Rethinking energy in the 2020s

The COVID-19 pandemic is changing the world in significant ways. There will be three dramatic tensions at play in the 2020s – between wealth, security and health – according to the latest analysis from the Shell Scenarios team, which explores the potential impact of the crisis. People will seek all of these to some extent, suggests Shell, but what societies choose to prioritise may differ. These priorities, along with different societal capabilities, such as public health, could shape the decade.

The analysis – titled Rethinking the 2020s – forecasts that future energy demand will grow again as populations increase and economies develop, but growth will be slower than in the past and will vary in all pathways. COVID-19 has reset the starting point for growth, and the nature of that growth will depend on economic recovery, government policy and consumer choices. For example, in a world that prioritises security, relatively depressed economic development puts growth in demand for total primary energy over the decade at only around half the level of other pathways.

Shell sees high growth in solar and wind energy in all pathways, but the energy system will still depend significantly on fossil fuels in the 2020s. In all pathways, demand for gas will continue to grow, but coal will peak sometime this decade. The outlook for oil varies. Oil demand is hit harder than natural gas or coal as the COVID-19 lockdown affected personal mobility most, which accounts for about 40% of overall oil demand, mainly in road and air transport.

In the past 20 years, the fossil fuel share of global primary energy demand has remained steady at around 80%. This falls by around 2.5% in the wealth and security pathways and more than twice that in the health pathway by 2030.

All pathways see a pause in the growth of CO₂ emissions, with the longer-term CO₂ profile determined mainly by populations and GDP growth and secondarily by the choices societies make as they emerge from this crisis.

Energy transitions do not go backwards, regardless of what society chooses to prioritise. Transitions are strongly technology-driven – which requires long lead times – and in most cases are already in progress.

In a world that prioritises health, the major reshaping of the global energy system could provide the trigger to reach the goals of the Paris Agreement, suggests Shell.