Innovation and shift to a low-carbon energy market, biggest issues facing the World’s Energy Leaders - says new World Energy Council report
Embargo: 00.01am GMT - Friday 11 March 2016
• Innovation - in particular issues of storage, market design and climate resilience have become increasingly important drivers of change
• Commodity Prices and associated volatility have replaced energy prices as the number one critical uncertainty on the energy agenda for leaders and experts globally
• Unconventionals have lost traction for industry leadership in the current price environment. However, the position of LNG remains stable.
Beijing, China, Embargo 11 March, 00.01am GMT: Now in its seventh year, the World Energy Council’s annual survey of global industry leaders the - 2016 World Energy Issues Monitor - tracks the concerns of over 1000 global energy leaders. This year’s report identifies ‘A climate of innovation – Responding to the commodity price storm’ and for the first time highlights the views of China’s energy leaders amongst the over 30 national deep dives in this pivotal study.
Launched in Beijing, the Chinese Issues Monitor reflects the direction of the 13th five year plan which will be formally adopted this month and runs from 2016-2020. The analysis also reflects the importance which the government has placed on the commitment which it made at COP21 in 2015. As such, carbon reduction and lowering the carbon intensity of GDP is at the heart of the issues facing China’s energy leaders.
Christoph Frei, Secretary General of the World Energy Council said, “There is a climate of innovation amongst energy leaders across the world in response to the need to de-carbonise, the opportunities arising from decreasing renewables costs, and emerging new risks on the environmental and cyber fronts - and this in the midst of a commodity price storm.
“This year we see that industry leaders remain most concerned about commodity price volatility, global recession and climate framework uncertainty with new market design and electric storage featuring as new items of innovation focus. The quest to finance the transition to a more sustainable energy system remains an issue that keeps leaders busy at work, whilst there is a growing acknowledgement that adaptation to new resilience challenges, smart innovation and regional interconnection will be key parts of the solution.”
After the Paris COP21 talks, the World Energy Issues Monitor shows that we are entering a period of transition in the energy sector where there are three powerful drivers that will influence change and result in different ways of thinking about infrastructure and critical system components. To navigate these transitions with limited resources defined by a sluggish growth context, investors and governments have to be very clear what their strengths and priorities are. The report says that the three key drivers of change will be:
• Decarbonisation transition – a wide range of different new technologies are becoming a reality
• Market design transition - increasing shares of zero-marginal-cost
energy from intermittent renewables in combination with the decentralisation of
systems; increasing use of smart data, and decreasing entry barriers for new suppliers.
• Resilience transition - the impact of extreme weather events, cyber security threats and the energy-water-food nexus.
How companies and industry can work together to facilitate a move to a low carbon economy will be a key theme at the 23rd World Energy Congress which takes place in Istanbul in October 2016. The report’s findings provide information to leaders and policymakers in nearly 100 countries and guide the structure for the discussions at the Congress.
Every year, the World Energy Council’s Issues Monitor gives an assessment of the issues impacting the global and regional energy sector based on the views of the World Energy Council’s energy leadership community. It identifies the key uncertainties while highlighting the areas where action is most required to enable the sustainable supply and use of energy.
Download the 2016 World Energy Issues Monitor: https://www.worldenergy.org/publications/2016/world-energy-issues-monitor-2016/
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Media contacts: for more information and interviews contact Vivien Rees, Media Manager on +44 (0) 20 3214 0616 / email rees@worldenergy.org or Florence Mazzone mazzone@worldenergy.org
For press only: to see the full embargoed report: http://www.worldenergy.org/wp-content/uploads/2016/03/2016-World-Energy-Issues-Monitor-Full-Report.pdf
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Notes to Editors
The 2016 World Energy Council’s Issues Monitor
The World Energy Issues Monitor is the World Energy Council’s annual assessment of the issues impacting the global and regional energy sector based on the views of the World Energy Council’s energy leadership community. It surveys the views of over 1000 energy leaders in over 90 countries to identify the key uncertainties in the sector while highlighting the areas where action is most required to enable the sustainable supply and use of energy. The 2016 report includes assessment of six world regions and over 30 country deep dives. The report highlights 40 issues and their perceived impact, uncertainty, and urgency for global energy leaders and experts.
The ten key findings in the report are:
1 COMMODITY PRICES and associated volatility have replaced energy prices as the number one critical uncertainty on the energy agenda for leaders and experts globally. This movement of commodity prices, to a position of extreme importance in every region, reflects the global recognition for energy leaders of the severity of the current market environment. This puts enormous pressure on many key players throughout the energy sector.
2 INNOVATION in particular issues of storage, market design and climate resilience, have become increasingly important drivers of change within the energy transition. This is reflected by the strong move of this group of issues up the energy agenda.
3 UNCONVENTIONALS have lost traction for industry leadership in the current price environment. However, the trends for shifting portfolio allocations around more flexible, shorter-cycle investments have important implications as more conventional business models are challenged.
4 THE POSITIONING OF LNG has remained stable in this year’s Issues Monitor. The issue is recognised as a clear action priority, with a high impact despite the experienced market volatilities. What was previously regarded as an issue with significant regional implications has become an increasingly global issue, as volumes of exported LNG have grown and existing supply routes become increasingly challenged.
5 GEOPOLITICAL CONCERNS are closely linked to the current emphasis on commodity prices. Uncertainty around Middle East dynamics and a higher impact attributed to US policy has assumed increased importance in 2016. In contrast to previous year’s reports, the latest geopolitical dynamics add further weight to supply side fundamentals.
6 THE EFFECTS OF THE GLOBAL RECESSION which continue to be high on the agenda are closely linked with the role of China and India and the impact of slowing demand. This is having an impact on the confidence for the energy sector as a whole.
7 THE RISK FROM CYBER THREATS has moved up the agenda this year, specifically in North America and Europe. A clearer understanding of the nature of cyber risk and mitigation measures for energy infrastructure is necessary, in an environment of increasing interconnectivity and emerging technologies.
8 THE EFFECTS OF EXCHANGE RATE fluctuations and currency risk on energy operations and investments show a clear divergence between OECD and non-OECD countries. Energy leaders in non-OECD economies perceive this issue with a notably higher level of concern. In particular, emerging markets are impacted by the combination of falling commodity prices and export volumes at the same time as a surging US dollar which has put increasing pressure on corporate balance sheets.
9 THE IMPACT OF THE CONFERENCE OF PARTIES (COP21) agreement in Paris and the adoption of energy as a UN Sustainable Development Goal have reduced uncertainty associated with the issue of a climate framework. However, energy leaders remain cautious about the words being translated into actions without clear price signals.
10 THE LATEST NATIONALLY DETERMINED CONTRIBUTIONS commitments presented to the COP21 meeting in December 2015 signal a clear indication of intent. This has increased the expectation for a significant scale up of renewable energies. This has translated into a reduced level of uncertainty amongst energy leaders in this year’s Issues Monitor, moving renewables firmly to the action priority space.
Key regional disparities exist in the Issues Monitor; most noticeably for issues of coal, corruption, large scale hydro and nuclear, but also resilience issues such as the energy-water nexus and cyber threats.
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 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 the World Energy Congress
Running since 1924, the triennial World Energy Congress is the World Energy Council’s global flagship event that enables dialogue among Ministers, CEOs and industry experts on critical developments in the energy sector. As the world’s premier energy gathering, the Congress offers a unique opportunity for participants to better understand energy issues and solutions from a global perspective. Over the 90-year history of the World Energy Council, the Congress has been staged in 21 cities across the world and the 23rd World Energy Congress will take place in Istanbul, Turkey in 2016.
For more information about the World Energy Congress 2016 and to register, visit http://wec2016istanbul.org.tr/ and @WECongress