Canada is entering the 2020s without a clear strategy to manage our energy resources and our consumption. It’s a global conundrum, with developed and developing countries alike starting and stalling on their energy transition plans. China is winning the electric vehicle race, with more than two million EVs on the road and production set to rise by 53% this year. At the same time, it’s leading the world in emissions, up 100 million tonnes in 2017. In France, anti-carbon tax protesters continue to make noise in the very city that gave us the Paris Agreement.
What’s keeping us stuck in limbo? At this year’s World Economic Forum, the Davos crowd ranked extreme weather their top concern; yet serious conversations were in short supply. I left Davos with five big takeaways about the current state of energy, and the transition challenges ahead.
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The first thing to know is, the energy outlook remains strong. The respected energy analyst Daniel Yergin told the Forum he doesn’t see “peak oil” until at least 2040 – “and peak doesn’t mean plummet.” Here’s one of the many reasons for that growth: 83% of the world’s population has never been on an airplane…yet.
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This growing demand for oil is at odds with a growing reluctance to finance it. Price volatility has spooked investors —three times since 2015, you’ve had a 40% change in the price of oil in 60 days. Today, the result is a U.S. $140-billion dollar investment gap, fueling uncertainty in the industry. “We’re going to need long-cycle projects to go with short-cycle projects like shale to ensure we have enough oil,” according to John Hess, the CEO of Hess Corporation.
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Business is in a space race for carbon-reducing ideas. There’s a lot of enthusiasm around technology, and companies are eager to share their success stories. Boeing, for example, has successfully tested a cargo plane using only biofuels. But technology is only part of the play. Regulations have to evolve, and consumer choices need to change, to push this over the finish line.
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Governments are faltering on climate leadership, from Emmanuel Macron’s blundered carbon tax messaging to the failed promise of Angela Merkel as the “climate chancellor.” It means there is still a deep disconnect in the public of the enormous challenge before us. The message at the Forum was that governments should tell people in blunt language about mounting costs and threats, and then set up programs to address the consequences.
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Exactly what the transition looks like is still unclear. As Daniel Yergin said, “There’s not agreement on what an energy transition is. Is it a more mixed system, is it a different system, and timing — you don’t really know what the technology is going to be how, and how they’ll interact.”
The most recent Intergovernmental Panel on Climate Change report says we only have 12 years left to avoid climate catastrophe. But Rachel Kyte, CEO of Sustainable Energy for All, highlighted some impressive progress: “Ten years ago, no one here in Davos would have confidently predicted the current low prices of renewable energy.”
A lot can still change in a relatively short time frame, when you pick a road and commit to it.