Fossil fuels
Fossil fuels are natural, non-renewable energy sources that formed over millions of years from the remains of dead plants and animals through geological processes under high pressure and temperature. The main types are coal, oil, and natural gas, which consist primarily of hydrocarbons and store chemical energy that is released during combustion. These energy sources have become central to industrial production, power generation, heating, and the transport sector.
The main types of fossil fuels
Coal, divided into lignite and hard coal, forms from plant remains and has a high energy density. Oil forms from the remains of marine organisms and is processed into fuels and numerous petrochemical products. Natural gas, composed mainly of methane, forms through geological processes similar to those of oil and is frequently found alongside oil deposits.
Share of fossil fuels in greenhouse gas emissions
Fossil fuels are by far the largest source of human-caused greenhouse gas emissions. Estimates suggest that around three-quarters of all global greenhouse gas emissions stem from the combustion of fossil energy sources. Within these emissions, coal accounts for the largest share, followed by oil and gas; cement production and gas flaring contribute a smaller but not negligible portion. Coal has the highest CO₂ intensity per unit of energy produced among all fossil fuels, while natural gas causes comparatively lower direct CO₂ emissions but is associated with methane emissions along its extraction and transport chain.
Despite the global expansion of renewable energy, fossil fuels still cover the majority of global primary energy demand. The share is declining, but at very different speeds by region: while some European countries have already largely completed their coal phase-out, coal, oil, and gas remain the dominant energy source in many fast-growing economies.
Environmental impact and energy security
Beyond their climate impact, fossil resources are finite, making the transition to renewable energy sources increasingly urgent. The extraction and processing of fossil fuels is also associated with further environmental burdens, including air pollutants, water consumption, land disturbance, and, in the case of oil, the risk of spills and contamination.
The extraction and sourcing of fossil fuels are also closely tied to questions of energy security and geopolitical dependency. Countries without significant reserves of their own rely on imports and are therefore exposed to price volatility and political risk on global energy markets, as recently illustrated by sharp price swings following geopolitical crises. Alongside climate protection, this dependency is an additional economic driver for expanding domestic, renewable energy sources.
Fossil fuels in corporate carbon accounting
For companies, energy consumption from fossil sources forms the basis for a large share of Scope 1 and Scope 2 emissions in the company-wide greenhouse gas inventory. Structured Corporate Carbon Footprint software helps capture energy consumption by fuel type and calculate the corresponding emissions correctly. Regulatory instruments such as the EU Emissions Trading System and the Carbon Border Adjustment Mechanism create additional financial incentives to reduce the share of fossil energy sources in the energy mix.
At company level, the importance of fossil fuels is especially evident in energy-intensive production processes such as melting, firing, or steam generation, which in many cases still rely on natural gas or heating oil. Gradually converting such process heat applications to electricity- or hydrogen-based alternatives is considered one of the most technically demanding, yet climate-critical, decarbonization tasks facing manufacturing industry as a whole.
Decarbonization and regulatory pressure
Gradually substituting fossil energy sources with renewable energy, energy efficiency measures, and process electrification is one of the most effective levers for corporate decarbonization. With carbon reduction software, companies can identify and prioritize concrete measures to reduce their reliance on fossil energy and track their impact on the overall balance.
At the international level, the UN Climate Change Conference COP28 in Dubai marked the first time an explicit global consensus was reached to transition away from fossil fuels. This political framework is reinforced by binding EU instruments such as the phase-out of free emission allowances under the EU ETS and sector-specific phase-out roadmaps for particularly emission-intensive industries.
Given the central role of fossil fuels in the global energy balance and the climate crisis, an orderly phase-out of coal, oil, and gas is considered one of the most important prerequisites for meeting international climate targets and positioning companies for long-term regulatory and economic resilience, especially in light of rising carbon pricing and growing expectations from customers, investors, and regulators for a credible decarbonization strategy.
