The Incredible Inefficiency of the Fossil Energy System

The document details a bottom-up methodology for sizing global energy waste using 2019 IEA World Energy Balance data and IIASA's PFUDB dataset. It estimates that of $12 trillion in gross global energy spending, approximately $4.6 trillion (40%) is spent on fuels that are wasted before becoming useful energy. The authors note that while the second law of thermodynamics prevents total elimination of waste, this $4.6 trillion figure represents a significant upper bound for efficiency opportunities.

• The authors estimate that global gross spending on energy is approximately $12 trillion per year, of which $4.6 trillion is spent on fuels that are wasted and do not become useful energy, representing roughly 40% of total energy spending.
• The methodology for sizing energy waste utilizes 2019 IEA World Energy Balance (WEB) data and the IIASA PFUDB dataset to determine final-to-useful losses. The authors adjusted IEA Final Energy Consumption (FEC) figures downward by 7 EJ to account for hidden energy transport waste, such as pipeline consumption and fossil fuel shipping.
• The calculated waste of 379 EJ and $4.6 trillion serves as an upper bound for efficiency opportunities. While the second law of thermodynamics means not all waste can be eliminated, the document cites research from Cambridge University suggesting that 85% of 2005 energy demand could be practically avoided with existing knowledge and technology.
• To calculate wasted spending, the authors applied global average wholesale prices for supply losses and retail prices for demand losses. Assumed prices included $100/t for coal, $60/bbl for wholesale crude oil, $150/bbl for final oil products, $5/million BTU wholesale for gas, $21/million BTU consumer price for gas, and $60/MWh wholesale versus $120/MWh retail for electricity.

APA

Walter, D., Bond, K., Lovins, A., Speelman, L., Gulli, C., & Butler-Sloss, S. (n.d.). The Incredible Inefficiency of the Fossil Energy System. RMI. https://rmi.org/wp-content/uploads/2024/05/appendix_the_incredible_inefficiency_of_fossils.pdf

Chicago

Walter, Daan, Kingsmill Bond, Amory Lovins, Laurens Speelman, Chiara Gulli, and Sam Butler-Sloss. The Incredible Inefficiency of the Fossil Energy System. RMI, n.d. https://rmi.org/wp-content/uploads/2024/05/appendix_the_incredible_inefficiency_of_fossils.pdf.

Wikipedia

{{cite report |last1=Walter |first1=Daan |last2=Bond |first2=Kingsmill |last3=Lovins |first3=Amory |last4=Speelman |first4=Laurens |last5=Gulli |first5=Chiara |last6=Butler-Sloss |first6=Sam |title=The Incredible Inefficiency of the Fossil Energy System |publisher=RMI |url=https://rmi.org/wp-content/uploads/2024/05/appendix_the_incredible_inefficiency_of_fossils.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{walterndincredible, author = {Walter, Daan and Bond, Kingsmill and Lovins, Amory and Speelman, Laurens and Gulli, Chiara and Butler-Sloss, Sam}, title = {{The Incredible Inefficiency of the Fossil Energy System}}, institution = {RMI}, url = {https://rmi.org/wp-content/uploads/2024/05/appendix_the_incredible_inefficiency_of_fossils.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }