The energy market is changing: new policies, technologies and sources are prompting us to embark on a long journey towards a new world, an “energy transition” to achieve a sustainable consumption model and solutions to tackle global warming and climate change.
The three mega-trends must now be addressed, which are probably the greatest challenges of this century facing the world of energy.
The first of the three is the mitigation of climate change. This is one of the most recent mega-trends, but it has quickly gained importance on the agendas of policymakers, as well as considerable interest in terms of public opinion. What is climate change? Climate change and global warming are terms used to identify two phenomena which are easy to describe but very complex to demonstrate scientifically. In a nutshell, it is the assumption that some human activities – in particular, but not only, the current way we produce and consume energy – are the main cause of a steady rise in the earth’s temperature and of climate change. Indeed, the combustion of fossil fuels (coal, oil and natural gas) causes carbon dioxide to be emitted into the atmosphere, which is defined as one of the “greenhouse gases”. These gases are able to increase the ability of the Earth’s atmosphere to retain energy from the sun, triggering an increase in temperatures and climate change. If the rise in greenhouse gas emissions continues at the same pace as recent decades, the scientific community predicts that this could trigger a great shift in temperature and climate, which will be potentially harmful to humans and the environment. Since a large part of the rise in greenhouse gases in the atmosphere is due to carbon dioxide emissions produced by the current energy system, one can easily see how the subject of mitigating climate change is closely linked to that of the transition to a new system which is capable of providing larger amounts of energy by progressively reducing – and ultimately eliminating – greenhouse gas emissions.
Great social and political attention is currently being paid to climate change; both internationally and nationally, there are many initiatives aimed at encouraging actions to tackle the phenomenon. One of the most important of these is the United Nations Framework Convention on Climate Change (UNFCCC), an international environmental treaty which aims to reduce greenhouse gas emissions and which led to the well-known agreement between countries that took part in the Paris conference in late 2015.
Another mega-trend that ties in with the main challenges facing the energy industry this century is universal access to energy and the struggle against energy poverty. Having the ability to access modern forms of energy in sufficient quantities is not only a key prerequisite to give everyone an opportunity for economic growth and social development, but it is often a matter of survival.
Energy poverty still today affects much of the world’s population: the International Energy Agency estimates that around 1.1 billion people still have no access to electricity and around 2.8 billion (38% of the world’s population and almost 50% of the population of developing countries) do not have access to “clean cooking” methods. They primarily use biomasses such as wood and charcoal for cooking food in stoves that are not suitable to be used in confined, unventilated spaces. The World Health Organization estimates that in 2016 alone, around 3.8 million premature deaths were caused by this practice. Ensuring that the poorest people in the world have access to modern energy sources is therefore a very significant issue, so much so that the United Nations has made it – along with the tackling climate change – one of the 17 objectives of the 2030 Agenda for Sustainable Development. These targets are better known as the “Sustainable Development Goals” with the aim of ending poverty, reducing inequality and promoting social and economic development worldwide.
Now, to gain a full overview of the forces that will together shape the future energy system, it is impossible not to mention the growing world population, a phenomenon that underlies all mega-trends seen until now and which heightens their impact and drive for change. Indeed, all of the forces listed until now would alone be enough to bring about a new energy transition, even without a rise in global population. Already today, eliminating the current inequalities in people’s living conditions would require worldwide growth in terms of both the economy and energy availability; a growth that – in order to be fair and sustainable – must also be compatible with environmental, climatic and social targets.
Yet if we also factor in the new population who are to be given a minimum level of quality of life, the pressure intensifies. At the same time, it becomes all the more challenging to find a new energy model that reconciles and fulfills all needs. To get an idea of the expected population growth and its potential impact, let us take a look at the latest UN forecast for this century. As can be seen from the graph in Figure 1, taking the mid-point scenario which is the most likely, from the current 7 billion people (or so), there will be around 10 billion people in 2050 and 11.2 billion in 2100.
In conclusion, there are many mega-trends driving the energy transition. Each of these mega trends, however, are guiding it in a direction that may conflict with the trajectory of others. For example, some are fostering a growing demand for energy which, in the absence of a new production and consumption model, will continue to cause higher greenhouse gas emissions, which is at odds with other mega-trends. Therefore, the next transition has the difficult task of leading us toward an energy system that can meet all needs, solving the issues of conflict. The “concept” guiding this evolution is relatively simple and can be summed up in a brief but effective phrase: sustainable energy for all. But what choices and what tools will translate this into practice? In actual fact, we know which needs must be addressed, but the timeframes and stages of the complex transition path toward our goal still remain uncertain. Sadly, there seems to be no single solution or easy shortcuts if we are to give a comprehensive response and achieve all targets, not just some of them. We will need to make use of a wide mix of tools and focus on the new technologies that become available in the coming years. This last consideration introduces us to one of the most widely discussed questions: What is the timeframe of the new energy transition and what can the history of the past teach us?