Embargoed until 00:01 EST / 05:01 BST September 12th 2019
Report by the World Economic Forum’s Global Future Council on Energy explores gradual and rapid energy transition scenarios, their impact on energy sector incumbents and on reaching the goals of the Paris Agreement
New York, September 12, 2019 – The World Economic Forum’s report, The Speed of the Energy Transition, released today, lays out the implications of a gradual versus a rapid energy transition, and identifies the signposts to help understand which path the world is following.
Coauthored by BloombergNEF (BNEF), Carbon Tracker and the Rocky Mountain Institute (RMI) the report’s gradual narrative outlines an energy world of tomorrow that looks roughly the same as that of today — implying that the global energy system has an inertia incompatible with the Paris Agreement.
The rapid narrative is that current and new clean energy technologies are rapidly supplying all the growth in energy demand. Together with new policies they will reshape markets, business models and patterns of consumption, leading to a peak in fossil fuel demand in the 2020s.
Businesses across the energy spectrum will be impacted significantly depending on whether the world will follow a path of a gradual or rapid transition. The rapid transition will bring new opportunities, but the need to adapt to change faster will be greater.
“The two different narratives set expectations for the future, and this in itself is important because it determines how governments, companies and individuals allocate their resources,” said Jules Kortenhorst, CEO of Rocky Mountain Institute and coauthor of the report.
The report describes how the two narratives — gradual and rapid — are distinguished by four main features and how views on these issues largely determine conclusions on where the energy markets are heading:
- At what point do renewables become mainstream enough to impact the incumbency?
- Is growth in new energy technologies linear or exponential?
- Will policy change be static, as policymakers remain cautious or dynamic, as new technologies open up new opportunities for better market design?
- Will emerging markets follow the fossil fuel path taken by developed markets or will they leapfrog to new energy technologies?
“It is important for policymakers and energy incumbents to understand whether the energy transition will be gradual or rapid. This report sets out the key issues to watch over the course of the next decade to see which narrative will prevail,” said Kingsmill Bond, Energy Strategist at Carbon Tracker and coauthor of the report.
These different modeling assumptions lead to different conclusions, and the report focuses on three: the likelihood of achieving the goals of the Paris Agreement; the timing of peak fossil fuel demand; and the significance of that peak in fossil fuel demand.
While it is not yet clear which narrative is likely to prevail, the report details recent developments that are used by advocates on both sides of the debate as well as some of the key factors to help establish which path the world is following.
“The energy sector is highly complex. This report provides a framework for navigating the mosaic of often conflicting narratives on how the energy system is evolving,” said Angus McCrone, Chief Editor at BloombergNEF and coauthor of the report.
Nick Steel, Rocky Mountain Institute, +1 347.574.0887, firstname.lastname@example.org
Veronika Henze, BloombergNEF, +1.646.324.1596, email@example.com
BloombergNEF (BNEF) is a leading provider of primary research on clean energy, advanced transport, digital industry, innovative materials, and commodities. With a team of experts spread across six continents, BNEF leverages the world’s most sophisticated data sets to create clear perspectives and in-depth forecasts that frame the financial, economic and policy implications of industry-transforming trends and technologies. Available online, on mobile and on the Terminal, BNEF is powered by Bloomberg’s global network of 19,000 employees in 176 locations, reporting 5,000 news stories a day. Visit https://about.bnef.com/ or request more information.
About Carbon Tracker
Carbon Tracker is an independent financial think tank that carries out in-depth analysis on the impact of the energy transition on capital markets and the potential investment in high-cost, carbon-intensive fossil fuels. Its team of financial market, energy and legal experts apply groundbreaking research using leading industry databases to map both risk and opportunity for investors on the path to a low-carbon future.
About Rocky Mountain Institute
Rocky Mountain Institute (RMI)—an independent nonprofit founded in 1982—transforms global energy use to create a clean, prosperous, and secure low-carbon future. It engages businesses, communities, institutions, and entrepreneurs to accelerate the adoption of market-based solutions that cost-effectively shift from fossil fuels to efficiency and renewables. RMI has offices in Basalt and Boulder, Colorado; New York City; the San Francisco Bay Area; Washington, D.C.; and Beijing.
About the World Economic Forum’s Global Future Councils
The World Economic Forum’s Global Future Councils are the world’s foremost interdisciplinary knowledge network dedicated to promoting innovative thinking to shape a sustainable and inclusive future for all.