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.
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 and design post-pandemic 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.
- Managing Through Crisis
- Emerging Leadership Themes
- Stress Testing Exit Strategies (Covid-19 Crisis Scenarios)
- Looking Forward (Futures Radar)
- Implications for Long-Term Energy Transition
No crisis happens in a vacuum. Before the crisis, discussions at the 24th World Energy Congress in Abu-Dhabi included the four global drivers of change - the ‘4Ds’ of decarbonisation, digitalisation, decentralisation and demand centricity were shaping energy systems developments in all world regions.
The crisis has accelerated and disrupted these and added to three pre-existing stressors that were already testing the energy industry:
- 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
The Council has run a series of agile surveys of our worldwide network on the impacts, actions and shifting expectations of the global health emergency for the energy industry. Some highlights 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)
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.
Our surveys and scenarios highlight four emerging leadership themes:
- Responsible leadership – strengthening focus on social licence to operate, the ESG agenda, and managing negative ‘spill-over’ effects of digitalisation of energy
- Resilience – ensuring agility and reliability that goes beyond securing the flow of electrons and/or stocks of oil to resilience of people and supply chains, including non-energy resources and materials
- Rescue and recovery – designing fiscal stimulus policies and opportunities for new investment in more diverse pathways for affordable and inclusive climate neutrality
- Redesign markets – leveraging behavioural transformation and enabling circular and regenerative development for billions of better lives and a healthy planet
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.
World Energy Transition Radar
The World Energy Council is scanning signals from around the world to see through the current fog of uncertainty, enhance a strategic conversation on recovery plans and 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.
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.