© World Energy Council 2016 | www.worldenergy.org | @WECouncil
New energy realitiesNavigating the triple transition
Christoph Frei | Secretary General | World Energy Council
November 2016 @chwfrei
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
World population
1970-2060
0
2
4
6
8
10
12
-
2
4
6
8
10
12
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060
2.0 x
1.4x
Forecast
(2015-2060)
Billi
on
s o
f P
eo
ple
Billio
ns
of P
eo
ple
Source: UN Population Forecasts to 2100
Actuals
(1970-2015)
UN Population Growth (Billions of People)
1.2x
1.6x
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
0,6
%
-0,4
%
2,7
%
-0,7
%
0,4
%
2,2
% 2,9
%
1,0
%
0,2
%
1,4
% 1,9
%
0,2
%
2,5
%
2,1
% 3,3
%
1,0
%
0,5
%
0,2
%
2,4
%
-0,4
%
1,0
% 2,2
%
3,0
%
1,0
%
6%
China India Germany Saudi Arabia Spain United StatesUnited
KingdomWorld
Average1000 GtCO2
by 2100
1970-2000 2000-2014 1970-2014
Growth in the past 45 years (1970-2015)
Climate Change Challenge
Carbon Intensity % reduction p.a. 1970-2015
(GtCO2/GDP USD)
Note: Positive % changes denote a reduction in CO2 per USD of GDP
Source: Total Economy Database, BP (2015) Statistical Review, IPCC (2015) “AR5, Synthesis Report”;
2015-2060
(GtCO2/GDP USD)
Note: Assumes global
GDP growth of 2.6%
De-carbonization for
1000 GtCO2
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
“It is not difficult to come up with plausible scenarios that fundamentally
change & challenge the conditions under which energy companies have to
operate in the next decade.”
FROM TO
big plants & upstream big data & technology
high entry barriers low entry barriers
centralised & monoculture decentralised & local empowerment
long term fixed returns rapid & flexible pay-back
operational & system excellence service brilliance
burning molecules leasing capital
traditional market design capacity & storage incentives
incorporation corporate IP venturing
global brand local trust
10 business shifts
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Financing Resilient Energy Infrastructure
Extreme Weather Events
Number of natural catastrophes,
1970-2014: factor 4
Insured catastrophe losses,
1970-2014
Source: WEC Financing Resilience Report, 2015 (October
1); also Swiss Re, 2015: Sigma report No 2/2015
0
20
40
60
80
100
120
140
160
180
200
1970 1975 1980 1985 1990 1995 2000 2005 2010
Natural catastrophes
Source: Swiss Re Sigma 02/2015
• Comparing the last 5 years to the last 20 years: The occurrence of extreme
events has roughly quadrupled; according to IPCC this is largely related to the
40% increase of carbon dioxide in the atmosphere.
• From impact-resistant “hard”/‘safe-fail’ components to “soft”/‘fail-safe’ systems.
• The solution appears to be ‘smarter not stronger’.
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
From hard resilience to soft resilience
2015
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Cyber & monoculture risks
2016
Cyber – a monoculture risk?
80’000 blacked out
hardware destroyed‘massive damage’ to
industrial equipment
critical power plant
design data stolen
Financing Resilient Energy Infrastructure
Managing Cyber Risks
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
talent
energy access
energy affordability
extreme weather risks
cyber threats
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integration
market design
energy subsidies
decentralised systems
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
digitalisation
innovative transport
electric storage
nuclear
hydro
unconventionals
LNG
hydrogen economy
weak
signals need for action:
what keeps energy
leaders busy at work
critical uncertainties:
what keeps energy
leaders awake at night
World Energy Issues Monitor 2016
Global map
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
talent
energy access
energy affordability
extreme weather risks
cyber threats
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integrationmarket design
energy subsidies
decentralised systems
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
digitalisation
innovative transport
electric storage
nuclear
hydro
unconventionals
LNG
hydrogen economy
► Key insomnia issues are of macro nature: new
growth normal, commodity price volatility, climate
framework uncertainty and regional integration /
cohesion.
World Energy Issues Monitor 2016
Global map
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
talent
energy access
energy affordability
extreme weather risks
cyber threats
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integrationmarket design
energy subsidiesdecentralised systems
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
digitalisation
innovative transport
electric storage
nuclear
hydro
unconventionals
LNG
hydrogen economy
► Key action priorities remain constant: renewables,
energy efficiency, followed by subsidies and
electricity prices.
World Energy Issues Monitor 2016
Global map
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
energy access
energy affordability
extreme weather risks
cyber threats
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integration
energy subsidies
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
innovative transport
nuclear
hydro
unconventionals
LNG
hydrogen economy
decentralised systems
electric storage
digitalisationmarket design
► The innovation cluster continues to move up: e-
storage, digitalisation, decentralised systems.
talent
World Energy Issues Monitor 2016
Global map: key upward trends
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
energy access
energy affordability
extreme weather risks
cyber threats
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integrationmarket design
energy subsidiesdecentralised systems
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
digitalisation
innovative transport
electric storage
hydro
unconventionals
LNG
hydrogen economy
nuclear
► CCS, unconventionals and nuclear and coal are
issues which have seen the biggest cooling down
over past years.
talent
World Energy Issues Monitor 2016
Global map: key downward trends
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
energy access
energy affordability
extreme weather risks
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integrationmarket design
energy subsidiesdecentralised systems
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
digitalisation
innovative transport
electric storage
nuclear
hydro
unconventionals
LNG
hydrogen economy
cyber threats
talent
Resilience
World Energy Issues Monitor 2016
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
energy access
energy affordability
extreme weather risks
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integrationmarket design
energy subsidiesdecentralised systems
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
digitalisation
innovative transport
electric storage
nuclear
hydro
unconventionals
LNG
hydrogen economy
cyber threats
talent
Resilience
World Energy Issues Monitor 2016
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
talent
energy access
energy affordability
extreme weather risks
cyber threats
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integration
market design
energy subsidies
decentralised systems
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
digitalisation
innovative transport
electric storage
nuclear
hydro
unconventionals
LNG
hydrogen economy
Venezuela United States
United Kingdom
United Arab Emirates
Tunisia
Trinidad & Tobago
Switzerland
Swaziland
SpainSouth Korea
South Africa
Singapore
Serbia
Senegal
Saudi Arabia
Russian Federation
Portugal
Peru
Norway
Nigeria
Niger
Netherlands
Mongolia
Monaco
Mexico
Malaysia
Lithuania
Lebanon
Latvia
Kenya
Jordan
Japan
Italy
Ireland
Iraq
Iran
Indonesia
India
Iceland
Hungary
Hong Kong
Ghana
Germany
Gabon
France
Finland
Ethiopia
Estonia
Ecuador
Dominican Republic
Czech Republic
Cyprus
Cote d'Ivoire
Congo (Democratic Republic of)
Colombia
China
Chad
Canada
Burkina Faso
Bulgaria
Brazil
Botswana
Bolivia
BelgiumAustria
Australia
Argentina
Algeria
© World Energy Council 2015
► Countries with highest concerns for cyber threats
are in East Asia and Europe.
cyber threats
Resilience
World Energy Issues Monitor 2016
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
talent
energy access
energy affordability
extreme weather risks
cyber threats
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integration
market design
energy subsidies
decentralised systems
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
digitalisation
innovative transport
electric storage
nuclear
hydro
unconventionals
LNG
hydrogen economy
Market design
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate framework
large scale accidents
economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
talent
energy access
energy affordability
extreme weather risks
cyber threats
corruption
terrorism
China
IndiaRussia
EU Cohesion
Middle East dynamicsUS policy
trade barriers
regional integration
market design
energy subsidies
decentralised systems
sustainable cities
energy efficiencycoal
ccs
renewable energiesbiofuels
digitalisation
innovative transport
electric storage
nuclear
hydro
unconventionals
LNG
hydrogen economy
Venezuela
United States
United Kingdom
United Arab Emirates
Tunisia
Trinidad & Tobago
Switzerland
Swaziland
Spain
South Korea
South Africa
SingaporeSerbia
Senegal
Saudi Arabia
Russian Federation
Portugal
Peru
NorwayNigeria
Niger
Netherlands
Mongolia
MonacoMexico
Malaysia
Lithuania
Lebanon
Latvia
Kenya
Jordan
Japan
Italy
Ireland
Iraq
Iran
Indonesia
India
Iceland Hungary
Hong Kong
Ghana
Germany
Gabon
France
Finland
Ethiopia
EstoniaEcuador
Dominican Republic
Czech Republic
Cyprus
Cote d'Ivoire
Congo (Democratic Republic of)
Colombia
China
Chad
Canada
Burkina Faso Bulgaria
Brazil
Botswana
Bolivia
Belgium
Austria
Australia
Argentina
Algeria
► Countries with highest concerns for cyber threats
are in East Asia, North America and Europe.
Market design
© World Energy Council 2016 | www.worldenergy.org | @WECouncil© World Energy Council 2015© World Energy Council 2015© World Energy Council 2015
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climate frameworklarge scale accidents economic growth
capital markets
commodity prices
electricity prices
exchange rates
energy water nexus
land use
talent
energy access
energy affordability
extreme weather risks
cyber threats
corruption
terrorism
China
India
Russia
EU Cohesion
Middle East dynamics
US policy
trade barriersregional integration
market design
energy subsidies
decentralised systemssustainable cities
energy efficiency
coal
ccs
renewable energies
biofuels
digitalisation
innovative transport
electric storage
nuclear
hydro
unconventionals
LNG
hydrogen economy
Estonia
World Energy Issues Monitor 2016
► Top insomnia issues in Estonia are Russia, market
design, economic growth & climate framework.
► Key action priorities are energy subsidies, electricity
& commodity prices as well as renewables.
► Other top impact issues include EU cohesion &
regional integration as well as energy efficiency.
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
► Fast economic growth
► Strong technological development
► Transition to a highly productive
world
► Handles well the economic and
geopolitical shift to Asia
► Broadly addresses sustainability
► Developments on the energy
supply-side and in the mid-stream
reduce energy costs
► Greater access to energy for all
Free market driven approach to
achieving individual access and
affordability of energy through
economic growth
MODERN JAZZ
► Moderate economic growth (slower,
more sustainable, more evenly
distributed)
► Delivery of high levels of
infrastructure
► Extensive network of fiscal
incentives such as green subsidies
and carbon pricing
► Global standardization across
sectors
► Strong tech. innovation in large-
scale, integrated solutions that
drive efficiencies & reduce carbon
emissions
Government-driven approach to
achieving sustainability through
internationally coordinated politics
and practices
UNFINISHED SYMPHONY
► Stagnated economic growth
► Ineffective policies and failed
market structures
► Poverty and inequity drag down
social and economic mobility
► Weakening resilience of energy
systems
► Large scale (national) energy
solutions driven by security
concerns: hydro, nuclear, fossil
fuels
Fragmented approach driven by
desire for energy security in a
world with low global cooperation
HARD ROCK
36
Three Scenarios Stories
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Energy Demand
37
Energy Demand
(‘000 MTOE)
0
2
4
6
8
10
12
14
16
18
20
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
Energy Demand per capita
(TOE)
1,0
1,2
1,4
1,6
1,8
2,0
2,2
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
peaking at equivalent of 2500 W
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Carbon Emissions and Carbon Budget
38
0
5
10
15
20
25
30
35
40
2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
IPCC 2°C Target
Cumulative Carbon Emissions from 2015
(Gt CO2)
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2015 2020 2025 2030 2035 2040 2045 2050 2055 2060
Modern Jazz
Unfinished Symphony
Hard Rock
Annual Carbon Emissions
(Gt CO2)
Carbon
Budget
year of reaching
& exceeding
carbon budget
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Energy intensity & Fossil fuel share
40
Energy Intensity
(MJ / US$ 2010 MEX)
0
1
2
3
4
5
6
7
8
9
10
11
12
13
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
Fossil Fuel Share
(%)
40
45
50
55
60
65
70
75
80
85
90
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Coal and Oil Demand
41
Coal Demand
(‘000 MTOE)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
5,5
6,0
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
Oil Demand
(‘000 MTOE)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
5,5
6,0
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Natural Gas & Nuclear Demand
42
Natural Gas Demand
(‘000 MTOE)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
5,5
6,0
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
Nuclear Electricity Generation
(‘000 TWh)
0
1
2
3
4
5
6
7
8
9
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Wind & Solar Electricity
44
Wind Electricity Generation
(‘000 TWh)
0
1
2
3
4
5
6
7
8
9
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
Solar Electricity Generation
(‘000 TWh)
0
1
2
3
4
5
6
7
8
9
1970 2000 2014 2030 2060
History
Modern Jazz
Unfinished Symphony
Hard Rock
© World Energy Council 2016 | www.worldenergy.org | @WECouncil46
Abraham Maslow, 1943
“theory on motivational
structure of a healthy
person”
ENVIRONMENT
ENERGY SECURITY
AFFORDABILE ENERGY
PYRAMID OF ENERGY
POLICY NEEDS:
LEGITIMATE
BALANCING THE
ENERGY TRILEMMA:
STRATEGIC
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Energy Security
The effective management of primary energy supply
from domestic and external sources, the reliability
of energy infrastructure, and the ability of energy
providers to meet current and future demand.
Environmental Sustainability
Encompasses the achievement of supply
and demand side energy efficiencies and the
development of energy supply from renewable
and other low-carbon sources.
Energy Equity
Accessibility and affordability of energy supply
across the population.
Balancing the
‘Energy Trilemma’
ENERGYEQUITY
ENVIRONMENTALSUSTAINABILITY
World Energy Trilemma
© World Energy Council 2015
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
World Energy Trilemma 2016 UK
Estonia
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Priority actions
To meet climate targets, development goals and balance the trilemma a focus
on a few key mechanisms is needed
• At the international level:
Trade and transfer Carbon pricing Financing
of technology and subsidies mechanisms
• At the national level:
Demand management Prioritisation of
and energy efficiency innovation and RD&D
Financing
mechanisms
Demand management
and energy efficiency
Prioritise innovation
and RD&D
Trade and transfer
of technology
Carbon
pricing
Financing
mechanisms
Demand management
and energy efficiency
Prioritise innovation
and RD&D
Trade and transfer
of technology
Carbon
pricing
Financing
mechanisms
Demand management
and energy efficiency
Prioritise innovation
and RD&D
Trade and transfer
of technology
Carbon
pricing
Financing
mechanisms
Demand management
and energy efficiency
Prioritise innovation
and RD&D
Trade and transfer
of technology
Carbon
pricing
@chwfrei
© World Energy Council 2016 | www.worldenergy.org | @WECouncil
Defining measures to accelerate the
energy transition
50