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Futures and Strategy Special Interest Group: first meeting on the Future of Energy (part 2/ 2)

April 25, 2014

The participants were asked to use the 3 horizons framework to develop the dynamics of the two scenarios “Two-Tier Energy” and “All is Well”, accounting for the potential impact of the Russian-Ukrainian crisis and other elements from the various presentations/discussions.

The Two-Tier Energy Scenario

A potent combination of public apathy, nimbyism and lack of joined up planning at a policy level contributes to a paradigm (horizon1) in which there is public opposition to ‘anything’ new being built. These faults, coupled with a series of external shocks – potential geopolitical conflict (as witnessed in Ukraine and potential conflict in the Middle East) or natural disasters – result in a situation in which energy supply can no longer match to energy demand. This situation is first observed in Japan (following the triple crisis) and South Africa – which both begin to experiences a shortage of energy in relation to demand. However, the extent of this discrepancy is slow to be noticed – although small signs appear… rising energy prices, people having to choose between “heating and eating”, government drives towards measuring and controlling usage – through smart meters with timing controls.

Horizon 2 witnesses a period of significant transformation with rolling black outs and increasing attention to how much energy we consume. In particular, previously unconsidered ‘everyday normal’ usage (e.g. being able to access the internet anywhere, anytime) suddenly become under scrutiny in a national drive to ‘use it better’. Some of the shortfall is met by scaling up existing power station – using deep-sea coal and overseas gas supplies – but this is inhibited by climate change commitments. Further, with national government’s increasingly reliant on foreign governments for energy supplies (either through fossil fuels imports or via regional electricity transmission), they are inhibited from applying diplomatic sanctions. Meanwhile movement of business and workers is increasingly dictated by energy availability (and reliability), with heavy industries relocating to countries or areas with sufficient energy – and workers following.

Recognizing that supply cannot keep pace with demand, governments focus their efforts (and investments) in two directions. Firstly, in discovering a ‘golden bullet’ of energy supply e.g. nuclear fusion and (long-distance) energy / electricity transmission from areas of plentiful energy supply. Secondly in reducing energy demand (energy-saving light bulbs being the first norm), significant investment is made in to the smart grid, and national campaigns are run to raise awareness of the wasted energy and to build a true understanding of the ‘true cost’ and energy usage of different devices.

By 2035 (horizon 3), there exists a new landscape of energy feudalism and self-sufficiency, in which two tiers exist. Certain businesses have established their own energy supply (e.g. mill-ponds), certain cities have created their own energy sources (e.g. geothermal bore holes), and these close their borders and become self-reliant. Yet, for the other ‘tier’ – energy remains expensive, internet access becomes a luxury – and home energy generation becomes the norm. For all, there is a high awareness of individual and everyday energy usage and the price one must pay for it.

The All is Well Scenario

The horizon 1 traditional energy paradigm represented by the large scale, centralised generation models with national grids and supply sources dominated by fossil fuels is facing serious challenges. The increasing demand for energy related to growing demographics (in particular in Asia and Africa) and new consumptions patterns, the adverse environmental impact of the high-carbon energy with resulting climate change, and on a longer horizon, the limit of  available reserves, are all creating strains that will only tighten in the foreseeable future. Concerns about energy security, energy access and environmental impact are regularly discussed, but changes are slow and mostly incremental.

Horizon2 encompasses a series of initiatives that tackle some of the issues of the traditional energy model and pave the way for future transformations. Improving energy efficiency both on the demand and generation sides and promoting carbon capture and storage solutions to reduce carbon emission are examples of such initiatives. Innovative experiments in green and renewable energy are observed (e.g., off-shore wind, geothermal in Scandinavia, house heating using biogas produced from waste, next generation nanotechnology-improved solar cells). The scaling up of such experiments would require both further research and significant infrastructure investment necessitating both solid public opinion support and a related political engagement that remains stable in the medium to long term. Given the “not in my backyard” attitude and the expected inertia when facing complex large scale transformations, a series of triggers would be necessary to boost public opinion and bring about the necessary momentum. Geopolitical instability in critical supply regions is a first step with the current Crimea situation representing a wake-up call for Europe as it highlights the vulnerability of the EU to Russian gas supply and pushes the need for diversification of supply. Other more dramatic triggers could be a huge grid meltdown with catastrophic consequences for the most vulnerable layers of the population or a terrorist attack on traditional energy infrastructures leading to supply shortages and catastrophic environmental damage.

In the premises of horizon 3, the public opinion outcry that follows the chain of adverse events will force a political response. Political agendas and public policies are put in place to support a diversification of energy sources and a steady engagement in renewables. This in turn will enable long term industry planning. Focused R&D energy programmes are initiated. Public-private partnerships are established. Innovative players enter the market. Decentralized generation models emerge. Charismatic public figures lead pilot experiments in cities or regions on a small enough scale to be manageable but large enough to be striking. By 2035, the spectre of “heating or eating” seems to be fading away despite the ever growing demand for energy. Solid steps have been taken towards new builds and renewable, promoting security of supply, energy equity and reduced climate impact. But solutions and the degree of progress will differ between regions/ countries and fossil fuels remain a dominant part of the energy mix.

Written by Alia Karaouni & Jim Ormond, Article 13 

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One Comment leave one →
  1. June 11, 2014 12:26 pm

    Very interesting. Some of the findings are close to Shell’s Energy Scenarios.

    It remains however difficult to derive policy implications that match with institutions that have a mandate to induce change.

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