What keeps Future Energy Leaders awake at night?

Future Energy Leaders (FEL) have created their own World Energy Issues Monitor 2017.

On October 13th, 2016 a group of young, talented and ambitious energy sector professionals declared their vision for the future of global energy, outlining their priorities and agenda items at the World Energy Congress in Istanbul. It is remarkable in that the context of the declaration was set by two crucial issues of the energy domain: one, an enduring legacy issue of price volatility, particularly of crude oil, and the other, representative of inevitable structural shift in the energy world, the growing relevance of renewable energy in mainstream discussions on energy. This next generation of Future Energy Leaders (FELs), equipped with knowledge and talents, is ready to rise up to the energy challenges and lead the transition by creating sustainable solutions that would shape the future energy landscape.

Compare the FEL-100 map with other maps available in the data section.

 How to read the Issues Monitor

  • Issues with high uncertainty and high impact (“critical uncertainties” – in the upper right corner) include these, which will most benefit from multi-stakeholder dialogue and scenario analysis.
  • The issues on the high-impact/low uncertainty side are these where immediate action finds easy consensus (“need for action” – bottom right).
  • The low impact/low uncertainty ones include issues of perceived lesser importance but also “weak signals” (bottom left), which may be issues that are still badly understood.
  • The urgency of an issue is proportional to the size of its bubble.

 Analysis

Commodity prices have maintained their position as the monitor’s most critical uncertainty, mirrored in the global monitor as well. Over the past two and a half years, energy headlines across the world were largely dominated by the prolonged slump in crude oil prices – a net effect of the surge in world liquids production led by US shale oil and the weakening demand in China, the primary contributor to energy demand growth over the past decade, as it restructured its economic growth objectives. This was further compounded by the slowdown or the relative lack of pace in recovery in the major advanced economies in the world such as Japan and the Eurozone. Once the price slide set, it was then sustained by the late-2014 OPEC decision to change its group strategy from one of price support to one of market protection with no caps in individual member supplies.Although this has changed in recent times with a the late-2016 understanding between OPEC and non-OPEC producers on curtailing output, marking another change in priorities, the current price recovery is still far from sustainable as most of the underlying fundamentals have not undergone any major change.

Energy efficiency slightly reduces its uncertainty and gains more impact higher than that of the global monitor in comparison with the previous year, leading the action priorities in the FELs issues monitor. This is reflective of the FELs’ viewpoint that energy efficiency is, indeed, the ‘fifth’ fuel (behind oil, gas, coal and renewables) and is among the most essential elements when it comes to framing a sustainable energy framework for the future with its emphasis on waste reduction, mitigation of the environmental costs of energy production as well as consumption., cost savings and process optimization. By placing greater importance to energy efficiency, the FELs issues monitor also caters to the need for ensuring greater availability of energy for wider access and more energy independence. Furthermore, in importing countries like China and India where demand outweighs indigenous supply by a huge margin, energy efficiency can potentially become a critical mandate for sovereign policy making as well.

Renewable Energy and energy subsidies retain their previous year’s position among action priorities in this edition of FELs’ issues monitor as well as in the global monitor. Renewables, especially solar and wind, have become cost-competitive with fossil fuels in recent years. To accomplish climate targets and to build sustainable energy systems, FELs’ emphasis on according a greater importance to the development of renewables within the energy mix is a clear statement of priorities to policy makers worldwide and forces them to reassess other important issues like fossil fuel subsidies and continued investments in capital-intensive fossil fuel projects.

In this current issues monitor,electricity prices slightly reduces its uncertainty and gains more impact, forming one of the action priorities, resembling its position in the global monitor. The continuous decrease in renewable energy-based power generation costs across the globe can be assumed to have contributed to the decrease in uncertainty while strengthening the case for greater efficiencies in the legacy systems and incorporation of more non-fossil fuel based generation into the grid.

On the contrary, regional integration has declined its impact and escalated its uncertainty, thus moving from being one of the action priorities to one of the critical uncertainties to the FEL community, similar to the global monitor. FELs understand the importance of this issue to boost the exchange of energy at a regional level in order to ensure secure flow of energy and economic growth.  FELs believe that such integration ought to be facilitated and there is need for measures to be set and mechanisms to be realized. This is of special significance in light of recent developments in the global political and economic landscape marked by the rise of nationalistic tendencies in sovereign policymaking and diplomacy, skepticism towards free trade deals and regional trade partnerships and rise of a protectionist domestic market in exchange of a connected global marketplace. Brexit, election of Donald Trump as US President and strong emergence of right-wing politics in Western Europe are some of the examples that are a pointer to this trend.

Market design continues to be one of the critical uncertainties in the FELs agendas with a lesser impact than the prior year but with a higher impact than the global monitor. In the FEL’s vision, to embrace new frontiers, FELs urge the need to adopt new business models by means of modern technology and innovation, implementation of right policies and greater collaboration/engagement with customers.

In the FELs issues monitor, electrical storage takes over the place of geopolitical issues (US policy, China and India). Electrical storage is perceived as an issue with higher uncertainty and an increased impact to be placed as a critical uncertainty. FEL community believes that in order to realize the full potential of intermittency of renewables, effective energy storage systems must be developed.

Talent is an issue of focus for FELs in 2017 as they believe it has a great impact. The FELs vision places emphasis on its significance by inviting organizations and companies to provide an opportunity to enthusiastic, young energy professionals to engage and innovate.

Climate framework moves from its position of critical uncertainty in the global monitor to almost an action priority in the FELs issues monitor as the community believes that climate change is an undeniable fact and urgent actions and commitments are required to address its adverse impacts. The signing of the Global Climate Change agreement at COP 21 in Paris in December 2015 and its subsequent ratification and coming into force in 2016 is ample proof of the global consensus on the need for effective and concerted action/collaboration towards managing climate change.

Other issues that have experienced a movement towards a lower impact are coal and nuclear. It is evident today that coal is being gradually replaced by natural gas in many power plants in various parts of the world due to its indisputable adverse impacts on atmospheric air quality and contribution to global warming.  Nuclear, despite the fact that it does not contribute to greenhouse gas emissions, evokes high level of environmental concerns due to perceived safety issues and lack of adequate public awareness which affects the support it garners in the wider community.