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Generation Y’s views on the future of energy in Europe (part two)

April 4, 2014

In last week’s post, we described the key drivers for change identified by Generation Y, and outlined the dimensions of future scenarios. In this second post, the scenarios are described in more detail and some summary conclusions attempted.

Scenario dimensions

The two most unpredictable forces Gen Y saw as affecting the future of energy were:

1. Will energy be affordable and the supply secure or not?

2. Will public opinion allow new build and renewables?

 

From these we create 4 scenarios:

04thApr2014

 

In “Two tier energy”, European governments fail to generate sufficient public support for new build / renewables, and so fail to create appropriate policy environments for the new build required to ensure a diverse energy mix. With an uncertain environment for energy investors exists, there is a lack of new generation investment.

The rich will manage to get their energy from private contracts, yet the poor are hit the hardest due to the increasing and unpredictable rates for energy. Meanwhile the competitiveness of industry, lacking cheap energy, will be damaged. This in turn results in global corporations relocating elsewhere, further exacerbating the intense structural and socio-economic damage.

“Net energy importer”:   Like the ‘Two Tier’ scenario, wide-spread lack of public support, including a significant NIMBY-ism, continues to prove a barrier to any progress on new build or a significant move towards renewable energy. This places ever-greater reliance on the (now dwindling) national energy resources (e.g. North Sea) and on imports to supplement the existing energy infrastructure.

Recognising the perilous position and increasing reliance on overseas supplies, greater profits can be accrued by international energy firms and their respective countries of operation. Governments would be required to expend an increasing percentage of national income on buying overseas energy, whilst using subsidies to keep it notionally affordable. Yet it is unlikely subsidies would stretch as far and wide as required, resulting in the vulnerable, poverty stricken and elderly all being disproportionately affected by fluctuating prices. Any market for renewables would remain stifled.

“Investment failure”  sees  the unusual situation in which public support is positive towards new build and renewables, yet energy does not become more secure or affordable. This situation could arise due to government instability, which fails to generate the support required for significant investment, or wider political short-termism.

Given the support of government, industry would be favoured by this scenario. Yet, for the general population, despite their acceptance for the need of new build / renewables as necessary, this is not reflected in action towards creating secure and affordable energy.

“All is well” is the most optimistic of our scenarios with affordable, secure energy with positive public opinion. Public opinion may have been swayed by a talismanic figure such as a Beckham or modern day Churchill lending their support to ‘green’ or a huge disaster such a large numbers of winter deaths when power supplies fail could act as a negative catalyst. 7

In this most optimistic scenario, everyone ‘wins’. The general public gets cheaper and more secure energy; governments have local, secure and cost-effective energy. Additionally, energy companies can move forward with long-term planning. The only real losers are those individuals wedded to carbon intensive fuels.

Summary

A key factor is what Generation Y think and do, as this is the generation which will increasingly be charged with dealing with the challenges (both from a professional perspective and as consumers). As the first digitally native generation, these individuals bring new values, behaviours and perspectives. Research has shown that whilst the % of Generation Y who report that they “buy as many green/eco-friendly products as they can” is up to 36% in 2012, only 51% said they made an effort to cut down on electricity use to save energy, compared to 68% of ‘baby-boomers’ in the 1970s. Similarly, massive increases in the use of smart and mobile technology places new demands on when and where energy is required, demands that simply would not be considered 20 years ago.

Policy makers need to consider three areas in order to navigate these scenarios:

1. To build public support – there needs to be a clear communication of risk in order to build shared understanding, particularly amongst Generation Y, of the dangers of not investing in new infrastructure.

2. Good, robust and unwavering governance is required from national and European leaders to take the difficult short-term decisions, which will bring long-term benefits.

3. A clear understanding of how energy is currently being used, and how this will change as new generations move through the workforce and society is required to ensure energy scenarios are fit for the future.

 

Written by Jim Ormond, Article 13 and Gill Ringland, SAMI Consulting

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