World Energy Issues Monitor 2014

How to read the Issues Monitor

  • Issues with high uncertainty and high impact (“critical uncertainties” – in the upper right corner) include these, which will most benefit from multi-stakeholder dialogue and scenario analysis.
  • The issues on the high-impact/low uncertainty side are these where immediate action finds easy consensus (“need for action” – bottom right).
  • The low impact/low uncertainty ones include issues of perceived lesser importance but also “weak signals” (bottom left), which may be issues that are still badly understood.
  • The urgency of an issue is proportional to the size of its bubble.

Discover the “FELs World Energy Issues Monitor 2014“ by the Future Energy Leaders’ community.

  • Macroeconomic Risks & Vulnerabilities
  • Capital Markets
  • Climate Framework
  • Commodity Prices
  • Corruption
  • Currency Uncertainty
  • Energy Poverty
  • Energy Prices
  • Energy Water Nexus
  • Global Recession
  • Talent
  • Energy Affordability
  • Large Scale Accidents
  • Energy Geopolitics & Regional Issues
  • Brazil
  • China/India
  • EU Cohesion
  • Middle-East Dynamics
  • Russia
  • Terrorism
  • US Policy
  • Energy Policies & Business Environment
  • Business Cycle
  • Innovative Regulation
  • Regional Interconnection
  • Energy Subsidies
  • Trade Barriers
  • New Market Players
  • Energy Vision & Technology
  • Biofuels
  • CCS
  • Electric Storage
  • Electric Vehicles
  • Energy Efficiency
  • Nuclear
  • Renewable Energies
  • Smart Grids
  • Sustainable Cities
  • Hydrogen Economy
  • Large Scale Hydro
  • Unconventionals

Overview and Trends

This is a time of unprecedented uncertainty for the energy sector. Secure, reliable, affordable, clean and equitable energy supply is fundamental to global economic growth and human development and presents huge challenges for us all. Energy demand will continue to increase, driven by non-OECD economic growth. The pressure and challenge to further develop and transform the energy system is immense. To make things more daunting, it is in the context of this uncertainty that today’s policymakers and business leaders have to take critical decisions on our future energy infrastructure. The World Energy Council (WEC) has, for the last five years, produced our World Energy Issues Monitor to provide an annual snapshot of the landscape of uncertainties, leveraging the insights of energy leaders and experts from our independent and impartial network across more than 90 countries. Over the last five years we have seen the acceleration and increased complexity of energy drivers as well as policy and investment signals. Today, the primary global issues that keep energy leaders awake and active are: Energy prices, and high associated volatility; The lack of global agreement on climate change mitigation, without a clear path for the future of CO2 prices; Access to capital with the necessary demand for energy infrastructure; Carbon capture, utilisation and storage (CCUS) and Energy efficiency.

Macroeconomic Risks and Vulnerability

Energy prices, and high associated volatility, have become the most critical uncertainty for energy leaders for the first time this year, surpassing the global climate framework. The lack of global agreement on climate change mitigation remains a key issue, for the fifth consecutive year, without a clear path for the future of CO2 prices. Access to capital has an increased uncertainty this year, demonstrating the difficulties in the matching of capital with the necessary demand for energy infrastructure. Africa: The top critical uncertainties appearing from the latest Issues Monitor were climate framework, high energy prices and commodity prices, all impacting negatively on the wellbeing and living standards of Africa’s population. This year, the climate framework has become more critical compared with last year’s global energy Issues monitor.  Asia: The growing demand and higher dependency on imported fuel are making the region more vulnerable to the fluctuating prices of the world energy market. This trend makes energy prices one of the top critical uncertainties in the region.  Europe: Europe’s economy continues to suffer from the current global financial crisis and in particular its own regional economic and financial challenges. While a few countries are slowly easing out of recession, the level and sustainability of growth is still uncertain.  Latin America & Caribbean: The continuous revaluation of asset prices after the global recession, uncertainty about growth in central economies and the slowdown in emerging markets’ economies may hit countries that are commodity exporters (including energy). At the same time large-scale portfolio capital inflows in Latin America have reduced and most economies in the region have seen their currencies depreciated.  North America: The shale gas boom in the US is leading to reduced demand for Canadian energy in the US market. As a result, Canada now has to reconsider its distribution system, and access to wider markets is increasingly important for its oil and gas producers. In particular, issues around pipeline technology and social license to build energy-delivery infrastructure are critical, as are the elimination of physical and legal barriers to energy trade.

Energy Geopolitics & Regional Issues

The energy sector has seen a changing geopolitical balance as a result of the shifting energy map. Growth is shifting from Europe and North America to the Middle East where demand is growing rapidly and where the solar peak is synchronised with the peak in demand for air conditioning. Large hydropower is back on the agenda with important unused potential in Central Africa, Latin America, Russia or Canada. Asia: Important issues revealed by this year’s energy Issues Monitor are China–India and Middle East dynamics which will dictate the energy future for the region. China has become the biggest energy consumer in the world, accounting for almost half of the world’s coal consumption. India is expected to overtake China as the world’s most populous country by 2030 and has huge potential for economic growth. To satisfy the demand for energy, the region will become more dependent on imported energy, and the relationship between Asia and the Middle East will be further strengthened. MENA: As one of the world’s largest regions for hydrocarbon resources, the Middle East clearly regards its own regional dynamics as a key concern. This relates not to the resource-holding countries themselves, which remain very stable, but the possible impact on the region caused by instability in the periphery.

Energy Policies & Business Environment

WEC’s latest Issues Monitor is set in the context of high uncertainty. There has been the need to redefine infrastructure resilience on the basis of emerging risks, and the expectation of changing market designs and evolving business models. Regional interconnection, which is often the feasibility basis for large energy projects, is also firmly in the need-for-action space. Africa: Regional interconnection has evolved from the critical uncertainties space to a position in the need-for-action space – indicating that regional interconnection should remain high on the agenda and a key priority for African energy leaders. Europe: Competitiveness was a critical issue in Europe as it dealt with energy cost and prices. The cheap price of shale gas and electricity in the US has had an impact on the European economy. Furthermore, the substantial subsidies needed to support renewables are not a sustainable policy instrument in a competitive energy market.

Energy Vision & Technology

Carbon capture, utilisation and storage (CCUS) is perceived with rapidly diminishing impact, continuing the clear trend of the past three years and reinforcing the reality check needed around our ability to deliver on climate objectives by 2050. Energy efficiency remains stable in its positioning as an action priority for the fifth successive year and continues to present an immediate opportunity, but will only be realised with a longer-term approach to financing. Asia: Renewable energy is a critical uncertainty. Renewables are one of the important solutions to the energy issues that the region is facing, but the sector is yet to mature and remains slow to penetrate the market due to difficulties in sourcing appropriate technologies and obtaining subsidies to make it competitive. Middle East and North Africa: One critical uncertainty for the region is energy efficiency. Without improvements in this area, an increasing proportion of the region’s oil and gas production will be absorbed by the domestic market. In addition to energy-efficiency measures, the Middle East is placing increasing importance in the development of renewable energy sources aimed at supplying the domestic market. Saudi Arabia and the United Arab Emirates (UAE) have ambitious renewable energy programmes in place and other countries in the region are following suit. North America: One of the critical uncertainties in this region is the stalling of the nuclear energy programmes, with a higher degree of movement in the issues monitor since Fukushima.