An Industry in Transition
In the fight against climate change, there are different priorities to be considered simultaneously, from global public governance, mechanisms and incentive systems, technologies, innovations, resources, and the key participation of citizens. All this must be accompanied by economic growth and general well-being while providing the clean energy required.
These issues will be the main topic of 17 Energy, with a special emphasis on the field of innovations and technologies. We will discuss the energy transition and an industry in transition because all these topics involve unprecedented changes in the entire energy value chain and its different subsectors.
The COP 21 Climate Change Meeting in Paris in 2015 was a global success because of the consensus reached, as well as the ambition and drive to activate a climate governance mechanism that should make it possible to reduce greenhouse gas emissions. The consensus required now seems harder to reach than in 2015. However, subsequent climate change conferences held in Marrakesh, Bonn and Katowice contributed notable advances toward setting up the processes required for this new climate governance.
In this transitional context, the debate on the model of mechanisms and incentives to be chosen will be of key importance. The essence of the debate is whether a top-down or bottom-up model should be established and although it is not a new one, the outcome in this case will strongly affect the decisions made and the development of this global commitment to climate change.
All of this will be impossible if we do not have the technology we need with the required level of technological and commercial maturity to transform our current industrial and energy systems. The importance of this matter can be demonstrated by asking just a few questions: Do we have the technology to provide air and sea transport without emitting greenhouse gases (GHGs)? Do we have the technology to do without steel, cement and glass by 2050? What role will hydrogen play?
The International Energy Agency’s 2018 “Tracking Clean Energy Progress” indicates that of the 37 key clean energy technology families for decarbonization corresponding to power, buildings, transport, industry and energy integration, only four have reached the level of advanced maturity required for mass deployment. Another 10 are in a stationary state without displaying any progress indicating future use.
Fortunately, we already have some renewable technologies (solar photovoltaic systems and onshore wind farms, among others), which will help us virtually decarbonize electricity. There are also spectacular advances with high-density electrical storage that look very promising for the electrification of land transport. In addition, a new ecosystem is emerging of entrepreneurial and startup projects, with public policies at the European level to drive and support innovation in sustainable energy, with companies leading the way, and support for R&D by creating new business and investment models.
This energy transition and industry in transition will certainly consume considerable financial resources in net terms. And this is no minor issue because problems of scarcity are well known in economic history and can provide myriad opportunities for costly errors. Disregarding economies of scale, learning economies of scale and network economies of scale will further raise the price of this long, intense process of change, climate transition, and renewal and transformation of an entire industry.
Finally, it is important to bear in mind that this energy transition, unlike previous ones, must go further and work faster than technological and market forces are able to accomplish on their own. Social acceptance and the essential role of citizens in this process call for a basic understanding of just how much citizens are required, as well as the need for fairness in the distribution of costs. That is why public policy and civil society must therefore play an essential role in the final outcome of this transition.
We look forward to discussing all these matters at the 17 Energy Industry Meeting organized jointly with Deloitte and with the collaboration of Innoenergy.