Innovation in Business and Energy
Because energy is everyone’s business
Year in review
We are now on the cusp of this century’s third decade. As we take stock of this calamitous year, we see the human and economic toll of the global Covid-19 pandemic – and the hope of a cure.
In terms of global energy consumption, 2020 will definitely be an “off-trend” year, with oil and gas consumption – and prices – reduced well below the year’s original expectations. But it is “off-trend” in another way, as more and more countries and energy firms are embracing the concept of “net zero carbon emissions” by mid-century. Those who have are beginning to share their ambitious aspirations for 2030. For these aspirations to be achieved, the years 2021-2030 will have to be “an off-trend decade”. Here’s why.
The ten years prior to the pandemic, 2010-2019, continued a long-standing trend – a trend of rising population (up 800 million over the ten years) and rising economic growth (up nearly 30% in real terms). This economic growth was fueled by a 15% growth in energy consumption. And even with a considerable contribution from hydro and nuclear power and renewables, the trend of rising consumption of crude oil, natural gas, and coal continued.
Consumption growth, 2010-2019, %
Crude oil – plus 11%
Natural gas – plus 24%
Coal – plus 4%
Total 2019 Fossil Fuels = 84.3%
Nuclear – down 4%
Hydro – plus 17%
Renewables – plus 300%
Total 2019 Non-fossil Fuels = 15.7%
Source: BP Statistical Review of World Energy 2020
Over these ten years, the level of atmospheric CO2 rose 5%, reaching 410 parts per million in 2019. CO2 emissions are likely to fall in 2020 – but as long as there are CO2 emissions, atmospheric CO2 will continue to rise. Over the next decade, global population will continue to grow. The questions at hand are these: how much energy will be required to fuel the next decade’s economic growth, and what fuels will be consumed in the process?
Does our experience in 2020 provide any hints to address these questions? Perhaps. For example, the pandemic will finally be controlled when enough people have been vaccinated. The emerging vaccines are the result of crisis-driven, break-neck technological innovation, with experiments on different approaches across the globe, and in many cases, strong cooperation between government agencies and business entities. Technological innovation in energy will also be required over the coming decade, although it is questionable whether a pandemic-like crisis mentality will prevail for research and development in the energy sector.
The pandemic – and its eventual demise – also point to some worrying aspects of the problem. Because technological innovation, even if combined with government and business support, can only go so far. A vaccine that requires low-temperature storage is of little benefit in countries with incompatible storage and distribution infrastructure. And human conventions – such as seeking the companionship of others instead of wearing masks and social distancing, or fearing vaccines rather than anticipating them with hope – will defer the time by which Covid-19 is conquered.
Similar challenges will confront this decade’s energy aspirations. We believe that a given country’s resource endowment – including built infrastructure – will play a huge role in determining their energy needs and the fuels they use. And the role of human conventions – particularly in terms of personal choices on energy consumption and specific fuel use – will also loom large. Some see the disruptions of 2020 as establishing new human habits – like working from home, and drastically reducing travel. But there is also the likelihood of a return closer to “business as usual”. After all, we humans are social creatures. That said, we are (allegedly) capable of learning!
With your support, we look forward to another series of business and energy talks in 2021. We are considering a few format changes, and would welcome any advice you may wish to share. Our goal, as always, is this:
To create a diverse, global community that works to change today’s polarized public discourse about energy sources and uses, and that endeavors to identify a portfolio of business-based innovations that solve real world problems.
Wishing you and yours Peace in the New Year.
Our Season’s Greetings!
David Gautschi and Dave Nagel