Six steps to energy sustainability and security
To enable massive investment requirements, the ICC G20 CEO Advisory Group offers the following recommendations to G20 leaders.
Access to reliable, affordable, economically-viable, socially-acceptable and environmentally-sound energy is fundamental to economic growth and sustainable development. In light of expected growth in world population and energy demand—projected to increase by one-third by 2035, across all types and forms of energy—long-term energy access and security must become priorities for G20 Leaders.
Meeting the future demands for reliable, affordable and sustainable energy will require timely investment in supply and demand infrastructure, given that projects can take up to a decade to develop and implement. The level of energy investment is expected to be the largest single area of overall infrastructure investment, requiring US$1-2 trillion per annum over the coming decades depending on overall energy use and the pace of expansion of low-carbon energy.
The majority of global energy demand in 2040 will still be met by coal, oil and gas. Under a prolonged period of lower than expected oil prices, there could be major implications for investment such as deferring upstream investment or weakening the case for fuel switching and efficiency investments; and security concerns can re-emerge if low-price oil demand outstrips supply. At the same time, the energy sector is at the heart of many solutions for tackling global climate change, calling for clear rules as governments around the world follow through on policy commitments made at the COP21 meeting in Paris in December 2015. Moreover, digitization and accelerating innovation are transforming most industry sectors and society at large, posing challenges to capital intensive, long-term energy investments. The potential sources of disruptive innovation and uncertainty on energy demand are many, requiring companies to more actively scan the innovation horizon in years to come than they have in the past.
Therefore, G20 leadership on energy policy must: (i) support the expansion of lower-carbon energy and the sustainable development of hydrocarbon resources; (ii) deliver long-run energy security, ensure affordability, increase energy access and realize environmental objectives; and (iii) provide a stable and predictable environment that will encourage long-term investment.
Policy recommendations for G20 countries:
Given the vast scale and long timeframes of required energy investments, effective and predictable policy and legal frameworks will be critical to ensure that adequate and appropriate energy investment occurs now and over the coming decades. To enable these massive investment requirements, the ICC G20 CEO Advisory Group offers the following recommendations to G20 leaders:
- Utilize a broad energy mix to drive sustainable development.
- Manage the long-term transition to secure and sustainable global energy systems by establishing stable regulatory frameworks that encourage and incentivize energy investment.
- Increase R&D investments for innovative energy technology.
- Promote and prioritize energy efficiency.
- Improve global energy governance and coordinate international efforts.
- Increase worldwide access to clean, modern forms of energy in accordance with SDG 7, with emphasis on Africa and the Asia-Pacific region.