WEC debunks energy myths and calls for action

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The World Energy Council (WEC) – organiser of this month’s World Energy Congress – provided plenty of food for thought and discussion amongst the thousands of policy-makers, industry leaders, academics and journalists who converged on the South Korean city of Daegu to take part in the event.

As more than 6,000 delegates – including more than 50 government ministers – gathered for the triennial conference, the WEC published several weighty reports that its members have been working on since the last congress was held in the Canadian city of Montreal in 2010.

They included: world energy scenarios to 2050 (Jazz, a consumer-driven scenario, and Symphony, a voter-driven scenario); a status report on the world’s energy resources; a study of the costs of producing electricity from various energy sources; and a report on energy efficiency policies. (All of these reports can be downloaded from the WEC’s website.)

The WEC also warned that “several prevailing myths are severely hampering the efforts of governments, industry and civil society to create a sustainable energy future”. It called for policy-makers and industry leaders to “get real” as it exposed “common myths informing [or rather misinforming] the energy debate” and defined “a path to a more sustainable energy future”.

Secretary General of the World Energy Council, Christoph Frei, said: “As we publish the results of our studies at the WEC, it is clear that we are at a tipping point.”

In a statement released as the conference opened, the WEC said:  “We have found through our multi-year in-depth studies and issues-mapping with energy leaders that we are in a much more challenging world than previously envisaged . . . the WEC’s studies reveal that current pathways fall short of delivering on the global aspirations of energy access, energy security, and environmental sustainability.”

Challenging the myths

* Myth 1: Global energy demand will flatten out

The reality: Energy demand will double by 2050.

* Myth 2: Peak Oil – there is an imminent shortage of fossil fuel resources

The reality: The discovery of new resources and the emergence of new technologies have multiplied fossil fuel reserves by a factor of four.

*  Myth 3: Demand growth will be fully met by the new clean energy sources

The reality: Despite significant growth in the relative contribution of renewables from 15% today to 20-30% in 2050, in absolute terms the volume of fossil fuels used to meet global energy demand will be 16,000 million tonnes of oil equivalent (Mtoe) in the Jazz scenario and 10,000 Mtoe in the Symphony scenario, compared with 10,400 Mtoe in 2010.

* Myth 4: We can reduce global GHG emissions by 50% by 2050

The reality: Even in the best case the WEC sees a near doubling of global greenhouse gas (GHG) emissions by 2050, “compared with where we should be in 2050 to meet the 450 parts per million carbon dioxide reference adopted by many”. At worst, “emissions could increase by over four-fold”.

* Myth 5: Current business models and markets are delivering

The reality: Current market designs and business models are unable to cope with the increasing renewable shares, decentralised systems, or growing information architecture.

* Myth 6: Current programmes will deliver universal access to energy within 10-15 years

The reality: On current paths, between 730 million people (in the Jazz scenario) and 880 million people (in the Symphony scenario) will lack access to electricity in 2030.

* Myth 7: On a global scale capital is cheap and abundant

The reality: Capital is extremely sensitive to perceived political and regulatory risks. Growing pressures on public finances will restrict availability of public funds to substitute or augment private financing of energy initiatives.

Defining the future: “The global aspirations on energy security, access and environmental sustainability are destined to fail unless incisive and urgent actions are taken to both develop and transform the energy system,” said the WEC. It went on to set out a number of recommendations:

  1. We are looking in the wrong place. The focus must shift from the supply mix to demand efficiency. We need more demand-side investments, innovation, incentives and stronger technical standards to reduce energy intensity. Price controls, subsidies, trade barriers and absolute targets for individual technologies distort the market and can have unintended consequences, so policy-makers must use them only sparingly.
  2. To attract the needed investment, national policy and regulatory frameworks have to be balanced. We need robust, predictable and transparent frameworks that allow the market freedom to exercise informed choices in terms of innovation, technology and investment. There is little agreement between investors and governments on the nature, price, and value of risks. It is therefore critical to improve understanding of risk and how to price it.
  3. We need significant investments in RD&D. We urgently need to realise the potential of breakthrough technologies such as electricity storage and CC(U)S (carbon capture, utilisation and storage). WEC analysis shows that the 450 parts per million carbon dioxide goal cannot be achieved without CC(U)S.
  4. The energy map is changing and our institutions need to change to keep pace. The centre of gravity in energy has moved outside OECD countries – and so are interactions between the countries and regions.
  5. To ensure universal access to energy, policy and institutional frameworks and funds are needed to de-risk and support entrepreneurial approaches.
  6. It’s no longer just about mitigation. Risks from the energy-water nexus, extreme weather events, or cyber-terrorism (to name but a few) expose our energy infrastructure to potential disasters. We need to adapt, re-think, and redefine the resilience of energy infrastructure.

by Alex Forbes, Daegu, South Korea