World Energy Issues Monitor 2015

How to read the Issues Monitor

  • Critical uncertainties: Issues with high uncertainty and high impact (in the top-right quadrant) are the ‘critical uncertainties’ with no clear path of action which keep energy leaders most awake at night. These issues need to be part of the energy leaders’ dialogue and scenario analysis.
  • Action priorities: The issues in the high-impact and low-uncertainty space are those which keep energy leaders most busy (bottom-right, ‘action issues’).
  • Weak signals: The low-impact and low-uncertainty issues (bottom-left quadrant) include those of perceived lesser importance or those that are still not fully understood and in need of further investigation.
  • The responses are translated into issue monitors with the three assessed dimensions: the impact of an issue on the energy sector – this forms the x axis; the degree of uncertainty related to its impact – this forms y axis; the urgency with which we need to address the specific issue – represented by the proportional size of the issue bubble where a larger size corresponds to a higher degree of urgency.

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  • 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
  • Cyber Threats
  • Extreme Weather Risks
  • Energy Geopolitics & Regional Issues
  • Brazil
  • China/India
  • EU Cohesion
  • Middle-East Dynamics
  • Russia
  • Terrorism
  • US Policy
  • Energy Policies & Business Environment
  • Innovative Regulation
  • Regional Interconnection
  • Energy Subsidies
  • Trade Barriers
  • Decentralised Systems
  • Energy Vision & Technology
  • Biofuels
  • CCS
  • Electric Storage
  • Electric Vehicles
  • Energy Efficiency
  • Nuclear
  • Renewable Energies
  • Smart Grids
  • Sustainable Cities
  • Hydrogen Economy
  • Large Scale Hydro
  • Unconventionals
  • Coal
  • Liquefied Natural Gas

Overview and Trends

The energy sector is once again faced with high levels of uncertainty. The agenda for energy leaders across the world is dominated by continued energy price volatility and new geopolitical dynamics. The G7 joint statement on energy security, the strengthened position of non-OPEC countries in the oil and gas markets, Brent crude oil prices falling below the $50 benchmark and energy security becoming a UN development goal are thereby some of the prominent developments that set the context for the Issues Monitor in 2015. The top critical uncertainties for energy leaders across the world in 2015 include:energy and commodity prices and their associated volatility, global climate framework uncertainty and electric storage. Issues that are regarded as action priorities for energy leaders are: energy subsidies; renewable energies, energy efficiency and China/India. Climate framework, energy prices, energy efficiency and renewable energies remain of extreme importance to address, reinforcing their trend in 2014. New in the 2015 Issues Monitor are coal and LNG, which are perceived to have a high impact by energy leaders across the globe. By contrast, extreme weather risks and cyber threats, which are also newly featured in 2015, display a stronger geographical split. With energy systems increasingly becoming modernised, automated and interconnected and with greater awareness of these emerging risks, the issues are likely to gain impact in the coming years.

Macroeconomic Risks and Vulnerability

Energy prices continue to be the most critical uncertainty for energy leaders across the world. The costs of non-energy commodities are falling in line with plunging energy prices due to weaker relative demand from China and Europe, coupled with the trend of oversupply in a number of energy markets. Climate framework has been featuring in the top right quadrant of the global Issues Monitor since it was first introduced in 2009. With COP21 approaching, uncertainty with regards to the future of a universal, legally binding climate agreement is once again high on the agenda. The impact of the global recession is entering a downward trend compared to 2014, indicating tentative optimism towards a global economic recovery amongst energy leaders. Energy subsidies are a key need for action issue in the 2015 map and a significant part of current market designs. However, in many countries they also still present an obstacle towards a more innovative market design to establish more sustainable energy systems.

Energy Geopolitics & Regional Issues

The energy sector has again seen a changing geopolitical balance as a result of the shifting energy map and the geopolitical developments in Russia/Ukraine and the Middle East. China/India is a key factor keeping energy leaders across the world most busy. China’s economic development, energy demand and its effects on energy prices plays a crucial role in the perceived impact associated with the China issue. US policy, another issue that keeps energy leaders busy at work reflects the changing energy markets, the country’s geopolitical decisions and international investment initiatives. Particularly for Africa, US policy plays an important role for trade and investment relations with the reaffirmed Africa Power Initiative. Russia, in the centre of the global map, displays a high regional bias in terms of the perceived impact. In Europe it features as the top critical uncertainty reflecting the regional interdependence with regards to trade and energy supply. By contrast, in Africa and Asia the issue is perceived to be a weak signal.

Energy Policies & Business Environment

Energy subsidies and innovative market designs are keeping energy leaders across the world busy at work. In many countries they present a significant part of current market designs. The role of governments in choosing preferred solutions and the political sensitivity associated with energy subsidies still present major barriers to changes in approach. Regional interconnection is another key action priority, especially in Europe and Latin America where complementary energy matrices need to be interconnected to secure a sustainable energy system in the future. Innovative regulation, energy technologies and decentralised systems all play a crucial role in the forming of effective energy policies, as well as the stable environment needed to enable the financing of robust and sustainable energy systems.

Energy Vision & Technology

Energy efficiency and renewable energies remain critical need for action issues this year, reflecting the trend of continued impact and importance for these technologies. This is particularly evident in Europe, together with electric storage, which presents an uncertainty regarding the abilities of the grid to cope with intermittent forms of energy and markets signals towards back-up capacity and storage.   The impact of other technologies varies strongly by region. In Africa and the Latin America and Caribbean, the need to further realise the potential of large-scale hydro power is high up on the agenda. In Asia, the development and demand of coal is a prime need for action issue, reflecting the region’s coal demand and consumption.For the Middle East and North Africa, a key hydrocarbon producing region, coal presents a competing fuel, which explains why it is perceived to be a key uncertainty in the region.In North America, the development of LNG continues to top the need for action agenda of energy leaders.