipping is a good place to see the problem. Roughly 40% of maritime freight tonnage is coal, oil and gas, with raw iron ore accounting for another 15%. Fossil-fuel demand declines as energy systems electrify, steel production changes, and inland and short-sea routes increasingly become candidates for battery electrification. All of those changes affect the amount of liquid fuel the shipping industry will eventually require.
My projection leaves about 70 million tonnes of annual shipping fuel demand by 2100. Other projections reach several hundred million tonnes. That gap has enormous consequences for investment because it changes how much biomass, synthetic fuel, renewable electricity and supporting infrastructure appear necessary. A fuel pathway that looks impossibly constrained against one demand forecast can look quite different against another.
📊 Industry & Real-World Impact
The same issue appears when biological fuels are discussed across transport sectors. Cars, trucks and trains electrify, much of shorter-distance shipping can electrify, and fossil-fuel freight declines. Aviation remains a stronger claimant on scarce sustainable liquid fuels, which affects what is economically available to shipping. Looking at those markets together changed my own assessment of how much biodiesel and renewable diesel should appear in my maritime pathway.
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🔮 Strategic Outlook & What Lies Ahead
Hydrogen provides a different example of assumptions shaping investment. The broad hydrogen-economy narrative depended heavily on green hydrogen becoming inexpensive enough to compete in transportation, heating, electricity storage and a wide range of industrial applications. I kept working through production and delivery economics and found a much smaller addressable market when hydrogen remained expensive.
Policies, subsidy programmes, corporate organizations and investment plans had already formed around the larger market expectation. Institutions do not disappear as quickly as the assumptions that created them. Once money, staff and political commitments accumulate around a proposition, changing direction becomes an organizational problem as well as an analytical one.
