World Energy Council

Energy Policy Scenarios to 2050

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Courtesy of World Energy Council

So much has changed in the world of energy since WEC last prepared scenarios in the 1990s. While these were updated at the turn of the century to take into account new assumptions about population, the prices of oil and gas, climate change, and technology developments, it became apparent that the real issues today are the emergence of massive new energy demand in China and India, the market power of fewer and fewer large suppliers of oil and natural gas, the shift to generally higher energy prices worldwide, the role of government policy and regulation in determining the energy mix and the value of carbon, and the regionalisation of energy markets which require harmonised standards and regulations. 

The Terms of Reference for this study contain three analytical elements, explained in more detail below. The study’s basic scope is to evaluate the impact of four possible scenarios on the fulfillment of the WEC 3 A’s of Accessibility, Availability, and Acceptability as defined in Section 2. The three analytical elements are:

  • Two axes that characterise the nature of the policy landscape. These are high or low engagement by governments, and high or low cooperation and integration among nations and regions, and among the public and private sectors.
  • Four scenarios that overlap through the development of these two axes.
  • A number of energy sector metrics that assist in understanding the details of the long-term physical energy landscape. 

The key challenge facing governments, business, and society at large is summarised in Figure 1-1. Average energy consumption per capita is shown for the nations of the world today (plotted as cumulative population), keeping in mind another one billion people (approximately) have no recorded energy use.  To allow everyone in the world to attain just the energy use per person of Poland today, or about 100 GJ/capita,5 would require about twice the amount of energy the entire world already uses today, assuming that people who are already above Poland’s level maintain their current energy use per capita. To achieve the level of Russia’s energy use today (~200 GJ/capita), more than three times as much energy is required over what is used today.  Where will this energy come from? How will it be used? What will it cost? What are the ancillary impacts? These are profound questions that policymakers have to address, and soon. 

Engagement and Cooperation/Integration
WEC Member Committees represent a large and diverse global community in terms of geographic, political, social, environmental, and economic conditions. While achieving the 3 A’s is largely determined by the social, political, and economic environment - and the extent to which these factors facilitate or hinder sustainable energy development - the study group members investigated choices that can be made by key decision makers in countries and regions around the world.

In Figure 1-2, the two axes lead to four overlapping scenarios or plausible storylines (remembering that all scenarios are a priori equally possible):

1. Government Engagement. Between two extremes of no government or a dictatorship, there is clearly a continuous spectrum of “government engagement.” On the one hand, the policy environment may support competition in the private sector, unleashing the power of the markets. Or, governments can compensate for a lack of private enterprise capacity. This study has reflected on three key aspects of the government role in energy development: engagement, involvement, and interference. Engagement occurs when government is fully aware of what is going on, what the issues are, and what is required of it. It is doing what is necessary to ensure that energy systems function optimally. Involvement occurs when the government is carrying out a number of functions, possibly in competition with other providers. This may distort the market due to inequity of power. Interference occurs when the government’s actions or regulations are so obtrusive as to affect the market negatively; energy systems are not developed as effectively and efficiently as they could otherwise be.

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