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Energy Demand To Peak Before 2030, Says World Energy Council

In contrast to historic growth levels, per-capita global energy demand is expected to peak before 2030, according to a new report published by the World Energy Council.

wec-1“Disruptive trends are emerging that will create a fundamentally new world for the energy industry,” wrote the authors of the new report, World Energy Scenarios 2016 — The Grand Transition, launched at the 23rd World Energy Congress being held in Istanbul. Specifically, the authors point to “lower population growth, radical new technologies, greater environmental challenges, and a shift in economic and geopolitical power” as those “disruptive trends” which they believe will “re-shape the economics of energy.”

The new report is the result of three years worth of analysis into what they are describing as a “Grand Transition” from the energy economics we all grew up with to a more renewable and sustainable energy future. The report provides seven key conclusions, prime among them being the prediction that the world’s primary energy demand growth will slow, and per-capita energy demand will peak before 2030, “due to unprecedented efficiencies created by new technologies and more stringent energy policies.”

“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, World Energy Council, speaking at the launch of the report. “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.”

The remaining key conclusions from the report include the prediction that demand for electricity will double to 2060, which will require us to meet this demand with cleaner energy sources; that solar and wind energy will continue to grow “at an unprecedented rate”; demand peaks for both coal and oil could end up creating “significant stress to the current global economic equilibrium”; one of the most difficult obstacles we will have to face is the diversification of transport fuels; limiting global warming to only a 2°C increase “will require an exceptional and enduring effort”; and “global cooperation, sustainable economic growth, and technology innovation are needed to balance the Energy Trilemma” of Energy Security, Energy Equity, and Environmental Stability.

The report provides predictive analysis based on three separate scenarios — Modern Jazz, Unfinished Symphony, and Hard Rock. The metaphorically-named scenarios represent three stages of potential growth: Modern Jazz represents what the authors call a “digitally disruptive,” innovative, and market-driven world, Unfinished Symphony represents a more “intelligent” and sustainable economic growth, while Hard Rock is a “more fragmented scenario” which “explores the consequences of weaker and unsustainable economic growth with inward-looking policies.”

“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,” added 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.”

The authors of the report also present a series of recommendations highlighting areas industry leaders and world leaders must tackle, including the need to:

  • Reassess capital allocations and strategies
  • Target geographies and new growth markets in Asia, MENA, and SubSaharan Africa
  • Implement new business models that expand the energy value chain and exploit the disruption
  • Develop decarbonization policies
  • Address socioeconomic implications of climate change policies

In conclusion, the authors explain that “the decisions taken in the next 5 to 10 years, in response to these and other implications, will have profound effects on the development of the energy sector in the coming decades.”

“The underlying drivers will re-shape the economics of energy,” concludes Ged Davis. “We are entering a world where the concern is no longer just about stranded assets but also the impact of stranded resources on nations.”

 
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