Stay connected

Get the latest insights into Canadian business

Toggle

Fuelling Tomorrow

October 16, 2016
Fuelling Tomorrow

Driven by emerging economies and rising populations, global demand for energy keeps growing at a rapid clip. By 2040, the world will need some 30 per cent more energy than it did in 2013, with electricity and transportation fuel use jumping an estimated 70 per cent and 50 per cent, respectively, according to the International Energy Agency and the U.S. Energy Information Administration.

But there’s another side to this story, explains geologist and energy industry veteran Dr. Scott Tinker, Chief Executive Officer of Tinker Energy Associates LLC in Austin, Texas. As emerging countries ramp up energy use to support demographic and economic growth, many developed nations in North America, Europe and Asia are seeing declines in energy consumption. Several factors are influencing the latter trend, including greater access to low- or zero-carbon power as well as commitments made at last year’s United Nations Climate Change Conference.

One thing is certain: Despite thirst for energy in developing countries, a shift toward renewables is underway. But how quickly and dramatically will this change happen?

A matter of time

“Energy transitionings take time,” says Tinker, who is also Director of the Bureau of Economic Geology in the Jackson School of Geosciences at the University of Texas at Austin. “There are reasons for that. Whether it’s pipelines, wires, trucks or trains, that infrastructure is there for a long time. Cars are on the road for 20 years or more – you may transition to a plug-in hybrid, but somebody buys your gasoline vehicle, and it stays on the road a long time.”

This gradual shift is mostly a good thing, Tinker argues. “It’s good not to have radical changes in that structure, to have the transitions be more patterned and predictable, so they can be stable, secure and reliable,” he says.

Tinker points to key developments in recent years that have shaped the current energy landscape, including the emergence of shale gas as a leading source of natural gas. Thanks to advanced and more cost-effective drilling technologies, shale now accounts for 60 per cent of natural gas production in the United States. Meanwhile, new smart technologies are enabling everything from more efficient ride sharing to driverless transport.

Another significant change in the past decade is the move in many parts of the world from centralized to distributed energy generation, with a variety of grid-connected devices and sites that produce or store energy, usually from renewable sources. This is largely the result of a greater willingness among energy sector stakeholders to invest in innovative technologies and alternative fuel sources such as wind, solar and geothermal.

Renewables provided close to 30 per cent of the world’s power generating capacity in 2014, enough to meet almost 23 per cent of global electricity demand, according to the Renewable Energy Policy Network for the 21st Century (REN21), a Paris-based group that promotes swift adoption of renewables.

Finding the radical middle

Although these numbers represent a welcome improvement, 85 per cent of global base energy still comes from oil, gas and coal, Tinker notes. In Southeast Asia, coal comprises 50 per cent of total energy use. “Over half the people in the world live there today – 3.5 billion,” Tinker says of the region. “Half of the world’s people get half of their energy from coal today. In percentage terms, it’s still over 30 per cent. In absolute terms, it’s an even bigger number because population and demand continue to increase.”

Discussions around moving global energy production and use toward low-carbon sources can’t ignore these facts, Tinker warns. “It’s very hard to have a global conversation about … the energy mix without thinking about what the world looks like and where the growing population and future demand centres are going to be, which is right there in Southeast Asia,” he says.

Having this global conversation is an imperative, Tinker adds. Industry, governments, environmentalists and academics need to come together to find a solution in the “radical middle,” he contends.

Tinker believes cities have a vital role to play in the global energy transition. Citing high levels of urbanization and accelerating migration to cities, the United Nations projects that about 66 per cent of the world’s population will live in metropolitan areas by 2050. 

“In terms of efficiency of energy use, cities are very important,” Tinker says. “They’re so dense. You can do things in the cities where you don’t have to get in a car, and you don’t have to travel long distances.”

Cities with well-planned mass transit systems are already ahead of the game, Tinker notes. The same goes for municipalities that use Internet-based technologies – such as those that make ride sharing easier or collect data to track how people travel in the city – to help whittle down the number of cars on the road.

Still, transitioning away from gasoline-powered cars won’t be easy even for city dwellers, Tinker predicts. Until electric cars are designed with larger-capacity batteries capable of fueling a long-distance road trip, many drivers will want to hang on to their gas vehicles, he says.

An energy transition that works for everyone

Most North Americans take energy use and availability for granted. But as Tinker points out, 1.3 billion people in other parts of the world have no access to electricity, and many of them live in abject poverty. Delivering energy to these underpowered regions can kick-start and drive economic growth – and make a big difference in the lives of billions of people, he says. That’s why it’s crucial to ensure that the global energy transition makes economic, environmental and societal sense across the planet.

Energy stakeholders need to boost investment in technologies that will advance low-carbon energy use, Tinker maintains. These efforts include technology to capture and condense energy from low-energy sources; more affordable, reliable and scalable storage systems for renewables; and data analytics tools to help inform intelligent decisions on energy generation and consumption.

There also needs to be a cultural shift toward a lower-consumption economy, Tinker says. Governments, industry and communities must identify the major forces that can create a more energy-efficient economy.

For the energy sector, the way forward is a gradual move to low-carbon sources. With so much at stake, getting it right is crucial, Tinker stresses. “It takes time,” he says. “I think there are people that wish it would go quicker. I understand, but we’ve got to be realistic about how quickly we can move in that direction so we don’t end up with something that doesn’t work.”

The content of this field is kept private and will not be shown publicly.
About PwC Canada Hide Footer