Mr Peter Schwartz, Chairman of the Global Business Network and renowned futurist, gave a keynote address on “Assessing the Energy Landscape for Today and Tomorrow” at the Singapore Energy Conference held last week. He is also a member of the International Advisory Panel (IAP) on Energy set up by the Ministry of Trade and Industry (MTI) to “provide insights and perspectives on emerging trends in the global energy arena, and to advise on the strategic directions for the energy sector in Singapore”.
In his presentation, Mr Schwartz focused on five key questions for the energy future:
- How much will income grow?
- How much will efficiency contribute?
- What is the future of conventional oil and gas?
- How much will greenhouse gas matter?
- What is the future of low carbon technology?
These five questions will define how our energy future would look like. Let’s take a closer look at Mr Schwartz’s thoughts on the questions.
How much will income grow?
- The world is growing richer with total global GDP increasing 3.5 times and change in global GDP per capita increasing 2 times over the last 35 years.
- Each country’s size, history and density matters.
- Related questions include where the growth in income comes from and how widely distributed is the income growth.
- The reality is that people want a higher standard of living, more and bigger cars, and to travel more, thus increasing our energy usage.
How much will efficiency contribute?
- Are the efficiency gains due to marginal technology improvements? Due to major leaps in technology that decrease demand? Or due to major changes in how we do things that decrease demand?
What is the future of conventional oil and gas?
- Although oil could become limited, the reason is not because oil supplies are running out but due to lack of technology and investment.
- What are the price dynamics of oil and gas?
- How political will supply be?
How much will greenhouse gas matter?
- The climate realities are that climate change is underway now with increasing frequency of extreme events, causing high impact on vulnerable societies. The climate will be increasingly variable and extreme.
- The policy realities are that climate change policies is chaotic, inconsistent and variable. Climate change policies need to become coherent, effective and global.
What is the future of low carbon technology?
- How fast will solar become cheaper?
- Will energy storage be more effective?
- We will be using more coal no matter what.
- Cleantech investments would come from venture capital, corporate R&D spending and government funding.
- The use of hydrogen would involve a major transition and cannot happen quickly.
- The technhology realities are that all technology have major issues.
- There will be a convergence between transportation fuels and electricity. The future of transportation will be electricity-driven based on charging vehicle batteries or using electricity to produce hydrogen as a vehicle fuel.
Based on the questions, 4 energy scenarios are developed as shown below. How we response to the challenges and opportunities posed by the questions will decide how our energy future scenarios play out.
Which energy scenario do you wish to see? Is your company ready for such a scenario? We think that scenario planning is useful for companies to map out their future and be ready for future challenges and opportunities. If you are interested in scenario planning, check out Peter Schwartz’s work on scenario planning and his books, The Art of the Long View.