The growth in global energy demand that surged rapidly from the 1970s, and has been met mostly by fossil fuels, is going to slow down: the world’s per capita energy demand is going to peak by 2030.
So concludes a report from the World Energy Council that was launched at the 23rd World Energy Congress in Istanbul.
The report, compiled in collaboration with Accenture Strategy and Paul Scherrer Institute (PSI), analyzes widely different world energy scenarios or possible futures.
The scenarios were built with help from 70 experts in 25 countries and with feedback from industry leaders, politicians, scientists, economists, and environmentalists.
The World Energy Council foresee solar and wind energy continuing to rise at unprecedented rates, from 4 percent of power generation in 2014 to 20-39 percent by 2060. Image: pixabay
Ged Davis, Executive Chair of Scenarios at the World Energy Council, says it is clear that the world is undergoing a “grand transition” where energy is concerned. He says the energy industry is entering a “fundamentally new world,” where:
“Historically people have talked about Peak Oil but now disruptive trends are leading energy experts to consider the implications of Peak Demand.”
Seven key implications
The report highlights seven key implications for the energy sector that world and business leaders will have to pay particular attention to.
1 – Global energy demand is set to fall and per capita (per head of the world population) energy demand will peak before 2030 as new technology brings unprecedented efficiencies and government policies get tighter.
2 – By 2060 we will see a doubling in demand for electricity which will require huge investments in clean energy infrastructures.
3 – Energy systems will face challenges and opportunities as solar and wind energy continue to surge at unprecedented rates. The different scenarios see these set to grow from 4 percent of power generation in 2014 to 20-39 percent by 2060.
4 – Demand peaks for coal and oil could take the world from “stranded assets” owned mainly by private enterprises to “stranded resources” owned by the state. This could cause significant stress and unbalance world economic equilibrium. Leaders need to plan exit strategies over decades.
5 – Efforts to decarbonize future energy systems will meet the biggest hurdles in transitioning global transport. The scenarios examine different ways these may or not be overcome. For example, more charging points for electric vehicles, new transport solutions, government support schemes, and integrated city planning could ease the transition, while less infrastructure – thus less penetration of alternative fuels – could hamper it.
6 – Limiting the global warming increase to no more than 2°C “will require an exceptional and enduring effort,” says the report. These will need to be much greater than the pledges already made, and the carbon prices will have to be high and meaningful.
7 – Global cooperation, sustainable economic growth and innovation in technology will be necessary to balance three core dimensions of what the World Energy Council – a UN-accredited organization – call the Energy Trilemma: Energy Security, Energy Equity, and Environmental Sustainability.
Carbon budget will be broken in 30-40 years
The report gives three different scenarios of possible future energy use. These show that the amount of energy coming from fossil fuels ranging from 50-70 percent by 2060, with different futures for coal, oil, and natural gas.
By 2060, all three scenarios show an increase in demand for natural gas, plus demand for oil peaking during 2035-2045.
However, in all three scenarios, the report predicts the carbon budget will be broken in the next 30-40 years.
The carbon budget is the maximum amount of carbon that can be released into the atmosphere to stand a reasonable chance of staying below the agreed global warming limit.
Nuri Demirdoven, Managing Director at Accenture Strategy, says:
“Leading companies across all scenarios will be those that adapt quickly and take two urgent steps: rethink the balance of their energy portfolio, and utilize business and digital technologies to transform how they deliver work and organize and manage performance across their businesses.”