Energy Transition

Energy Transition
January 11, 2021
Author: Chelsey Hillier
The energy landscape is constantly changing
The topic of change has become a larger imperative in this time of great upheaval. The pace at which business, technology and society is changing requires us to identify the forces of change so we might even dimly perceive their implications for the future.

The energy transition encompasses all kinds of change. The type of change grabbing the most media attention is focused around forced, rapid, or unexpected change. This type of change captures the more chaotic nature of change, one in which organizations are compelled to react to external events or forces outside their intentions and strategies.

Natural, evolutionary, and adaptive change is also applicable to the energy transition. This category recognizes that organizations change simply because they exist, that they move through a generally understood lifecycle, and that they evolve by doing – by their interactions in the market, with clients, with technology, with competitors, and with governments (David Ruhlen, 2020).

My colleague, David Ruhlen, authored a compelling article titled “Change is Inevitable”, about some key elements of industry change and transformation that can apply here.
Discussions around energy are complex
Like many others in my community, 80% of my LinkedIn news feed involves issues facing the energy industry and new technologies developing at a rapid pace. With so much specialized information available and articles posted daily, it can be hard to process the information for the purpose of trying to understand it, having educated conversations around it, making investments within it, or identifying a pathway through it.

In addition to keeping up with the information, many people have observed how complicated it can be to have conversations regarding energy through social media platforms.

For a variety of viewpoints on the topic of energy transition, consider these titles:
  • Etam, Terry. The End of Fossil Fuel Insanity: Clearing the Air Before Cleaning the Air. FriesenPress, 2019.
  • Smil, Vaclav. Energy Transitions: Global and National Perspectives. Praeger, 2017.
  • Yergin, Daniel. The Quest: Energy, Security, and the Remaking of the Modern World (Penguin, 2011)
The Energy Transition
What does Net Zero mean?
"Net zero" refers to achieving an overall balance between emissions produced and emissions taken out of the atmosphere. The amount of CO2 we emit must be matched by the amount that we remove from the atmosphere.

The target year of 2050 is a negotiation between the necessary and the possible. The Intergovernmental Panel on Climate Change (IPCC) says if we cut global emissions to net-zero, we can keep warming below 1.5⁰C (Russell, 2019).

As average temperatures rise, spikes and heatwaves could climb much higher than just 1.5⁰C. The (over) simplified version is that the more heat added to the Earth’s climate system, the more imbalanced natural systems become, leading to many potentially destructive events.

Where can I go for energy outlook and transition forecasts?
Energy transition outlook reports can provide a high level of understanding and context around how specific topics or technologies influence the “big picture”.

Each report explains assumptions made in their models and data used (or not used). Representing complex data in a linear or exponential projection over a long period of time does not do the complexities of the data involved justice. For the purposes of these reports, the trends need to be illustrated this way but if you do not understand the data involved, oversimplification of projections can be misleading.

“Peak final-energy demand will occur at different times in the various world regions; indeed, for the regions with lowest GDP per capita, demand will not peak during our forecast period. Furthermore, demand will not peak uniformly across the various demand sectors.” (DVN GL Energy Transition Outlook, 2020, p. 19)

The article Peak Oil Is Suddenly Upon Us ( focuses on oil demand and includes forecasts from a number of different sources. The authors of this article do a good job at pointing out that these are just forecasts and what happens next depends on the actions people take.

Here are a few of the energy outlook forecasts reviewed.
The International Energy Agency (IEA):

The IEA was created in 1974 to help co-ordinate a collective response to major disruptions in the supply of oil. While oil security remains a key aspect of their work, the IEA has expanded significantly since its foundation. Taking an all-fuels, all-technology approach, the IEA recommends policies that enhance the reliability, affordability, and sustainability of energy. It examines the full spectrum issues including renewables, oil, gas and coal supply and demand, energy efficiency, clean energy technologies, electricity systems and markets, access to energy, demand-side management, and more.

Canadian Energy Regulator (CER):

Explore Canadian energy data, statistics and information, get market updates and view provincial and territorial energy profiles.


DVN GL is the world’s leading classification society and a recognized advisor for the maritime industry, the technical advisor to the oil and gas industry, and delivers world-renowned testing, certification and advisory services to the energy value chain including renewables and energy management. They are one of the world’s leading certification bodies, helping businesses assure the performance of their organizations, products, people, facilities and supply chains. They are also a world-leading provider of digital solutions for managing risk and improving safety and asset performance for ships, pipelines, processing plants, offshore structures, electric grids, smart cities and more.
DNV GL Energy Transition Outlook, 2020

BP Energy Outlook:

Much of the analysis in the Outlook is focused around three scenarios: Rapid, Net Zero, and Business-as-usual. The multitude of uncertainties means that the probability of any one of these scenarios materializing exactly as described is negligible. Moreover, the three scenarios do not provide a comprehensive description of all possible outcomes. However, the scenarios span a wide range of possible outcomes and so might help to inform a judgement about the uncertainty surrounding energy markets out to 2050.
BP Energy Outlook, 2020
What could an energy transition look like?
In a recent webinar Brad Hayes examines two competing “realities” for how the energy transition could take place.

Potential Reality 1: Transition will be a measured, gradual process driven primarily by market forces but supported by policy that does not impose excessive costs on people and business.

Potential Reality 2: Transition is an urgent process because the world is facing a climate crisis. Transition will be driven primarily by strong, rapid policy interventions.

Approximately 81% of the world’s energy comes from fossil fuels (DVN GL Energy Transition Outlook, 2020, p. 66). Today’s energy supply is complex and if we want to change the energy supply there are complex lines to follow. Existing energy supply chains cannot easily be replaced, and renewable energy plays a relatively small share of the world’s current energy needs. In 2018, 26% of electricity was supplied from renewable sources, with two thirds generated from hydropower (DVN GL Energy Transition Outlook, 2020, p. 85).

Net Zero 2050 does not mean that hydrocarbons will be removed from the energy mix entirely but what would that look like in terms of the required growth in renewable resources? Mike Simmons, Halliburton UK, created context around how difficult it would be to remove hydrocarbons from the energy mix by 2050. He highlighted that the world uses 11,685 Million tons of oil equivalent (Mtoe) of fossil fuels per year and there are 10,700 days until 2050. We would need to replace 1 Mtoe every day from now until 2050. 1 Mtoe = 1 nuclear power plant or 1,500 wind turbines.
(Simmons, M., (Producer), 2020, Hydrocarbons, Geoscience, and Energy Transition, [webinar])
What could a rapid energy transition scenario look like?
DVN-GL forecasts a rapid transition between now and 2050. These diagrams are snapshots of the global energy flows in 2018 and 2050, illustrating the major changes in the energy system over a 32-year forecast period. The 2050 picture shows solar PV growing 25-fold and wind growing 10-fold at the expense of coal and oil. Electrification more than doubles through to 2050. The report shows how passenger electric vehicles are likely to outsell their fossil-fuel counterparts worldwide by the mid-2030’s. Natural gas will be the largest energy source in 2050 but only 13% of natural gas used in 2050 will be decarbonized through the growth of blue hydrogen and carbon capture and storage.

Energy demand will fall 8% in 2020 due to the pandemic. The world will need to achieve the same percentage of emissions reduction seen in 2020 every year through 2050 to succeed in reaching the ambitions of the Paris Agreement and be on track to 1.5⁰C. DVN-GL forecasts have global energy demand fluctuating 6-8% lower than pre-pandemic forecasts. They are assuming that factors such as the demand for aviation, remote working and reduced commuting will have lasting affect lower energy use. The demand for steel and construction materials for office buildings will also be significantly reduced. Energy efficiency improvements will require significant policy to push to scale to meet 2050 Goals.
- DNV GL Energy Transition Outlook 2020
What are some concerns around a rapid energy transition scenario?
Energy density, reliability/intermittency, costs, and supply/demand are frequently raised as concerns around a rapid energy transition scenario. The extraction of raw materials is concerning and what it would take to rewire the power grid at a global scale is astounding.

The DVG GL 2020 Energy Transition report acknowledges that the drivers and barriers to energy transition are often beyond the control of any single organization or government. Some choices facing policymakers may be clear-cut, but others involve highly complex trade-offs and require comprehensive planning and pro-active policy strategies.

How can you align people and industries when highly complex trade-offs are involved? Is the impact on the environment due to the extraction of raw materials required for rapid electrification one of these trade-offs?
- DNV GL Energy Transition Outlook 2020
In 2017, The World Bank questioned the required metal extraction to generate an estimated 50% of the world’s energy by 2050. This would lead to dramatic increases in the extraction of multiples metals. It would likely require silver extraction to increase by as much as 100% and indium could see extraction increase 920%. Both metals are essential to creating solar panels. Just to produce enough silver to transition half of the world’s energy to renewables, we would need to commission 130 mines the size of the Mexican Penasquito mine, the largest silver mine in the world which spans 40 square miles.

Lithium batteries are required to store all this energy. This article mentions that lithium extraction would need to increase 2700%. Lithium requires 500,000 gallons of water to produce a single ton. With the world's largest reserves of the valuable metal, Chile has been called "the Saudi Arabia of lithium." Over the last 20 years, 40% of the global lithium supply has come from Chile. And global demand is expected to triple within the next six years (Boddenberg and Mortensen, 2020).
What could a gradual energy transition scenario look like?
In BP’s 2020 Energy Outlook, they reviewed scenarios of what primary energy consumption by fuel type would look like in 2050. This report includes a “Business-as-usual” case, although all scenarios envision a huge growth in renewables.
Energy Outlook 2020 (, p. 65
Thomas A. Blasingame, 2021 SPE President, discussed the energy transition in a recent interview published in the Journal of Petroleum Technology. The US Energy Information Administration (EIA) estimates for 2050 have global energy consumption at about 50% as oil and gas and a bit more than 25% as renewables. These estimates are in line with what a gradual transition scenario would look like.

Vaclav Smil, a Czech-Canadian scientist, and policy analyst, has the point of view that based on history, a large-scale transition in energy sources will be gradual.

“History shows that neither the dominant sources of primary energy, nor the common energy converters can be displaced rapidly and completely in a short period of time”

“The unfolding energy transition towards decarbonization will inevitably follow the progress of all previous large-scale primary energy shifts – it will be a gradual, prolonged affair.” (Policy Brief, Smil, 2020, p. 2)

What are some concerns around a gradual energy transition scenario?
A shift this large needs to start sooner rather than later:

The bottom line is that a modeled gradual energy transition may not come close to the goal of keeping the average global temperature below 1.5⁰C.

Many 1.5°C and 2°C scenarios ’achieve’ their GHG-reduction target by pushing mitigation commitments into the future. Placing faith in breakthrough solutions that do not exist now, to solve the problem in the future can carry unacceptable risks (DVN GL Energy Transition Outlook, 2020, p. 254)

Companies are already shifting goals and setting net zero targets:

Are “business as usual” projections already too conservative? A lot of companies have established Net Zero 2050 targets and policies with global implementation. Market analysts believe that linear growth trends are likely too conservative for the changes that are already happening with respect to renewables and energy related technologies. Top oil and gas producing companies are preparing to transition to become "energy" companies and have written down some oil and gas assets and accepted they won't ever produce them.

A push for new technologies will be impactful to forecasts that do not include them:

DVG GL’s 2020 2020 Energy Transition Outlook shows geothermal energy makes up 1% of the energy supply in 2018 and forecasts it to make up 1% of the energy supply in 2050. Their forecast does not include disruptive entrants into electricity production. However, only recently have governments in Alberta and Saskatchewan revamped regulations for drilling and for power generation to stimulate geothermal power in these provinces.

Deep Earth Energy Production Corp. drilled a “gusher” well in Saskatchewan. This single horizontal geothermal well can produce 3 megawatts of renewable, reliable electricity, enough to power 3,000 homes. No company in Canada has produced electricity from geothermal heat, but Deep Earth’s chief executive officer Kirsten Marcia told the Financial Post that there is a “big, big future for geothermal power in Western Canada,” as demonstrated by the results of the first ever horizontal geothermal well, which is also the deepest horizontal well ever drilled in Saskatchewan.
Are we on the pathway to achieving Net Zero 2050?
Achieving Net Zero by 2050 will be difficult and here are a few examples of why.

Energy growth in developing nations:

Climate change is at the top of many Canadians’ minds but almost half of the world's population does not have access to reliable electricity services. Developing nations are concerned with education, healthcare, job opportunities, responsible governments, access to nutritional food, protection against crime and violence, clean water, and sanitization, etc. These are things that many Canadians may take for granted. Developing nations will be key drivers of energy growth demand in the future. People living in developed countries are not voluntarily reducing energy consumption. A huge variable in the future energy demand forecasts is how citizens in developed countries can be persuaded to change their energy consumption (Simmons, M., (Producer), 2020, Hydrocarbons, Geoscience, and Energy Transition, [webinar]).

Significant changes in policy are required:

According to the DVN GL Report, EU’s net-zero target appears to be ambitious, and is unlikely to be met owing to cost, the political difficulty of implementing a high carbon price and supply chains (aviation, maritime) beyond the EU’s control. Yet, there is an unprecedented roadmap for coordinated regional climate action and the deal will require many new policies and technical details to be drafted. It brands the new Commission with a clear green profile. To turn plans into action requires approval and support from all member states and Parliament.

Considerable technological developments are still necessary:

Regarding technological advances, the IEA recently reported that uneven progress on clean energy technologies faces further pressure from the Covid-19 crisis. In 2019, only 6 out of 46 technologies and sectors were “on track” with the IEA’s Sustainable Development Scenario. Another 24 technologies showed some progress while 16 technologies were “off track.”

An IEA report on Tracking Clean Energy Innovation stated that most energy technologies are not on track to provide the clean energy transitions targeted by governments. Many technologies required to lower emissions to “net-zero” levels either do not exist or are not ready for markets, notably in sectors such as heavy industry and long-distance transportation, for which large-scale low-carbon solutions are not widely available (IEA, Tracking Clean Energy Innovation, p.7).

How could Alberta/Canada/World Leaders align with respect to Net Zero 2050?
Regarding Net Zero 2050 goals and pathways, how might world leaders balance belief in the future while learning from the past?
There are no simple ways to design a ‘one likely pathway’. Countries and regions have different starting points regarding available resources, existing energy-sector infrastructure, and political preferences.

Solutions fall within three main categories of emissions reduction, all of which must be addressed in any emissions-reduction plan. To achieve our climate goals, we require solutions that:
  • Reduce energy use by improving energy efficiency.
  • Increase the share of non-fossil energy supply.
  • Capture and store carbon.
A combination of effective cross-sectoral measures is needed to reduce emissions and must include a focus on cost and effectiveness. Measurement should include reduction or capture of industrial emissions, as well as restricting deforestation, ensuring afforestation, and promotion of more-efficient land use.

To ensure the necessary reductions are achieved, various policy actions are also needed within each of the sectors. This aspect is critical, and without enabling governmental policies and regulatory measures at international, national, and subnational levels, the solutions and technologies are unlikely to scale, and the technologies will not deliver on their promised potential. Furthermore, the contributions and shifts in investments, from both the financial sector and the private sector in general, will be instrumental in accomplishing implementation of the various solutions.

Within the long list of potential technical solutions, it is relevant to question whether we need them all, or which solutions should be selected for prioritization. Clearly, some of the solutions are also partly overlapping, and there is no single way to close the gap. In choosing the optimal approach, cost-efficiency considerations are important and ease of implementation, in terms of political feasibility and public acceptability.
- DNV GL Energy Transition Outlook, 2020 (p.268)
The Intergovernmental Panel on Climate Change Special Report on Global Warming emphasizes the need for transformative global actions and global cooperation to decarbonize the energy system. This is where discussions around LNG Canada often come into play.
Exporting cleaner-burning Canadian natural gas might help coal-dependant nations to access lower emission sources of power and improve their energy stability. China alone accounts for 30% of global GHG emissions and under its Paris Agreement commitment, it can grow emissions to 2030. Liquified Natural Gas (LNG) is an alternative that allows China to simultaneously grow its economy and reduce emissions, which could help them meet their targets sooner. British Columbia is on track to producing the lowest emission LNG in the world, at least half the global average, and in the case of all-electric LNG facilities, even lower
- World Oil, March 2020 (p. 7)
Decreasing global emissions may cause an increase in local emissions which can be hard to gather support for. Adam Legge acknowledges this in an article published in the Calgary Herald. To replace coal generation in China alone, we could build a total of 36 more LNG projects of similar size and decrease global emissions by Canada’s total several times over. Yes, this may increase domestic emissions in some areas. Increasingly, emissions reductions and carbon capture can work to address an increase in local emissions. These expansions will require interprovincial co-operation, Indigenous partnerships, and an enabling federal government as a partner.
in closing
The intention of this article was to present a high-level informative overview around the topic of energy transition. Energy transition is a complex conversation with a myriad of diverse opinions, compelling ongoing research projects, and an overwhelming global investment in policy, practice, and infrastructure. We are fascinated with the complexity and challenges presented by the significant changes presented with this topic.

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