If COVID-19 Hasn’t Put Humanity at the Heart of the Energy Transition Debate, What Will?
I was brought up with the adage that you should "hope for the best and prepare for the worst". These words must surely resonate with many policymakers right now. So how should we plan for what's next, and possibly the worst?
As policymakers grapple with potential exits from the current crisis, the world energy community is reviewing implications for the speed and direction of global energy transition. The impacts are highly uneven as experienced by the energy sector and other areas of the economy, as well as different segments of society. This crisis has impacted at a moment when leadership mindsets are shifting to the customer centric energy future, as value creation moves closer to the end-user. It has magnified pre-existing stresses – from economic recession and climate change to more visible and deeper inequalities.
This Crisis is Nothing Short of a Global Stress Test of the Future of Humanity
With many expecting that the worst is yet to come, attention in the energy sector has turned to balancing the needs of survival and recovery. Corporate announcements from energy giants and leaders across the spectrum point to expectations that the pandemic will stall demand for oil and gas for a prolonged period and will accelerate the global shift towards cleaner power and fuels. Meanwhile, power sector executives highlight the fact that the crisis is accelerating digitalisation opportunities and presenting new challenges of resilience – for people and value chains, as well as cyber security.
To prepare a better exit from this pandemic we also need to ask: How and what does this fundamentally human health crisis teach us about the need to put humanity at the centre of the global energy transition debates?
Energy Demand Tsunami
Nearly 40% of respondents in our latest survey expect a “new normal” for energy systems, up from 15% just a month earlier, but they have diverging views on what ‘new’ looks like. More than 60% expect behavioural shifts and over 50% expect changes in social norms.
Three human-centric uncertainties will determine the success of exit strategies: trust, ambition and control. And as we exit from crisis, we must also anticipate the “tsunami” of pent-up energy demand that is building up everywhere and will hit post crisis. I call it a "tsunami" because of its strength, power and disruptive impact. The doubling of global energy demand by 2040 will fundamentally reshape an energy landscape that is ill prepared due to inadequate investment and preparation, largely caused through previous volatility and multiple crises.
When we talk about accelerating clean, affordable, reliable energy transition, particularly in a post-crisis era, we need to think about demand-side disruption as part of the ‘new normal’. We can’t keep overlooking the very real problem of inadequate energy access everywhere– in addition to the lack of basic access to any modern energy source that still affects a more than 850 million people in non-OECD countries. How can we avoid the risk of polarisation of End of the World vs. the End of the Week perspectives? We will also need to reconnect price with value and cost to society: climate neutrality, which is not the same as an ideological war on carbon, opens up new solutions including a clean hydrogen vector, sector coupling strategies and negative emissions technologies.
If Covid 19 hasn't taught us to place Humanity at the centre of the Energy Transition debate, what will?
Note: Our new WE Talks series will create space for a better quality, more inclusive, public discourse on global energy transition. Most importantly, one with humanity at the centre. Details of this new discussion forum will shortly be published here on our website and via our social media platforms - stay tuned.