The global Covid-19 pandemic is a fundamental test of leadership for the energy industry. The World Energy Council is analysing the ongoing impact of the pandemic on energy as well as the responses and changing expectations of the worldwide energy industry, drawing on surveys of our global network of energy organisations in nearly 100 countries and the Council’s expertise in impartial and actionable energy futures thinking to provide.
The ongoing surveys not only provides insight into the crisis' impacts but has enabled the development of plausible and alternative scenarios of what might happen. Organisations, governments, innovators and experts have already begun to use these scenarios to stress test exist strategies and to explore and navigate how we can emerge from the COVID-19 shock as a more resilient society and continue to accelerate a successful global energy transition.
The energy industry worldwide was already facing a build-up of new global risks and stressors:
- Sluggish global economy and increased inequalities within and between countries
- Oil supply glut and oversupply of gas, weaker oil and gas prices
- Stepped up climate change momentum in response to rising energy-related emissions
IMMEDIATE IMPACTS AND ACTIONS
Highlights of results from regular surveys of our worldwide network indicate:
- Three key impacts – drop in demand, weak cashflow, shift to digital ways of working
- Increasing expectations of a new normal, but not for 12-18 months after peak crisis
- Opinions on the outlook for the climate change agenda are split three ways: derail, delay, and redesign (leading to more ambitious, behaviour-centric policies)
Understanding the Present to Prepare for the Future
As COVID-19 continues to spread and the impacts cascade from society to the economy, anxiety about uncertainty creates fear of the future. We must look beyond the immediate urgency and evaluate the ongoing implications of the crisis to avoid either black and white thinking or rose-tinted glasses.
Planning Through a Crisis
While the world’s essential energy workers continue to support the needs of business and society, our agile surveys of the real experiences of our worldwide energy community generates practical wisdom and contributes value-adding voice and timely insights in these challenging times.
Survey 1: Managing Through Crisis (Business Continuity Preparedness)
The World Energy Council continues to gather informed perspectives of our globally diverse energy community and engage wider perspectives on emerging developments as we explore and navigate how we can emerge from the COVID-19 shock as a more resilient society, and continue to accelerate a successful global energy transition. While the surveys are ongoing, you can read the latest Brief from our initial round of global survey responses on Business Continuity Preparedness.
Survey 2: The Shape of the 'New Normal' - Outlook for Energy Systems and Energy Transition
The World Energy Council continues to gather informed perspectives of our globally diverse energy community and engage wider perspectives on emerging developments as we explore and navigate how we can emerge from the COVID-19 shock as a more resilient society, and continue to accelerate a successful global energy transition. While the surveys are ongoing, you can read the latest Brief from our initial round of global survey responses on Implications for Energy Systems and Energy Transition.
MANAGING THROUGH CRISIS
The experience and impacts of the crisis are highly uneven in timing (peak impact) and on regions, national economies, energy sectors and segments of society. Our surveys indicate that energy firms are adopting a three-step model – respond, rebuild, recreate – to manage the crisis.
Preparing for What Comes Next, Starts Now
As citizens, communities, companies and countries, we are all still learning how to cope with the impacts of this global pandemic. But now is also the time to start to prepare for what comes next – whether a steady recovery to ‘normal’ or a spring forward to a ‘new normal’ in a very different post-COVID-19 world.
Survey 3: A Vital Transformation of Global Energy Systems Is Underway
Insights gleaned from 220+ energy experts in 61 countries across six continents show that an historic reallocation of energy systems investment is underway, driven by COVID-19 crisis.
EMERGING LEADERSHIP THEMES
Our surveys highlight three leadership themes:
- Resilience – extended to people and value chains
- Rescue and recovery – fiscal stimulus policies and opportunities for new investment in more diverse pathways for affordable and inclusive climate neutrality
- Redesign policies – behavioural transformation, circular and regenerative development for billions of better lives and a healthy planet
Covid Impact: Re-investing in Resilience
As governments take measures to control the spread of Covid-19, businesses within and outside of energy are adjusting their ways of working while facing operational and ﬁnancial challenges in response to changing demands and disruptions along value chains. Despite these challenges, we have kept the lights on. We have ensured uninterrupted supply to support the needs of business and society.
STRESS-TESTING EXIT STRATEGIES
There is still much we do not know about Covid-19 and its implications for society and the economy at large. However, energy leaders can engage constructively despite the uncertainty by exploring what might happen. Using scenarios as a starting point for strategic conversations and a decision support tool, energy leaders and their organisations can stress-test and design better post-pandemic strategies.
The Council has identified three major uncertainties – trust, ambition and control of the virus – that are critical to preparing for what might happen in the next 3-5 years. Using these uncertainties the Council has developed a challenging set of four medium-term energy scenarios – Pause, Rewind, Fast-Forward and Re-Record.
Each scenario describes how overall responses to the current crisis might differ in their impact on existing and new energy system developments. The scenario framework provides a futures radar for detecting and decoding new signals of change from around the world.
The World Energy Council is scanning signals of change from around the world to see through the current fog of uncertainty, enhance a strategic conversation on different energy futures and enable orderly global energy transition as the world emerges from crisis. Help to shape the post-pandemic agenda by detecting and sharing signals of change.
IMPLICATIONS FOR LONG-TERM ENERGY TRANSITION
Since 2016 the Council has been using three scenarios to explore the impact of a new industrial revolution, changing geopolitics and the challenge of climate change and the broader resilience agenda. The three scenarios are defined by:
- Rise of digitally empowered consumers (Modern Jazz),
- Renewables revolution, surge in hydrogen development and electric vehicles (Unfinshed Symphony),
- Turning inward with a focus on national energy security and reduced global trade (Hard Rock).
These scenarios allow organisations to test and design projects, investments, energy strategies and responses to new policies.
WORLD ENERGY SCENARIOS | 2019
The world of energy is being reshaped by a set of fundamental drivers, which we term the “Grand Transition”. These drivers provide the broader context for determining global energy pathways to 2040.