IEA World Energy Outlook 2021: My own top 10 reflections of an evolving energy landscape

A few days ago the International Energy Agency released its flagship publication: the World Energy Outlook 2021. On the upside, data tells us that we are moving into a new energy landscape driven by renewables and other low-carbon technologies. On the downside, the progress is far too slow and investments too defensive if we are serious about reaching net zero by 2050.

But before I’m getting into my reflections of the report, I want to use some space to highlight the last couple of weeks energy crisis. Because I’m a bit concerned that the crisis has moved the focus away from this report, its important content and the upcoming climate meeting - towards some kind of blame game and risk mitigation.

Some voices are now questioning the idea of an interconnected grid, some are claiming that nuclear is the answer to everything, but even worse is that it adds fuel to the fire for the anti-renewable movement. This has also caused the energy debate to become even more polarized: BEV vs Fuel cell, offshore wind vs nuclear and so on....when the effort should focus more on how we should utilize them all to push fossil out of the mix.

From my point of view, this “crises” shows how important it is to move from the fossil economy a majority are currently fully locked in, into a new economy. A massive clean electrification program powered by sources such as solar, wind and hydro power would make us more energy independent. Sure, renewables add new challenges related to reliability and balance between supply and demand. Sure, interconnected grids may cause a pricing that’s based more on other countries demands than your country's supply. But it also adds resilience, scalability gains as well as abilities to maximize penetration of renewables. We don’t want a Texas crisis in Europe, I promise.

Enough about that – let’s focus a bit on the IEA World Energy Outlook 2021. Because this is a thin yet insightful report that should be read by everybody interested in the energy space, sustainability as well as in how our society may evolve.

But instead of just summarizing the findings in the report (btw, you’ll find the executive summary here), I will focus this article around my top 10 personal reflections related to the report and the evolving energy landscape in general.

1. Climate doesn’t care about boundaries. Neither does it care about politics, quartal reports or your personal wants or needs. Time to get down to the simple fact that the responsibility is shared. Because the consequences will be, in one way or the other, even though some will be affected more than others. This is not a challenge for our governments, for corporates nor individuals. This is a planetary challenge – literary. Let’s treat it that way and unite around mission net zero.

2. There’s no business on a dead planet. This should be the ultimate wake-up call. Even though some eccentric entrepreneurs are focusing on space travel and colonizing other planets, we still have a wonderful planet to keep living on. But we need change to be able to do that in the long run. There’s still time left, and our capability to change during the COVID-pandemic has strengthen my beliefs that its possible....if we want to.

3. Energy will enable everybody else’s transition. Face it: an electric car isn’t cleaner than the electricity you charge it with. Replacing coal with hydrogen in the steel industry won’t capture the potential climate benefit if the hydrogen is made from coal-powered electricity. Therefore, clean energy is of essence – it will indeed create the foundation for all other sectors to succeed.

4. We need to be pragmatic about the energy transition – the world needs action, and that action should be incorporated in every single decision we as government, corporate or individuals are making. Further on we need to invest more into those breakthroughs’ innovations projected to make a big impact – but we can’t stand still and wait. We need to act in the meantime, reduction by reduction.

5. There’s massive opportunities to be captured. Obviously, you’ll find great potential in clean energy investment itself since its projected to tenfold to USD 1.2 trillion by 2050, but innovation around the value-chains vertically and horizontal offers a breed ground as well. Excess heat and oxygen from the electrolysis process, recycling of wind turbine blades, salt from Li-ion battery production, recycling or second life application for end-of-life batteries and so on. Generating value-streams in the ecosystem will create additional revenues, increase circularity, and improve system efficiency.

6. We need to move focus into how we distribute and consume energy. Increasing production capacity makes perfect sense, but there’s a lot of short-term and cost-efficient solutions available too. Energy efficiency, both hardware and software-based, offers tremendous opportunities to save energy and CO2-footprint. And a growing installed base of distributed energy assets at the grid calls for a better integrated value-chain, and the introduction of optimization and flexibility.

7. We are moving into a new landscape and a new economy, which are depending on a new setting of policies, an evolved market design and to establish new roles and responsibilities. The energy system is transforming into more of an ecosystem, which is why we also need advanced sector coupling capabilities to add even more flexibility. Since the pathway includes a large share of weather-depending energy sources, we also need extensive electricity storage, demand-side response and dispatchable low emissions sources of power. And besides assets, we need a virtual grid atop of the physical one, to enable more efficient ways of orchestrating an increasingly more complex energy system.

8. System design needs to be optimized, not based on peak-load. Increased variability on both demand and supply side along with several different energy carriers, storage systems and primary energy sources, means that both static and dynamic real-time optimization at system level should be part of the scope. These topics are important to avoid hyper fragmentation and sub-optimization as well as open up for additional value-adding services.

9. Transparency and traceability throughout the value-chain is of essence to avoid green washing and to enable rational choices. We need the ability to define, track and measure every kWh in the system and based on that, make choices that support the wanted change and pathway. Every fraction of a product should be defined in CO2 to ensure that we are comparing apples to apples, and not hiding footprints upstream or downstream.

10. Finance is the missing link to accelerate the transition. To cope with the net zero pathway, investments need to threefold from today in clean energy and infrastructure. Regulatory reforms along with policies, pricing mechanisms and our individual choices, will help accelerate the flow of capital to support the energy transition.

At ABB we are committed to support our customers, suppliers and partners by keep pushing the limits of technology, keep challenging status que, and collaborate & co-create with customers and partners to enable the energy transition towards a low-carbon society.

And remember that people often tend to overestimate the effects in short-term, and underestimate them in long-term. There’s indeed a massive opportunity embedded in the latter - for companies, individuals, and societies.

We need to agree that this is an opportunity that we all need to capture. Together.?