The Incredible Inefficiency of the Fossil Energy System

This research paper by RMI analyzes the systemic inefficiencies of the global fossil energy system, quantifying the energy and financial losses occurring from primary extraction to end-use. It argues that these inefficiencies make fossil fuels vulnerable to disruption by cleaner, more efficient alternatives such as renewables, electrification, and localized energy generation.

• The global energy system is highly inefficient, wasting nearly two-thirds of all primary energy before it provides any benefit. In 2019, out of 606 EJ of primary energy, only 227 EJ (37%) became useful energy, resulting in a loss of approximately 379 EJ per year.
• Fossil energy inefficiency represents a massive financial loss totaling $4.6 trillion annually, which is roughly 5% of global GDP and 40% of total global energy spending. This averages to approximately $600 wasted per person globally each year.
• Energy production is a major source of waste, losing 177 EJ per year. The largest contributor is power generation, which wastes 126 EJ annually, with coal and gas thermal power plants accounting for 60 EJ and 30 EJ respectively.
• Energy use losses total 183 EJ per year, dominated by the production of work and heat. Internal Combustion Engines (ICEs) are a primary culprit, wasting $2 trillion per year due to average efficiencies of less than 25%.
• Fossil fuel technologies are responsible for over 75% of all energy losses. Specifically, fossil thermal power plants and Internal Combustion Engines together account for nearly half of the global energy waste.
• The fossil energy system is vulnerable to disruption by three primary 'tailwinds': renewables (which eliminate extraction and thermal losses), localization (which removes the need for long-distance transport), and electrification (via heat pumps and EVs, which are two to four times more efficient than fossil alternatives).

APA

RMI (2024). The Incredible Inefficiency of the Fossil Energy System. https://rmi.org/resources/the-incredible-inefficiency-of-the-fossil-energy-system/

Chicago

RMI. The Incredible Inefficiency of the Fossil Energy System. 2024. https://rmi.org/resources/the-incredible-inefficiency-of-the-fossil-energy-system/.

Wikipedia

{{cite report |author=RMI |title=The Incredible Inefficiency of the Fossil Energy System |date=4 June 2024 |url=https://rmi.org/resources/the-incredible-inefficiency-of-the-fossil-energy-system/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2024incredible, author = {{RMI}}, title = {{The Incredible Inefficiency of the Fossil Energy System}}, institution = {RMI}, year = {2024}, month = jun, url = {https://rmi.org/resources/the-incredible-inefficiency-of-the-fossil-energy-system/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }