What will the energy system look like in 50 years? What trends are in play today that should inform business strategy, with an eye toward a long-term vision for the future? Those are the questions that I tackled in a presentation earlier this year to hundreds of top executives from Royal Vopak, a 400-year-old global tank storage company based in the Netherlands.
In the presentation (video below and on our YouTube channel), I make the case that our global economy—and, in turn, the global energy system—will move from the current linear model of production and consumption (where we take natural resources, use them, and throw them away ), to one that is circular (in which we increasingly design products to return to productive use at the end of their useful lives either as biological nutrients back to the soil or “technical nutrients” back into the economy as new products). Such a circular flow of resources will more closely mimic the natural world’s closed-loop systems; indeed, nature has already done the R&D on how closed-loop material flows work.
This shift will happen because:
- the current linear system is simply unsustainable,
- a circular system allows us to extract more value from every resource, and
- global consumers are increasingly demanding more sustainable practices.
For the energy system, that means transforming the way we produce, use, and consume energy to an approach that uses energy more efficiently, relies much more heavily on renewable sources of energy like wind and solar, and results in reducing, reusing, or recycling carbon emissions in a new closed-loop carbon economy.
Solving climate change is essentially about restoring the natural carbon cycle—which requires keeping carbon emissions out of the atmosphere and capturing and removing carbon we’ve already emitted by using it to make useful products with low- to negative- carbon emissions including fuels, chemicals, building products, and advanced materials, and/or storing it geologically.
The momentum toward a more circular economy is growing. Social and market pressure is increasing for products that are part of this move to a circular economy, and trends across key sectors illustrate where the economy and the energy system are headed.
To describe this transformation, I focus on the future of the energy system’s three main sectors:
- Electricity, which is on the path to becoming the first sector to decarbonize and enable the electrification of other sectors. We’ll also see the shift to other energy carriers, such as hydrogen and renewable natural gas for things that don’t make sense to electrify.
- Transportation, which will be shaped by a growing trend toward electrification and low- or even carbon-negative fuels, along with other important trends including bans on internal combustion engines in some countries, autonomous vehicles, and “transportation as a service” displacing some private car ownership.
- Thermal energy (i.e., heating and cooling), which will come to rely on a combination of electric space & water heating and air conditioning, and other zero- and low-carbon replacements where electrification is not sensible or feasible (e.g., hydrogen, renewable natural gas, and conventional natural gas with carbon capture), particularly for industrial processes like steel, cement, and chemicals.
While it’s impossible to predict the future, the trends we see today point toward a transformed global economy where the energy system:
- contributes to a circular economy;
- meets consumer preferences for clean, reliable, and affordable energy;
- is carbon neutral and more electrified; and
- treats CO2 as an economic resource, not just a liability.
Watch the full presentation and view the slides to see a detailed discussion of the trends shaping the future in each of these sectors.
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