STEVEN PORUBAN
MANAGING EDITOR-NEWS
Findings from a new report launched Oct. 13 in Istanbul at the 23rd World Energy Congress (WEC) in collaboration with Accenture Strategy and the Paul Scherrer Institute point to the energy industry having a very different future from once envisioned. The report-World Energy Scenarios 2016-found that a fundamentally new world for the energy industry will be created through the emergence of certain "disruptive trends."
The report states that this new world will be "characterized by lower population growth, radical new technologies, greater environmental challenges, and a shift in economic and geopolitical power."
The report said, "These underlying drivers will reshape the economics of energy." The report calls this "uncertain journey" into the new world of energy "The Grand Transition."
Implications
Over the last 3 years, the WEC has explored the likely outcomes for the Grand Transition. These findings include:
• The world's primary energy demand growth will slow, and per capita energy demand will peak before 2030. This is in stark contrast to historic growth levels, which have seen global demand for energy more than double since 1970.
• Electricity demand will double to 2060.
• Solar and wind energy will continue to rise at an "unprecedented" rate, creating both opportunities and challenges for energy systems. Solar and wind currently account for about 4% of power generation. These two forms of energy will see the largest increase, so that by 2060 they will represent 20-39% of power generation.
• Peaks in demand for coal and oil have the potential to shift the world from "stranded assets" to "stranded resources."
• One of the most difficult obstacles to overcome in an effort to "decarbonize" future energy systems will be transitioning global transport.
• "Limiting global warming to no more than a 2°C. increase will require an exceptional and enduring effort, far beyond already pledged commitments, and with very high carbon prices."
Three scenarios
To assist users with a "common language" for thinking and talking about energy's uncertain future, the report presents three "exploratory and metaphorically named" scenarios looking to 2060: Modern Jazz, Unfinished Symphony, and Hard Rock.
The scenarios were built by a network of more than 70 members from more than 25 countries.
Modern Jazz represents a "digitally disrupted, innovative, and market-driven world." Unfinished Symphony represents a world in which "more intelligent and sustainable economic growth models emerge as the world drives to a low-carbon future." And Hard Rock, a more fragmented scenario, "explores the consequences of weaker and unsustainable economic growth and inward-looking policies."
The three scenarios present three distinct trajectories for the energy sector to 2060, with very different realities across regions, the report said.
Speaking at the report's launch, Ged Davis, WEC executive chair of scenarios, said, "It is clear that we are undergoing a Grand Transition, which will create a fundamentally new world for the energy industry. Historically people have talked about Peak Oil but now disruptive trends are leading energy experts to consider the implications of Peak Demand. Our research highlights seven key implications for the energy sector which will need to be carefully considered by leaders in boardrooms and staterooms."
Fossil fuel's role
In one of the scenarios, the report said that fossil fuel usage could fall to as little as 50% of the primary energy mix, "with very differing futures for coal, oil, and natural gas."
It said, "However, in all three scenarios the carbon budget is also likely to be broken within the next 30 to 40 years. Oil will continue to play a significant role in the transportation sector representing over 60% of the mix in all three scenarios to 2060 and natural gas will continue to increase at a steady rate."
Nuri Demirdoven, managing director at Accenture Strategy, said, "By 2060, all scenarios point to an increase in demand for gas, as well as a possible peak demand for oil within the 2035-45 timeframe."
The full report can be found at worldenergy.org/publications.