Planet Getting Green
By 2030, the global energy sector will be bristling with good news. There are five trends that will become the key drivers of the global energy industry a decade and a half from now.
The energy sector has probably undergone more rapid change in the last 10 years than in the previous fifty. In a matter of a decade, shale gas production in the US increased by more than a factor of 10, taking US gas imports to their lowest level since the early 80s. Solar costs have come down so considerably that solar is as cheap as regular grid electricity in some parts of the world, despite prices being previously projected to increase over the same period due to poor availability of silicon feedstock. After the shock of the Fukushima disaster, many developed nations are exiting from nuclear, despite reasonable public and government support before the disaster.
With that rate of change in mind, I can confidently predict that the next 10 years will be just as unpredictable as the last. Nevertheless, there are trends appearing that lead me to think that the headlines we’ll be reading about energy in 2030 will be largely positive.
Transporting myself to the future, here is my look at the top five trends that I think, and hope, we can expect to see.
A global carbon price is established
China’s national emissions trading scheme had some teething problems after starting in 2017, but by the early 2020s, the scheme was responsible for 50% of China’s emissions reductions. The presence of the scheme reduced concerns about carbon leakage and competitiveness in other countries, leading to more countries starting their own emissions trading schemes. All countries included the energy sector in their nascent schemes, with knock-on impact for fossil-energy prices and the attractiveness of investing in renewables worldwide.
After the European Commission decision to rectify the over-allocation of allowances in the EU Emissions Trading Scheme, the European and Chinese schemes were able to link. By the mid 2020s, the new Latin American and Canadian-Californian schemes had begun negotiations for inclusion, paving the way for a global carbon price by 2030. This means that there is one price, applicable all over the world, for the right to emit a tonne of CO2 into the atmosphere – providing a simple and powerful incentive to make the switch to clean energy.
Investment into renewables more than quadruples as divestment from coal becomes widespread
In 2013, the US stopped investing in new coal-fired projects overseas, that same year the World Bank Group limited its financing of new coal projects, and in 2015, the Norwegian Sovereign Wealth Fund pledged its intention to divest from coal. Spurred on by increasing focus on the long-term risk associated with stranded assets, pension funds, and other institutional investors followed suit throughout the 2020s, switching to investing in renewables on a global scale.
By 2030, there is over $1.2 trillion annually invested globally in renewables, more than five times the investment into fossil fuels.
Public engagement in energy soars in areas with community energy ownership
Many developed countries fell well behind their energy efficiency targets in the 2020s due to lack of public engagement. Consequently, governments were forced to focus more on decarbonising energy generation, leading to increased financial incentives and reduced regulatory barriers for household and community renewables ownership.
In 2030, individual and community energy generation contributes to more than 50% of the energy mix in developed countries, up from less than five percent in 2016. Not only that, but research shows that these areas have significantly higher uptake of energy efficiency technologies, vastly reduced energy consumption, and much lower resistance to previously divisive technologies such as onshore wind.
Politicians begin to see community energy ownership as the way to finally get citizens engaged in their energy future and to remove social and cultural barriers to the most affordable renewables.
Europe becomes the centre of production for next generation renewables
Having lost much of the production of silicon solar PV to China, European governments saw the potential of advanced manufacturing techniques for gaining a lead in next generation renewables and invested heavily in R&D alongside multinationals.
Europe became the centre of production for thin film solar PV, where reel-to-reel printing with in-process verification enables panels with near-silicon scale efficiency being produced at a fraction of the cost. 3D printing enabled lower cost and faster production of very large wind turbine blades by reducing the complexity and energy intensity of production. In 2030, Europe finds itself at the heart of renewables production once again, with growing markets worldwide for the next generation technologies it is producing.
The fossil fuel lobby is (almost) a thing of the past
Widespread electrification of transportation and heat, the move to a smart grid, and the vastly increased need for energy storage created huge opportunities throughout the 2020s for new companies to get involved in the energy sector. As expected, progressive incumbents and start-ups led the field initially, but in 2030, the market is dominated by companies previously strong in other sectors.
Food retailers are using distributed cold storage assets to provide large scale and affordable energy storage, vehicle manufacturers are selling energy management as a service, and IT departments of major companies have moved from a cost centre to a profit centre by utilising their UPSs to provide half hourly grid-balancing. These established companies know what market conditions they need for their new products to prosper, and how to get them. In 2030, the energy lobby looks very different. Powerful voices once concerned with agricultural subsidies or air quality targets are now asking for cost-reflective energy pricing and the removal of fossil fuel subsidies. The vested interests of the past are finding that their grip on power is in decline.
The ‘World 2030. Vision’ series of articles are reprinted by BRICS Business Magazine with permission from the World Economic Forum.