The energy industry is facing unparalleled and unprecedented times. Consumption is on the rise, while a digital and sustainable energy future is ahead. In the 2020 World Energy Markets Observatory report, Capgemini’s experts analyse the challenges within the energy industry and examine how it has progressed toward a greener future.
The report outlines the “why” of the need for action against climate change and the “how” of mitigating climate-change contribution while maintaining security of the energy supply.
Says Colette Lewiner, senior energy advisor to Capgemini chairman: “In 2019 worldwide economic slowdown combined with energy transition measures resulted in some improvements regarding climate change objectives. However, the world was not on track to meet the 2015 Paris agreement objectives.
However, “in 2020 our planet suffered from the COVID-19 pandemic and the economic crisis that followed, plunging our world into a long period of uncertainty.”
The 22nd edition of the World Energy Markets Observatory (WEMO), balances two opposing narratives: a continuation of trends related to the energy transition, climate change, technological advancement and energy markets evolution throughout 2019; and the dramatic and profound industry-wide impact of COVID-19 in 2020 that has, in many ways, reset the baseline and established a so-called “new normal.”
Energy consumption fell by up to 20% during peak lockdown periods, global greenhouse gas emissions dropped to the lowest levels since World War II, and the share of renewables surged to more than 40% in some markets.
The report brings together the changing dynamics in the energy market, from the rise of hydrogen to the increased need for grid stability and energy security.
Other topics of consideration include:
- Climate change & regulatory policies
- Energy transition & sustainability efforts
- Infrastructure & security of supply
Key findings from the report include:
- Despite energy demand slowing in 2019, global GHG emissions continued to grow.
Global energy consumption grew at a modest rate of 0.7%. While energy-related CO2 emissions are down 0.4%, total global GHG emissions have risen 0.6%.
- The use of renewables will accelerate as generation and storage technologies continue to mature.
Worldwide investments in wind and solar climbed 3% in 2019, while European capacity surged by 42%.
Batteries remain a critical enabler of at-scale adoption of intermittent renewable generation.
- Green recovery packages related to COVID-19 can help accelerate the climate change agenda.
COVID-19 may be an unlikely impetus for change if governments leverage economic stimulus bills and recovery packages to accelerate and prioritise “green” initiatives.
The research indicates some leverage in recovery packages to do this, including:
- increasing the share of renewables and green hydrogen, especially within the mobility sector;
- electrifying some usages, such as EV development;
- refurbishing buildings to support energy efficiency measures;
- enabling the smart grid at scale to support industry transformation as well as commodities and networks convergence;
- and encouraging incremental behaviour change among consumers, including a reduction in travel.
- Oil & gas majors are diversifying their business, though many need to invest more outside the core.
As carbon pressure on core products continues to mount, O&G companies will need to develop a long-term strategy to diversify their revenue from traditional production.
For many organisations, this means pursuing options outside the core area of business of pure oil and gas exploration and production. At present, the majority of organisations—with the exception of EU majors—invest just 1% outside the core business.
- Utilities’ transformation roadmaps must be reconsidered post-COVID.
As the energy sector grapples with the effects of the global pandemic, a transformation strategy based on the shift to energy services is no longer a viable growth opportunity.
Organisations must refocus their digital transformation agenda around the acceleration and the prioritisation of energy transition.
Smart Energy International will be hosting a webinar alongside Capgemini on 10 November discussing some of the outcomes of the report.
11h00 New York | 15h00 GMT| 15h00 London | 16h00 Paris | 16h00 Amsterdam | 17h00 Johannesburg | 20h30 New Delhi | 23h00 Singapore | 02h00 Melbourne
We invite you to join our experts as they review key findings from this year’s WEMO in the webinar: In pursuit of carbon neutrality: What the World Energy Markets Observatory reveals about our climate change and energy transition goals.
- The status of near- and long-term climate change goals outlined in the Paris Accord
- How green recovery packages could accelerate sustainability efforts
- Mitigating security of supply issues due to increased use of intermittent renewables
- Oil & Gas majors’ carbon neutrality strategy
- Electricity and gas retail market recovery
- Utility financial impact from COVID-19 and other geopolitical issues
- Capgemini’s key recommendations for a sustainable future
Philippe Vié, Energy & Utilities Sector Head, Capgemini
Colette Lewiner, Senior Energy Advisor to Capgemini Chairman
Elfije Lemaitre, Global Energy Lead, Capgemini