2015 WORLD ENERGY TRILEMMA REPORT: AMBITIOUS CLIMATE FRAMEWORK NEEDED NOW, SAYS ENERGY SECTOR
- Global policy uncertainty is one of the biggest obstacles to gaining the $48-53 trillion of investment needed to address climate challenges.
- Proactive engagement between climate negotiators and industry implementers will be essential to ensuring measures are deliverable and targeted.
- The World Energy Council Report calls for a stable and meaningful climate framework, guided by clear emissions targets and a flexible approach to the different needs of countries.
MERIDA, MEXICO, 27 MAY 2015: Development of a clear climate framework and a global emissions target is essential if $48-53 trillion for a new sustainable energy infrastructure is to be delivered, according to a new Report from the World Energy Council.
The findings are uncovered today in the fifth edition of the energy leaders dialogue series, the World Energy Trilemma Report, ‘Priority actions on climate change and how to balance the energy trilemma’, released by the World Energy Council and project partner Oliver Wyman, along with the Global Risk Centre of its parent Marsh & McLennan Companies, to government representatives as they meet for the sixth Clean Energy Ministerial (CEM6) in Merida, Mexico.
Drawing upon the insights of more than 2,500 industry leaders and policymakers from across the globe, the Report reveals the urgency with which energy sector leaders view the need for negotiators to agree on a climate framework and a global target for greenhouse gas emissions. Such a target, clearly defined and monitored, would enable the industry and finance sector to unlock investment and facilitate the transition to a sustainable energy future.
Joan MacNaughton, Executive Chair, World Energy Trilemma, commented: “The energy industry believes the time is ripe for stronger action on climate change, and it is more than ready to play its full part, building on the examples of leadership which some businesses are already showing.
“Our findings show that there is a real thirst for vigorous implementation of strong commitments - the focus now needs to move from negotiation to action. Unless this happens, it will become increasingly difficult to deliver across the three trilemma goals of energy security, energy equity and environmental sustainability.
“As the energy industry is telling us, it is now time to get something done.”
The Report identifies five policy enablers which are key to the successful transition to a low carbon energy system:
- Remove barriers to trade and enable technology transfer, including tariffs on environmental goods and services, and protecting intellectual property rights.
- Set a carbon price to level the playing field and redirect investment towards low-carbon solutions.
- Provide the right policy signals to scale up investment, accompanied by a portfolio of bankable projects to attract more private capital.
- Place greater emphasis on demand management including increasing energy efficiency across all sectors covering residential, commercial, industrial and transport.
- Prioritise and build platforms for innovation and RD&D, principally in the investment case for new technologies, as well as a new era of collaboration between the public and private sectors.
Christoph Frei, Secretary General of the World Energy Council, speaking ahead of the CEM6 meeting said: “It is increasingly clear that traditional mechanisms, known technology, policy and rates of innovation will not deliver the change needed to balance energy security concerns within countries and meet global climate targets. New and ambitious thinking is needed.
“This new thinking will require stable economic and policy platforms in order to boost investment and establish clear, consistent goals that guide the development of new energy infrastructure that will support the lower carbon transition.
“Energy leaders have identified five priority action areas. These actions must be accompanied by accelerated innovation in business models, processes and regulatory frameworks to accommodate new technologies, market design and a focus on resilience of energy infrastructure.”
The urgency with which a framework is required is evidenced by predictions around major changes in global energy demand which is set to change dramatically in the period to 2050. As the economies of emerging countries such as Brazil, India, China and Southeast Asia grow, they will use more energy and their role in the negotiations as well as their commitments will be critical.
Asia is set to produce almost 50% of global economic growth by 2050, with its share of global total primary energy consumption rising between 45 and 48%. The Middle East and North Africa will continue to be heavy users of energy - their economies are set to triple by 2050, stimulating a doubling in energy demand during the same time. Despite European GDP doubling over that period, with improved energy efficiency across the continent, energy demand will remain largely unchanged.
François Austin, Global Head of Energy Practice, Oliver Wyman, commented: “Reducing policy uncertainty is essential. This will enable policy makers and business leaders in the energy and financial services sectors to work within a robust framework for making critical investment decisions. Clear outcomes from the Paris negotiations are critical to moving forward with innovative business models and market designs that reflect and support the new and changing dynamics of the energy sector.”
Alex Wittenberg, Oliver Wyman Partner and Executive Director, Marsh & McLennan Global Risk Center, noted: “Transitions in the energy sector and the evolution in energy supply and demand will have huge impacts across all economic sectors. Companies have new and evolving choices on how they source and use energy now and in the decades to come and policy clarity is essential to accelerate the pace of transition.”
Further information about the World Energy Trilemma Report, including additional data and infographics, is available from www.worldenergy.org.
Download the World Energy Trilemma 2015 infographic: https://www.worldenergy.org/wp-content/uploads/2015/05/Tackling-policy-uncertainty.pdf
ENDS
Enquiries
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Notes to Editors
In addition to the Clean Energy Ministerial meeting, the insights of the Report will be shared with the lead negotiators of all countries involved in the 2015 climate negotiations as well as with the 30-member Open Working Group on the new sustainable development goals.
About the World Energy Trilemma Report 2015: ‘Priority actions on climate change and how to balance the trilemma
- The Energy Trilemma recognises the complex interwoven links among three core dimensions – energy security, energy equity, and environmental sustainability – and their importance to ensuring sustainable energy systems. In balance and considered together, these three dimensions are a prerequisite for prosperity and competitiveness of individual countries.
- This is the seventh World Energy Trilemma Report. Previous reports analysed global financing mechanisms for energy, the implications of inaction over climate change, and a 10-point plan for a sustainable energy future
- To date, more than 2,500 government ministers and industry leaders have contributed to the World Energy Council Energy Trilemma framework. This year’s Report included contributions from the private sector (60%) and public sector (40%).
- The Report is developed in partnership with Oliver Wyman, along with the Global Risk Centre of its parent Marsh & McLennan Companies. Oliver Wyman is a global management consulting firm that combines deep industry knowledge with specialised expertise in strategy, operations, risk management, and organisation transformation.
About The World Energy Council
The World Energy Council is the principal impartial network of leaders and practitioners promoting an affordable, stable and environmentally sensitive energy system for the greatest benefit of all.
Formed in 1923, the World Energy Council is the UN-accredited global energy body, representing the entire energy spectrum, with more than 3000 member organisations located in over 90 countries and drawn from governments, private and state corporations, academia, NGOs and energy related stakeholders. The World Energy Council informs global, regional and national energy strategies by hosting high-level events, publishing authoritative studies, and working through its extensive member network to facilitate the world’s energy policy dialogue.
Further details at www.worldenergy.org and @WECouncil
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 26 countries, Oliver Wyman combines deep industry knowledge with specialised expertise in strategy, operations, risk management, and organisation transformation. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.
About The Marsh & McLennan Global Risk Center
The Marsh & McLennan Global Risk Center draws on the combined expertise of Marsh, Mercer, Guy Carpenter, and Oliver Wyman to address the major threats facing industries, governments, and societies. Working with research partners from around the world, the Global Risk Center highlights critical challenges and bring together leaders from different sectors to stimulate new thinking and practices. Marsh & McLennan Companies (NYSE: MMC) is a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With annual revenue of $13 billion and 57,000 colleagues worldwide, Marsh & McLennan Companies provides analysis, advice and transactional capabilities to clients in more than 130 countries. Visit www.mmc.com and follow us on Twitter @MMC_Global.
Vivien Rees, World Energy Council PR Manager
Phone: ( 44) 20 3214 0616 Email: rees@worldenergy.org