Global energy demand on track to peak between 2020 and 2025

The latest World Energy Scenarios report from the World Energy Council, in collaboration with Accenture Strategy and the Paul Scherrer Institute, underscores how challenging it is for companies, governments and others to combat climate change despite per capita energy demand being projected to peak before 2030. None of the scenarios presented in the report foresee meeting the 2°C target agreed to in the UNFCC Paris Agreement.

Launched at the 24^th World Energy Congress in Abu Dhabi, United Arab Emirates, the report presents three plausible pathways to 2040 focusing on the impact of ‘disruptive innovation’ on the global energy system. The three musically-named scenarios are ‘Modern Jazz’, which represents a ‘digitally disrupted’ and market-driven innovative world; ‘Unfinished Symphony’, a future in which more ‘intelligent’ and circular economic growth models drive clean, affordable and sustainable energy transition; and ‘Hard Rock’, which explores the consequences of inward-looking policies and weaker and unsustainable economic growth, in a more fragmented world.

The updated report provides new insights into the broader and fast-shifting landscape of innovation, which is emerging from within and beyond the energy system and includes not only new energy technologies but also policy, business model and social innovations. The scenarios highlight how different combinations of innovation accelerators – so-called ‘constellations of disruptions’ – might trigger and scale to enable alternative energy pathways and disrupt existing value chains.

Key findings of the report include:

• Global primary energy demand momentum remains in line with the 2016 scenario modelling, with per capita energy demand projected to peak in the 2020s.
• Electrification extends to more uses and users, driving decarbonisation rates; however, the question of hard-to-abate sectors and non-electrified uses remains open.
• A new mobility revolution, which is dependent on infrastructure, is gathering momentum with the potential to disrupt the entire energy landscape in the longer term.
• Energy efficiency gains are critical to manage energy demand from industrial, residential and commercial sectors and to avoid reducing climate change momentum.
• New opportunities are emerging to provide energy-plus services in an increasingly consumer-centric energy system.
• Infrastructure innovation and investment, and proactive policies, are necessary to secure affordable decarbonisation and energy transition.
• New net-zero carbon pathways, including hydrogen, and carbon abatement mechanisms emerge and start to scale by 2040.
• Achieving Paris Agreement targets remains elusive, with none of the 2019 scenarios meeting the 2°C target agreed to in the UNFCC Paris Agreement.

Disruptive innovation is driving change in the energy system at an unprecedented scale and pace,’ comments Muqsit Ashraf, Senior Managing Director, Accenture Strategy, Energy. ‘To achieve competitive agility and manage the economic, environmental and social objectives of the new energy system, industry leaders will have to double down on their response to challenges from peak demand and value, managing emissions, investing in infrastructure and unleashing digital system-wide.’

Dr Tom Kober, Head of the Energy Economic Group of the Paul Scherrer Institute, adds: ‘The transformation of the energy economy is a systemic challenge where interdependencies between technologies, actors, markets and the environment play a decisive role on how new energy structures emerge and how successful future energy and climate goals will be achieved.’

Meanwhile, Ged Davis, Executive Chair Scenarios, World Energy Council, concludes: ‘Technological innovation, climate change and more tense geopolitics are disrupting the world of energy. These world energy scenarios provide the perfect tool for assessing these macro-uncertainties and crafting a strategic response for your enterprise.’