It is impossible to know what the future will hold. We do not know yet how long we will need to “self-isolate”, to work from our homes, to avoid seeing our friends and loved ones. Short of a magic crystal ball, we have two options: wait and see what comes our way, or use what information we have to prepare for and shape what comes next. I, for one, choose the latter. We can, and should, use the information at hand to prepare for the post-COVID crisis future by using alternative scenarios.
We know that the immediate impacts of responses to the COVID-19 crisis are triggering both positive and negative spill-over effects. We know that, at its most extreme, the resulting unprecedented disruption of activities has both reduced pollution levels and muddied the long-term outlook for human security and planetary health. We know that the crisis has triggered a ‘prefect storm’ of conditions favourable to bankruptcy across the energy sector. The combination of uncertainties creates an overwhelming array of scenarios. However, through ongoing surveys of the World Energy Council community, we have begun to make sense of the chaos.
The results have taught us that the outlook will not likely be a simple return to ‘normal’, but have helped us to also understand what a “new normal” may look like. Three sets of critical uncertainties are at play, including potential mutations of the virus, ongoing economic and trade impacts, and overarching societal shifts (you can read my recent blog investigating these uncertainties here). It is the interaction of these uncertainties that suggest the potential for cascading crisis - responses to the health crisis might trigger an economic crisis, which in turn triggers global chaos and/or new order.
The resolution of any of any of these crises does not happen in a vacuum. Even as countries ‘hammer down the peak’ the subsequent ‘dance’ will be influenced by pre-existing dance music. In our 2019 World Energy Scenarios, we suggested three types of dance music are already in play.
Four Scenarios and Early Indications
The pre-existing dance music and three interacting sets of uncertainty can be combined to create a set of four plausible and alternative medium-term scenarios: Pause, Rewind, Fast Forward, and Stop and Re-record.
- Pause: A scenario in which the global recovery is predominantly well-managed, tensions are reduced, and we ultimately see a return to growth. This scenario results in little change to the existing order and emphasises slow, incremental improvement.
- Rewind: A scenario involving the contraction of global value chains, decoupling of trade, and an emphasis on national security. This scenario moves away from the existing order toward the new, while still emphasising only slow, incremental improvement.
- Fast-forward: In this scenario we are likely to see new global leaderships emerge in the path to recovery, large-scale global renewal and investment in resilience buffers. This scenario involves radical policy shifts while working toward a return to the existing order.
- Re-record: A scenario involving bottom-up flips and self-organisation as well as a focus on regenerative development. This scenario moves away from the existing order toward the new and involves radical policy shifts.
These scenarios are already being used by the World Energy Council community to explore, navigate and prepare for what comes next. We have begun to develop a strategic early warning system by using the scenarios to identify, interpret and track new signals of change, and make better sense of the emerging direction of exit from crisis. And in doing so, we have begun to clarify the implications for a new global energy leadership agenda for managing an orderly and successful global energy transition. Notably, we expect a short-term rush to resilience, a focus on new digital operating models, and a bottom-up flip with the possibility of radical policy change. Stay tuned, as we explore further these early indicators – and direct implications for the speed and direction of energy transition – in the coming days.
We are committed to enabling today’s energy transition experts through actionable insights. The Council’s COVID-19 surveys are ongoing and active, utilizing the information and intel as it comes in to continuously hone our scenarios and provide adaptive guidance as we navigate this unprecedented crisis – and as we know more, you will know more. Even as we experience crisis, remember that we can build societal resilience through energy transition if we pull together as a worldwide community. At the World Energy Council, we are using the resources at our disposal to do just that.
Stay tuned for more as we learn through our ongoing COVID-19 surveys, and be sure to read the preliminary findings on business continuity and planning, implications for energy systems and energy transition, and critical uncertainties.