Energy Perspectives 2019: Long-Term Macro and Market Outlook

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Equinor Summary:

In what direction will global energy markets develop towards 2050? This is a crucially important question, not only for energy companies. The answer to this question will give profound signals on the chances of securing a sustainable development, as defined e.g. by the 17 Sustainable Development Goals. Recent signals show that possible combinations of important drivers such as economic and demand growth, energy efficiency, climate policy cooperation, technology development and geopolitics could result in very different development paths for global energy markets over the next decades. This 9th edition of Energy Perspectives aims to provide the reader with a helicopter perspective on possible macroeconomic and global energy market developments towards 2050, analysing relevant trends, energy sources, sectors and regions across three very different scenarios, called Reform, Renewal and Rivalry.

The scenarios are stories of the future that illustrate the very large future outcome space for energy markets. Two of the scenarios, Reform and Rivalry, illustrate where the world may move if current energy market, macroeconomic and geopolitical developments are not significantly changed. Reform represents a future driven by technology development and benign market forces, supported by gradually tightened energy and climate policies. Rivalry describes a future where the energy transition is slowed by lack of trust, significant geopolitical volatility and ineffective solutions to common challenges, like today. Renewal, on the other hand, shows where the energy markets need to go to contribute to a sustainable future. Renewal is driven by rapid and significant energy and climate policy tightening,
global political cooperation, and fast technology change, delivering a path that keeps global energy-related carbon emissions consistent with the well below 2° target established in the Paris Agreement.

What is new in Energy Perspectives 2019? In addition to what follows from updated historical figures and revised assumptions on key input parameters such as economic growth and energy intensity, the description of Renewal is enriched with two sensitivities. The first one is centred around the direction in IPCC’s 1.5° report, while the second one illustrates the effects of delaying policy action on climate to 2025. It is also illustrated how Renewal depends on a crucial combination of simultaneous changes in energy intensity, fuel mix and carbon capture, utilisation and storage (CCUS) developments. The potential impacts of hydrogen are quantified and visualised in an illustrative pathway to the Renewal framework. Finally, new perspectives are put forward for crude oil qualities, driven by different levels of oil demand and different supply mix in the three scenarios.

The challenges of satisfying global energy demand in a sustainable manner are vast and multifaceted. Leaders of nations, businesses and civil society are trying to make choices today, facing unknown futures. Doing so requires an informed debate and dialogue across many scenarios. I hope that Energy Perspectives 2019 will contribute to these discussions of possible energy futures.