16 September 2011

World needs energy system resilient to all changes

It is in the nature of the energy sector to be able to cope with new uncertainties each year. Therefore we must now make all our efforts to build a world energy system resilient to all changes and accidents, said Pierre Gadonneix, Chairman of the World Energy Council, at the world energy leader’s gathering in Brazil.

Pierre Gadonneix, Chairman of WEC, Dr Christoph Frei, Secretary General of WEC and Norberto de Franco Medeiros, Chair of the WEC Brazilian Committee at press conference.

The only energy system that is capable of resilience is the one that allows economic development for all in a way that is environmentally and socially acceptable and sustainable. And we must come together now to achieve this goal, Gadonneix said.

“To create such a system we must give investors the long term signals to invest now in diversified forms of energy, in infrastructures, in energy efficiency and in R&D to prepare for the future."

The key messages are drawn from the World Energy Council’s “2011 Global Energy Issues Survey”, which was launched at WEC’s World Energy Leaders’ Summit held in Rio de Janeiro.

The summit brings together the world’s leading energy figures under the theme of “2011, a Year of Change for the Energy Industry?”

“This survey highlights the issues that are keeping energy leaders awake at night. The uncertainty around a long term climate framework will simply lead to wrong investment decisions,” said Christoph Frei, Secretary General of the World Energy Council.

“The developments in the Middle East and North Africa region and the tragedy at Fukushima have further added to the pressure to adapt and represent a significant set-back in solving the global energy challenges,” Dr. Frei said.

For the 3rd consecutive year, the “2011 Global Energy Issues Survey” has gathered the views of WEC’s energy leadership community, which is drawn from energy leaders in over 90 countries, to identify the key drivers in the Global Energy Agenda.

For the 3rd consecutive year, the “2011 Global Energy Issues Survey” has gathered the views of WEC’s energy leadership community, which is drawn from energy leaders in over 90 countries, to identify the key drivers in the Global Energy Agenda.

Key drivers in the energy sector. Critical uncertainties (red), geopolitical (brown) and the potential energy solutions requiring immediate action (green). To see larger map click here

Critical uncertainties

The survey provides an insight into the critical uncertainties affecting the energy sector, identifying key trends and highlighting the areas where action is required to ensure the sustainable supply and use of energy for the greatest benefit of all.

In 2011, the critical uncertainties space is dominated by three major macroeconomic and geopolitical issues:

*The absence of a global climate framework and the lack of progress towards a significant agreement between the big blocks is keeping this issue as the dominant critical uncertainty

*The “political spring” in the Middle East / North Africa region with its impact on Libyan oil supply has affected energy markets globally and  increased concerns over political instability

*Fukushima has pushed the nuclear renaissance from consensus into a much more uncertain position

Taken together and factoring in the 2010 oil spill in the Gulf of Mexico, these events have put large scale accidents on the top of Energy Leaders’ radar.

In comparison to 2009, macroeconomic risks related to the financial / economic crisis have lost their dominance as a key concern for the energy sector.

However, the crisis is still looming and issues including energy price volatility, commodity prices and capital market access remain in an alert position, similar to 2010.

Solutions requiring action

Looking at the potential energy solutions that require immediate action (shown in green above) three topics are on top of the agenda:

*Renewable energies which remain a priority despite investors’ prudence in a current economic climate

*Energy efficiency which will require investment in capital, education and institutional frameworks to promote adequate behaviour and solutions

*The quartet of smart grid, storage, electric vehicles and sustainable cities has been increasing in influence since 2009 and these are now in a solid position to play a significant role in energy developments

*Carbon capture and sequestration (CCS), with higher perceived impact the uncertainty has decreased. However, without a clear climate framework, CCS remains in a challenging position due to a lack of effective financing mechanisms and incentives to develop this technology beyond pilot

Hydrogen is not currently seen as playing a big role as a clean energy vector while the energy-water nexus is seen as rapidly growing in concern.

“It strikes that the very issues that in previous years were seen as a substantial part of the solution are all taxed with higher uncertainties” highlights Dr. Frei.

“The risks associated with these issues, ranging from physical accidents over regulatory uncertainties to financial risks, have increased and managing them will be an important part of the agenda going forward”.

The findings from the survey also show that Latin American countries see a greater role for electric vehicles and biofuels in meeting our energy needs.

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