World Energy Council report identifies 2017's global issues trends

Commodity prices will remain the single biggest global issue as demand peaks approach and multinational oil companies begin to consider directing their capital elsewhere, the World Energy Council said in its 2017 Energy Issues Monitor.

Global climate change remains important, but the more than 1,200 senior energy leaders in more than 90 countries who were surveyed believe there is less uncertainty about climate change now and it will have a less immediate impact than volatile prices, the report indicated.

"Transition is the key word in energy now," WEC Sec.-Gen. Christoph Frei said during a presentation at the US Energy Association, a WEC member, on Apr. 6. "At last fall's World Energy Congress, which we hold every 3 years, we used very different language for the first time. This report helps explain why."

Volatile commodity prices are a major issue in all global regions, but energy leaders in producing and consuming countries expressed the most concern, the report said. Those in Asian and African countries that depend heavily on imports said prices provided the most uncertainty, while those in Middle Eastern and North African countries, which depend heavily on hydrocarbon exports, said the issue undermines long-term economic strategies.

"For their part, North American energy leaders are equally concerned and buoyed by the fact that they are major producers and consumers of energy," the report noted.

"Here, the slow decline of coal has an impact on commodity price concerns, but more than anything, it is the future of the tight and shale oil and gas industries that keeps energy leaders awake at night. Massive amounts of capital now are tied up in the industry in both the US and Canada, and they are held hostage by a single issue: price," it said.

Frei said the report's key findings were:

• Primary energy demand growth worldwide will continue to slow down and peak before 2030.

• Demand for electricity will double, "making it the new oil."

• Phenomenal wind and solar energy growth will continue at an unprecedented rate.

• Demand for coal and oil could create stranded resources, instead of assets, worldwide.

• Light-duty vehicles will pose major problems for carbon reduction efforts.

• Limiting global warming to no more than a 2° C. increase will require an exceptional and enduring effort beyond pledged commitments.

• Technological breakthroughs will have a more positive impact than government policies.

Frei said carbon emissions reductions have been the biggest force in addressing global climate change. They also could lead to stranded fossil fuels, led by coal and followed by expensive, then cheaper, crude oil, and natural gas to a lesser degree, he suggested.

"Oil's future is uncertain because of transportation fuels, where there's less innovation than with electricity. Natural gas is not expected to peak as quickly because it will be needed in countries like China to help combat air pollution," Frei said.

The report presented three scenarios: a market-driven approach to achieving individual success and energy affordability and success through economic growth; a government-driven approach to reach energy sustainability through internationally coordinated policies and practices; and a fragmented approach driven by desires for energy security with minimal global cooperation. Frei said the last option would be the least effective.

USEA Executive Director Barry Worthington said the report shows that energy resource management is as important as ever. "We need an all-of-the-above approach to our energy policy, and our government leaders should rely on industry leaders to help develop that policy based on their knowledge of changing dynamics and the reality of resource availability and reliability," he said.