World Energy Scenario Foundations

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World Energy Scenario Foundations

The recent Covid-19 pandemic, the war in Ukraine, the conflict in Gaza, geopolitical realignments, the rise of AI, and the consequences of severe, climate-change-related weather events have all profoundly affected the global economy and global energy system. An in-depth project to build new scenarios to 2050 is needed. The Council is offering reflections on what a new set of scenarios might look like.

Our new World Energy Scenario Foundations build upon elements of the 2019 World Energy Council scenarios and the lessons learned since then. Enriched by an updated comparison of global energy outlooks, scenarios and visions has been combined with regional deep-dive dialogues, they offer a glimpse of the foundations on which a new scenario set might be built, including specific views on designing for the future to realise significant opportunities.

As societies approach the global energy transition rapids, they are learning to navigate between #Rocks and #Rivers as we chart the multiple pathways required for fairer, faster and far-reaching energy transitions.

In ROCKS, the global hopes and national promises associated with the Paris Climate Accord are threatened by intense pressures for energy security, industrial competitiveness, and other aspects of national self-interest—a “new tribalism.”

In many parts of the world, plans for the phasing out of fossil fuel have been moderated or delayed, and NDCs are barely being met. Energy subsidies are the most direct way to meet increasingly powerful populist demands in a world where leaders emphasize national strength rather than international agreement or responsibility.

Energy-related transitions continue where they are established and support security-related goals, but the idea of the whole world succeeding in meeting UN sustainable development goals seems to belong to a long-ago, simpler time.

In RIVERS, digital advances and market dynamics significantly re-shape energy supply and demand. Economic growth moves in sporadic yet dramatic bursts, rewarding companies that adopt new technologies and supply chain alignments ahead of demand surges.

As the old system of international collaboration comes under strain, new forms of cooperation at many different levels emerge, sometimes unexpectedly: sustainability projects within shared value chains, sharing of best practice among citizen groups, new efficiencies resulting from technology innovation, and ‘carbon clubs’ and other incentive-based mechanisms.

Increased digital transparency allows connected energy actors to make strategic choices in their domains rather than respond to policy edicts from above.

Driven by both national policy and business interests, in both scenarios there will be deeper electrification of many economies, with an increasing proportion of power supplied from renewable resources. In heavy-duty applications, where molecular fuels will still be required, there will be increasing substitution of fossil fuels by biofuels, hydrogen derivatives, and eventually synthetic fuels. And there will be growth in carbon capture and removal through natural or technological means. In both scenarios, the first new approaches to become established in any given arena will generally continue to be dominant as long-duration infrastructures are established and commercial competition drives down costs through learning curves and economies of scale. Competitive forces will drive explosive and disruptive paces of change once conditions are attractive enough to kick this off.

The big strategic uncertainty is whether these opportunities occur “sooner” or “later” and where they will occur, and the big strategic question for individual energy-system actors is whether it is better to risk being “too soon” or “too late” in changing. This strategic uncertainty raises additional questions for the different actors.