There’s no turning back for energy
“Creating a Shared Future in a Fractured World” was the theme of the 48th annual meeting of the World Economic Forum (WEF) in Davos, Switzerland. The challenge for leaders is to reconstruct a shared ‘narrative’ in order to improve the world.
This is the goal of “Shaping the Future of Energy,” one of the initiatives promoted by the WEF which, together with other factors, such as the future of mobility, the environment and natural resources, financial and monetary systems, the digital economy and society, should favour a transition toward increasingly sustainable, accessible, secure and inclusive global systems.
The transformations in the world of energy are heading precisely in this direction and there is no turning back: the trend is toward a system that is increasingly linked to renewables, decarbonisation, energy efficiency and digitalization.
This is the conclusion of the much-anticipated round table that the WEF in Davos dedicated to the topic, a discussion that was attended by Enel’s CEO and General Manager Francesco Starace.
A paradigm shift
In the transition from the energy paradigm of the 20th century to our current scenario, everything has been changing much faster than expected. The question at the heart of the Davos Panel was: How can we ensure a clean, secure and affordable future for energy that is accessible to all? The initial answer is that we are no longer talking only about the future: today, the market is already seeing the impact of the competitiveness of renewables, while the fossil fuel sector is experiencing great uncertainty from a financial point of view. Francesco Starace explained this, citing on the one hand the figure for Italy, which has reached 47% of clean energy in its electricity generation mix, and on the other hand the experience of geographical and technological diversification, through which our Group has anticipated the global trend and achieved a leadership position.
“Two major forces are at work in the great energy transformation: digitalization and material science. They are making renewables a cheap and abundant energy resource. This is driving progressive decarbonization of electricity at competitive stable prices”
Francesco Starace, Enel CEO and General Manager
The position of Patrick Pouyanné, CEO and President of the Board of Directors at Total, is more nuanced. He argues that the energy transition is indispensable and irreversible, but it might not mean the total abandonment of oil and gas, but only their reduction in the energy mix. The problem for Pouyanné is the so-called “energy trilemma,” i.e., the need to reconcile environmental protection with the need to produce energy at an acceptable cost and make it available to all. That is why, according to Ulrich Spiesshofer, CEO of ABB, a company specialised in energy and automation technologies, the ultimate goal is to decouple economic growth from environmental impact.
Efficiency and digitalization
Spiesshofer also insisted on an integrated approach: renewable sources are the basis of clean energy, but alone they are not enough; they need to be matched by the drive towards energy efficiency, a reliable distribution network and the development of energy storage systems. According to Francesco Starace, the key to this process is the digitalization of the electricity grid to address the demand for efficiency as well as for a large-scale development of e-mobility. In addition to storage systems, efficient smart devices are also needed for flexible network management.
The transformation already under way, alongside the decarbonisation of the energy mix that is lowering and stabilising prices, is bringing more affordable electricity to countless economic activities. In doing so, it triggers a virtuous mechanism that not only decarbonises the energy industry, but also many other industrial activities. “We want to provide technologies that enable us to drive the world forward without consuming the planet,” explained Spiesshofer.
The “Trump effect”
Technological development is now the driving force behind change, but national policies can be decisive in achieving the objectives of the Paris climate agreement. This point was emphasised by Rachel Kyte, CEO of Se4All (Sustainable Energy for All) and UN Special Representative for Sustainable Energy.
One of the most topical issues at Davos in this regard was the so-called “Trump effect,” i.e., the consequences of the new, more protectionist policies adopted by the US Administration. According to Kyte, the White House decision to leave the Paris accords has driven the other countries towards greater cohesion and therefore they will pursue environmental policies with even greater determination, “because sustainability is in their interest.” For Pouyanné, Trump’s decision will not have significant consequences, while another recent decision of his might, namely imposing high tariffs on solar panels from Asia. The political factor is decisive for another low greenhouse gas technology: nuclear energy. In this case, the problem is the long lead time and the considerable investment costs, which can only be incurred for strategic reasons by countries with a tightly planned economy. China is an excellent example, as confirmed by Shu Yinbiao, Chairman of China’s State Grid Corporation, who - while recalling the 48 nuclear reactors still in operation on Chinese soil - explained that the direction being pursued with great determination by the Asian electricity giant is that of wind and solar energy: in 2017, Chinese investments alone in renewable sources reached the stratospheric amount of 100 billion dollars.
This provides further evidence that the world is moving decisively in one direction, that of renewables and decarbonisation, towards a future of clean, secure and affordable energy accessible to all. And there is no turning back.