Brief Analysis on the World Economic Forum’s 2016 Fossil Fuels Future

The climate change and the energy sector were highlighted in Davos 2016 as relevant economic challenges confronting our society. Exporters from all around the globe discussed several questions on the subject such as: the possibility of the decarburizing our world and the future perspectives on the fossil fuel industry.

This article aims to highlight some of the most relevant conclusions from Davos in a concise way.

 Figure 1 shows one of the first studies on the increasing concentration of CO2.

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Transition will not be overnight:

Society has become very sensitive and aware of the climate risks we are exposed to. Energy sector is the spotlight, more precisely, the fossil fuels energies. Due to their negative impact on the environment and uncertain sustainability in the long-run, the question of a decarbonized world is the order of the day.

The world is committed to accomplish both economic and environmental changes which are very ambitious. Paris has set the international regulatory framework to start pursuing the evolution of this sector towards cleaner energy sources.

As previously explained the climate crisis entry; Economy, development and almost any human activity have relied on Fossil Fuel energy supply, for the past 150 years at least. Fossil Fuels are big tax contributors to governments, some of these sources of energy are also subsided, and this sector has engaged enormous amounts of investment, and still will. The decarburization of national budgets and industries will have to be pursued gradually. Otherwise, a sudden decrease on the investment and demand on Fossil Fuels will have negative implications for markets and economies.

It is about energy efficiency and sustainability:

Our current energy production system has high costs. Around the 60% power of it is lost while burning fossil fuels. This is energy waste. Less-efficient and polluting energy devices must be replaced by advanced and clean technologies. We must increase the efficiency of the global energy:  both the efficiency of fossil fuels and renewable energies.

 It is important to keep on mind that efficiency, renewable and sustainability are different concepts, entailing complex connotations. The debate here is not as simple as fossil fuels. vs. renewables. A holistic approach aiming clean energy both sustainable and efficient must be pursued.

Fossil Fuel energies future is now:

Energy demand is likely to rise about 35% globally. Inside this percentage, fossil fuels will increase too, and will remain as the dominant energy source. Fossil fuels will decline overtime, but in a long-term foreseeable future. Fossil Fuels are expected to grow until 2040 approximately, but the numbers of growth will slow gradually.

Like it or not, we still depend on fossil fuels and on the whole huge industry that is behind them. Transition will be progressive. It is really hard to predict which tendencies will happen in the years to come, but as said in Davos: “The fossil fuel industry has a future, and that future is now”.  Click here to know more about it.

Sometimes the bad things that happen in our lives put us directly on the path to the best things that will ever happen to us. (1)

The transition:

“We have one globe where we can provide enough food and energy for everyone. Using the planet’s effectively and efficiently is therefore crucial.”

 

Countries need to start reducing their dependence on fossil fuel energies. Transition must have a multiple level reform covering these areas:

  • Breakthrough technologies must be implemented in the energy sector to boost the efficiency of the sector, in a clear way, as well.
  • Gradual reduction of the dependence on fossil fuel energies.
  • Maximize people’s access to energy and electricity, with a particular emphasis on developing countries.
  • The world needs transition energy. It is a radical change to shrift from fossil fuel energies to renewables. A transition source of energy is required. Some countries like South Africa are substituting coal for natural gas pipelines, and it is not the only country in doing so. Natural Gas seems to be establishing itself as this transition energy. Despite Natural Gas is fossil fuel energy, the CO2 emissions are much lower in contrast to coal and oil.

We will enter into a period of energy co-existence between fossil fuels and renewables. The changes will not be imminent; there are too many economic, social and environmental interests at stake. The direction of the transition has already been set, but in the meantime, Fossil Fuels Empire will still remain. Nonetheless, the world needs to learn the lesson Paris gave us, otherwise, maintaining the levels of CO2emissions will provoke immeasurable climate changes that will put an end to the world as we know it nowadays.

World Trade Centre Dublin will publish four short summaries on different topics addressed in Davos last week. From the extensive list of Davos 2016 we have selected these four topics:

a)      2016 Global risks (Tuesday 26th January).

b)      The Climate Crisis (Wednesday 27th January)

c)       The Energy Industry (Thrusday  28th January).

d)      Industry 4.0 (Monday 1st February).

Please stay tuned and keep up to date on our social media pages.

 

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Macarena Ochoa Martínez

International Trade Associate –  World Trade Centre Dublin

28 January 2016

 

Further References:

– http://www.weforum.org/events/world-economic-forum-annual-meeting-2016/sessions/around-the-world-without-fuel-or-fear

– http://www.weforum.org/events/world-economic-forum-annual-meeting-2016/sessions/forum-debate-fossil-fuel-futures

– http://www.weforum.org/events/world-economic-forum-annual-meeting-2016/player?p=1&pi=1&id=73396

– http://www.weforum.org/events/world-economic-forum-annual-meeting-2016/sessions/the-transformation-of-energy

– http://www.weforum.org/events/world-economic-forum-annual-meeting-2016/sessions/the-new-energy-equation