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World Energy Issues Monitor 2019

Managing the Grand Energy Transition

The World Energy Issues Monitor provides a snapshot of what keeps CEOs, Ministers and experts awake at night in over 90 countries. The monitor helps to define the world energy agenda and its evolution over time.

It provides a high-level perception of what constitute issues of  critical uncertainty, in contrast to those that require immediate action or act as developing signals for the future. It is an essential tool for  understanding the complex and uncertain environment in which energy leaders must operate, and a tool through which one can challenge one’s own assumptions on the key drivers within the energy landscape.

This tenth iteration of the monitor is based on insights provided by more than 2,300 energy leaders to provide 50 national assessments across six world regions. In addition to this report, the interactive online  issues Monitor tool allows the visualisation of the data that underpins the Issues Maps. This tool has been developed in collaboration with our Project Supporter ARUP.

World Energy Issues Monitor - Global

World Energy Issues Monitor - Europe

World Energy Issues Monitor - Italy

This year’s survey provides a unique reality check and horizon scanning of persistent and emerging concerns involved in whole energy systems transition. Each Issue Map provides a visual snapshot of the uncertainties and action priorities that energy policymakers, CEOs and leading experts strive to address to shape and manage successful energy transition.

The World Energy Issues Monitor observes 4 key strategic priorities for energy leaders to consider in 2019:
  • Market design rules will need to be updated to incorporate the growing move towards decentralization
  • The accelerating pace of electrification remains the focus for energy leaders, with Renewable Energies ranking highest in terms of impact.
  • Global strategic competition and the rise of nationalism will impact the pace of the energy transition
  • Lithium and cobalt will play a growing role in commodity market risks, traditionally dominated by oil and gas price fluctuations
MARKET DESIGN

The growing abundance of cost-competitive renewable energy technologies (especially solar) is accelerating transition towards decarbonised,  decentralised and digitalised energy systems. Market design rules (from electricity trading to grid operation rules) will need to be updated to integrate a growing share of intermittent renewable energy supply (RES) from a diversity of zero and low carbon sources. Maintaining investment in electrical supply security, grid reliability and resiliency emerges as a strategic priority.

This year’s survey responses and follow-up commentaries indicate that innovation in market design is of significant leadership interest and key in realising new opportunities for integrating cost competitive renewable energy at scale while also utilising existing centralised systems. How energy leaders face this new dynamic will determine the market design of the energy sector as it diversifies the supply mix with more RES. It is worth noting that survey results indicate that innovation is not just about new technologies shaping market design. The synthesis of commentaries clearly indicates that innovation in policy and regulatory reform are just as significant as technology innovation.

4

Oil and gas prices played a major role in 2018 influencing the tracking of commodity prices on the global map. They will continue to impact the speed and direction of the global Energy Transition.
It is noteworthy to point out the emergence of other resources, such as cobalt and lithium, as key commodities which will have an ever-expanding role in price fluctuation concerns, which traditionally have been dominated by oil and gas prices.

2

The accelerating pace of electrification remains the focus for energy leaders, with RES ranking highest in terms of impact. Nevertheless, energy leaders remain concerned about the rapid scalability of renewables and perceive fluctuating oil prices and trends of nationalism as risk to successfully managing a global Energy Transition. Overall, as showcased in the national commentaries developed by the Council’s Member Committees, the focus on global Energy Transition centres on four drivers – Decarbonisation, Decentralisation, Digitalisation, and Demographics as well as the disruptive potential of impacts from their interactions.

3

Survey responses indicate energy leaders are conscious of the political economy impact of large-scale RES development. Whilst strategic  competition is focused on high tech ecosystems (digitalisation), rather than energy resources per se, the emphasis on commodity prices highlights current concerns about access to resources required for electrical storage. Furthermore, the new geopolitics of technology (data protection, cyber security) raises questions about the role of digitalisation in energy in the long term. Many national Member Committees identified the rising trend of global strategic competition and nationalism as critical  uncertainties for the energy sector.

Policy developments in China and the US, as well as trade tensions between them, are a source of uncertainty for energy leaders worldwide. In 2018, the United States imposed new tariffs and quotas on its imports (solar panels, steel, aluminium, etc.), to which China responded by imposing new tariffs on US imports of liquefied natural gas (LNG). More generally, for the survey respondents, the trade policy of the current US administration raises questions about the stability of US commitments.

C. Frei

For ten consecutive years, the World Energy Issues Monitor has been gathering the perspectives of energy leaders from public and private sectors across the six regions on 42 key issues that shape and drive the global energy system. It has become the energy leaders’ foremost platform to identify, share and track critical issues surrounding the energy transition.

Christoph Frei, Secretary General, World Energy Council

Italy

Energy supply balance, institutional framework and technology  developments are key to understanding the 2019 Italian Issues Monitor.

Geopolitical and political issues are both in the Critical Uncertainties (Russia) and in the Action Priorities (EU Cohesion). In fact, Italian energy supplies are characterised by the same European reliance on Russian gas, making EU Cohesion crucial to address diversification and improve resilience. In addition, the historical industrial and commercial relationship between Italy and Russia make geopolitical issues related to Russia critical for the Italian energy sector. At the same time, technology developments bring along the need for a policy and regulatory framework that can enable the development and deployment of new solutions and technologies. This is the case of IoT/Blockchain, as its deployment is still facing consumers’ scepticism and the lack of a clear regulatory framework.

Electric Storage also continues to be perceived as a critical issue mostly due to the evolving regulatory and technological framework. This issue, is generally connected to the development of both renewable energies and electric mobility – two areas of great interest for national and local energy stakeholders.

At the national level, private and public actions on Innovative Transport are not only related to electric mobility, which is more suited to the urban context. The replacement of traditional vehicles for improved emission performance, the development of biofuels and the deployment of natural gas and bio-methane (CNG and LNG) for buses, heavy vehicles and maritime transport, are important pathways in the evolving landscape of sustainable transport in Italy.

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