A new report from the World Energy Council has concluded that demand for energy per capita will peak in 14 years-time. But is the council duplicating the errors made by the likes of Blockbuster and greatly underestimating the effect of disruptive technology?
At first glance, the latest report from the World Energy Council is good news and very much puts it in the optimistic camp. It forecasts that energy demand per capita will peak by 2030, and that by 2060 demand for electricity will double, with solar and wind generated power, which currently account for approximately four per cent of power generation, seeing their market share rise to between 20 per cent and 39 per cent.
It looked at three scenarios, and the playful organisation, that it is, proceeded to give these scenarios hilarious names designed to lighten the mood. Scenario one, it called Modern Jazz, this is a scenario in which the markets rule, creating a kind of sound in which technology innovation creates access for all. Scenario two is unfinished symphony (do you see what it is doing?) in which governments take the lead and work together, and scenario three, ‘Hard Rock’ in which there is a fragmented approach to energy policy and the result is a more localised response to energy.
It said: “In all three scenarios the carbon budget is also likely to be broken within the next 30 to 40 years. Oil will continue to play a significant role in the transportation sector representing over 60 percent of the mix in all three scenarios to 2060 and natural gas will continue to increase at a steady rate.”
This all begs two questions. Question one, what has the World Energy Council got against hard rock, which it seems to suggest is the less desirable option? The author would like to suggest it recruits some rock fans fast.
Maybe the second question is slightly less important than the merits of rock over jazz, but important nonetheless. Is it right?
As Simon and Garfunkel once said “The words of the prophets are written on the subway walls”, alas, they may not be in the World Energy Council report.
It is overlooking some key points – and before these are explained remember Apple, Netflix/Blockbusters and Encarta. No one predicted how smart phones would change the world, how they might, for example, play a key role in the demise of Kodak. Few predicted the fall of Blockbusters and the rise of Netflix, and few spotted how Wikipedia would make Encarta an irrelevance, but give Encyclopedia Britannica a second life.
Once a product, or service, gathers a certain momentum, maybe gains mass production in the case of smart phones, or indeed, before that, in the case of PCs, things can change at a breathless pace.
The Internet of Things will make our use of energy more efficient, this will be one of the main drivers of falling demand per capita.
The use of renewables will not lead to less demand merely a switch in the source of supply.
But self-driving cars, which will promote more economical driving, will support falling demand for energy.
But the real game changer will occur when the combination of falling renewable energy costs and energy storage costs converge, and technologies such as solar paint make it possible for more and more households to be energy self-sufficient. When this happens, at roughly the same time as autonomous cars become the main form of transport, the energy industry will change at a pace that has no precedent, and the forecasts made by the likes of the World Energy Council will look about as accurate as the five year forecasts from Blockbusters just before Netflix began to takeoff.
Or to put it another way, it needs to worry less about jazz and more about, after-all, as Bruce Springsteen once sang; “We learned more from a three-minute record than we ever learned in school.” Maybe the World Energy Council needs to listen to more records.