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Humanising Energy

How are energy leaders and companies managing the crisis? “Our agenda is inspired by a vision of the energy transition that puts its humanization at the forefront”.

by Angela Wilkinson
08 October 2020
13 min read
byAngela Wilkinson
08 October 2020
13 min read

The world is in the midst of an existential crisis. As the Covid-19 pandemic swept across international borders, it had devastating impacts on human health, the world economy and energy systems all at once. Preconceptions and conventional wisdom have been thrown into doubt and our future vision is obscured by a fog of uncertainty. Is it still possible to see a brighter energy future? I believe it is if we work together to prepare post-crisis strategies that make more room for “greener” and cleaner energy pathways and incorporate the human cost of transition.

Since the start of the pandemic, the World Energy Council has been surveying its members drawn from more than 3,000 organisations around the world, among these I am pleased to mention the dynamism of WEC Italy and the significant contribution of its important associates, to see how energy leaders and businesses are managing crisis and to share their expectations for the future. Our surveys indicate that the pandemic has impacted all energy industries and businesses, but with highly uneven effects.

Covid-10 offers a glimpse of a better energy future

In many ways, the disruption to our normal lives caused by the global health crisis provided a glimpse of a better energy future. As roughly half the global population went into partial or total lockdown, the air was purer and waters ran blue as a large percentage of the workforce shifted from offices to homes, turning cities into spaces free from congestion and urban pollution, as road transport came to a virtual halt and aircraft were grounded.

We can seize the moment while memories are still fresh to prevent a return to pre-Covid business-as-usual. We can build resilient societies and overhaul outdated economic systems and ensure that the global energy transition is not derailed by geopolitical and trade disputes and inward looking national policies.

When our 24th World Energy Congress was held in October 2019, it brought together 15,000 energy leaders, decision makers and experts from all sectors around the world. The discussions highlighted the risk of fragmentation and the need to address social and financial risks in accelerating the pace of transition. Ten months on, the world is reeling from the effects of Covid-19. The closure of shops, businesses and factories has resulted in massive job losses, bankruptcies and fiscal stresses.

Whether this crisis will lead to transformational actions is not yet clear. The responses to our surveys have enabled us to identify four alternative post-crisis scenarios, with a time horizon of 3-5 years. We are using this set of scenarios as a radar to detect and decode signals of change from around the world. We are also developing a scenario-based serious gaming platform that can be used to stress test and design post-crisis strategies and make a contribution to the recovery efforts being considered by governments, energy companies and utilities.

No single pathway and no short cuts

There is no single pathway to net zero and all technologies, fuel sources and abatement measures will be needed if the targets are to be attained by 2050. The drive to decarbonize must also take into account demand growth and societal affordability.

It not possible to turn the global energy system around overnight. To move from 20 percent of the world’s energy system that runs on electrical power to a 100 percent net zero carbon economy by 2050 is highly ambitious. To imagine this can be done without the use of more energy or with only renewable power and battery storage is pure fantasy.

While it is true that renewable energy sources grew their share of electricity generation during lockdown, total reliance on intermittent solar and wind would not have kept the lights on everywhere, nor provided sufficient heat, cooling, fuel or power to restart whole economies. The need for a broader resilience also came into sharp relief during lockdown. Electricity companies had to balance systems to cope with surging demand from households while industrial use declined and all energy organizations had to manage people and supply chains, not just the flow of electrons or stocks of fuel.

The World Energy Council’s recently published Innovation Insights Brief on the role of transmission companies shows a growing trend to invest in enhancing system security and resilience as well as prepare for a more digital world. Until we find flexible, affordable and sustainable storage solutions, there can be no globally imposed exclusion on the use of existing energy technologies, so long as new solutions enable the overall carbon footprint to be reduced to levels that are compatible with the goal of climate neutrality by 2050.

With many expecting the worst is yet to come as economies around the world start to return to some kind of normal, attention in the energy sector has turned to balancing the needs of survival and recovery. So how should we plan for what’s next, and possibly the worst?

Covid-19 has magnified pre-existing stresses

The World Energy Council promotes a multi-dimensional approach which uses the “Energy Trilemma” framework to assess and rank the performance of a country on energy security, energy equity and environmental sustainability. It is difficult to get the balance right, especially considering the negative impacts of energy poverty in Africa, where hunger, poor sanitation and indoor pollution are leading causes of premature deaths. This crisis has magnified pre-existing stresses – from economic recession and climate change to deeper social inequality. It has come at a time when leadership mindsets are shifting to the customer centric energy future, as value creation moves closer to the end-user. Corporate announcements across the spectrum point to expectations that the pandemic will stall demand for oil and gas for a prolonged period and hasten the shift towards cleaner power and fuels. Meanwhile, power sector executives highlight the fact that the crisis is accelerating digitalization opportunities and presenting challenges of resilience – for people and value chains, as well as cyber security.

Historic reallocation of capital

Covid-19 is also driving a historic reallocation of investment in energy systems. Responses to our survey from energy leaders and experts in more than 100 countries show that up to 80 percent plan to shift investments to digitalisation, research and development while strengthening environmental, social and governance policies. Around 20 percent are considering more ambitious climate policies. To prepare a better exit from this pandemic we also need to ask: How and what does this fundamentally human health crisis teach us about the need to put humanity at the centre of the global energy transition debates? Nearly 40 percent of respondents in our latest survey expect a “new normal” for energy systems, up from 15 percent a month earlier, but they have diverging views on what ‘new’ looks like. More than 60 percent expect behavioural shifts and over 50 percent expect changes in social norms.

As we emerge from crisis, we must anticipate the “tsunami” of pent-up energy demand that may hit post crisis. The doubling of global energy demand by 2040 will fundamentally reshape an energy landscape that is ill prepared due to inadequate investment, largely because of previous volatility and crises, and exacerbated by Covid-19. According to our calculations, energy investment is set to fall by between $200 and $400 billion in 2020, putting at risk 350,000 jobs in the energy sectors of the G7 economies.

Inadequate access to energy, the circular economy and the Energy Transition

When we talk about accelerating clean, affordable and reliable energy transition, particularly in a post-crisis era, we need to think about demand-side economics as part of the ‘new normal’. We can’t keep overlooking the problem of inadequate energy access everywhere– in addition to the lack of basic access to any modern energy source that affects more than 850 million people in non-OECD countries. We also need to reconnect price with value and cost to society: climate neutrality, which is not the same as an ideological war on carbon, opens up new solutions including a clean hydrogen vector, sector coupling and carbon removal technologies. Carbon Capture Utilisation and Storage offers a decarbonisation solution and if deployed across energy and energy-intensive industries could takes us closer to a circular carbon economy, where carbon dioxide is removed, recycled and reused. Energy transition does not mean the end of oil but it does mean more responsible management of fossil fuels to reduce their impact on the environment. New pathways exist. Some fossil fuel infrastructure can be repurposed to carry net zero carbon fuels like clean hydrogen-based fuels, while depleted oil and gas fields offer space for storage.

Energy transition does not mean a future of only renewable power. Emerging from crisis there will be even greater attention to issues of affordability, social responsibility and environmental sustainability. A big question facing the global energy industry is ‘how to’ ensure its responses to and strategies for emerging from the pandemic can meet new and shifting energy demand, whilst advancing ambitions for climate neutrality.

Estimates suggest greenhouse gas emissions fell by between 8 and 9 percent as a result of the lockdown measures. Yet to achieve climate neutrality by 2050, that reduction would need to be sustained every year for 30 years. Of course, no society can stop breathing to save oxygen!

Similarly, the need to kick start globally competitive economies is redirecting attention to the energy investment gap and fueling the risk of more extreme polarisation e.g. clean vs. green energy, renewables vs. gas.

The notion of “humanizing” the energy transition has come of age

The technologies available for accelerating global energy transition and securing clean, affordable, reliable energy for all are the same as those that existed before the crisis. What has really changed – and could be the new force for change – is the social energy agenda. Issues of affordability, societal cost and acceptability and social licence to operate are set to challenge all energy transition players. In effect, our humanising energy transition vision agenda has come of age and reflects:

  1. The opportunity for whole societies to move faster and further together by engaging those impacted by energy transition in designing and managing the process;
  2. The increasing gap within countries in quality energy access, despite progress in closing the global gap on basic access;
  3. A new context of affordability and the need to reconnect price and cost and ensure adequate infrastructure investment planning – not just new build, also decommissioning and repurposing where it makes sense;
  4. The migration of value creation towards the end-user, the rise of digitally empowered prosumers and renewable communities and new demand for energy-plus services;
  5. New challenges for energy and power firms of all shapes and sizes in maintaining their social licence to operate, recognising also that no energy technology can assume social acceptability.

Now is the time to remember why the World Energy Council was founded in 1923 as a community of energy expertise and practice and our responsibility to step forward as an inclusive and pragmatic community open to all. We are the modern equivalent of the cathedral builders of old. As architects of new energy futures, we are focused on the ‘how to’ rather than ‘should do’ of energy transition inspired by earthly dreams of better energy for all. We are open to learning by doing, by sharing experiences and through dialogue. Even at regional level we work together with an agile approach to connect different societies, energy needs and solutions. When it comes to the European region, I am pleased to mention the dynamism of WEC Italy and the significant contribution of its important associates in support of agile Euro-Mediterranean energy transition dialogues, starting from recent events organized in Milan and Abu Dhabi from the Italian MC together with the Observatoire Mediterranéen de l’Energie (OME).

United in diversity, our community has pulled together in a time of crisis to provide practical insights and a value-added voice. Looking to the future we are well placed to make a valuable contribution to a human-centric Energy Transition agenda.

The author: Angela Wilkinson

Secretary General and CEO of the World Energy Council, she is one of the world’s leading global energy experts, an experienced energy executive and a published author. Angela Wilkinson has 30 years of experience in leading national, international and global multistakeholder transformation initiatives on a wide range of economic, energy, climate and sustainable development related challenges.