Global Energy Demand Growth Set to Fall
In stark contrast to historic growth levels, energy demand is now expected to peak before 2030, according to a new World Energy Council report launched at the 23rd World Energy Congress in Istanbul.
Technological innovation, government policies and lower growth expectations will have a significant impact on the sector in the coming decades, said the report, which displayed its findings in a new set of exploratory scenarios, developed by the World Energy Council in collaboration with Accenture Strategy and the Paul Scherrer Institute.
The report, titled ‘World Energy Scenarios 2016 – The Grand Transition’, includes three scenarios entitled “Unfinished Symphony”, “Modern Jazz” and “Hard Rock”, which present three distinct trajectories for the energy sector to 2060, with very different realities across regions.
Fossil fuel usage could fall to as little as 50 percent of the primary energy mix in one of the scenarios, with very differing futures for coal, oil and natural gas. 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 percent of the mix in all three scenarios to 2060 and natural gas will continue to increase at a steady rate.
The report goes on to highlight that there will be a shift in final energy consumption with demand for electricity doubling by 2060. Solar and wind, which currently account for approximately four percent of power generation, will see the largest increase so that by 2060 they will represent between 20 percent and 39 percent of power generation.
“It is clear that we are undergoing a grand transition, which will create a fundamentally new world for the energy industry,” said Ged Davis, executive chair of scenarios at the World Energy Council.
“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,” he added.
“By 2060, all scenarios point to an increase in demand for gas, as well as a possible peak demand for oil within the 2035-2045 timeframe,” said Nuri Demirdoven, managing director at Accenture Strategy.
“Misspending, including misallocation of capital, has always been a risk for energy assets and will continue to grow due to fundamental shifts in the industry. 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.”
Commenting on the report, Michael Burns, energy partner at law firm Ashurst, told Rigzone that energy companies will have to adapt their businesses to the impending challenges.
"There is no doubt that the energy industry faces challenges from rapidly developing disruptive technologies. But energy companies are responsive and they will have to mould their businesses to take account of these challenges,” Burns said.
“One response we are seeing is that large integrated energy companies are increasing their focus on those sectors (particularly renewables and battery storage) where the challenges are actually coming from,” he added.
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