Assessment of Energy Policy and Practices
Emerging energy transitions are creating a turbulent environment for the energy industry that is testing governments from the local to the international level. Shifts in energy demand are taking place faster than expected, challenging existing infrastructure and suppliers, and driving energy price volatility. This is exacerbated by concerns over possible longer-term supply constraints to conventional oil and gas supplies, and the geographical distribution of these resources.
Rapid industrial growth and urbanisation are creating regional air pollution problems. These are solvable, but take time and money. Looming over the industry is the increased urgency attached to tackling greenhouse gas emissions, the major driver of climate change. This requires a rapid shift to carbon-free and low-carbon technologies over the coming decades.
Also, a large portion of the world's population still lacks reliable and affordable access to modern energy. Despite a considerable effort to address this, there is still much to do.
The cumulative effect of these challenges underscores a number of observed phenomena:
Energy price flaring. In the last year, crude oil has more than doubled in price and subsequently declined in price to less than half its peak.
Deep concern among energy consumers. In many countries, the high cost of energy has caused strong reaction by consumers.
Possible economic dislocation in countries. Higher oil and gas prices have severely affected the budgets of the poorer oil-importing countries, in some cases leading to political difficulties. High energy prices are a major contributor to inflation, putting particular pressure on the energy poor.
Greater emphasis on energy security. The uncertainties around future energy supply, in a world of higher energy prices, have raised security of supply concerns in many energy-importing countries.
The increased role that governments have in relation to energy. The global nature and magnitude of these transitions, with increased annual investments estimated as high as one trillion USD, has highlighted the essential role of governments in providing adequate frameworks for energy decision-making and action. For example, governments need to enable, and even fast-track, new investments in energy infrastructure and facilities in the face of public local and regional groups who do not want these facilities on, or to pass across, their lands.