Global energy use is increasing dramatically, primarily driven by increasing demand for electricity. In addition, energy related CO2 emissions are too high to meet international commitments to the climate agenda by 2050. The only path to success will be through technological innovations leading to energy savings, low/zero carbon energy sources, carbon capture, and greater energy efficiency see ‘Environmental degradation’ for more on resource management and carbon storage).
The number of potential power sources is expected to increase over the next 30 years, as technological innovations in energy production and storage make renewables and new generation batteries cheaper and more efficient. Changes in electricity markets, such as growth in developing countries and regionalization of energy systems, will set the scene for future evolutions in the sector.
Although energy trends involve significant technological and societal aspects, they have been included in the environment section of this trend report because the evolution of the energy sector is so interdependent with the global climate agenda 2050. From greenhouse gas (GhG) emissions reduction to energy efficiency and the increased use of renewable energy sources for power, heat or fuel, future innovations and standardization work in the energy sector must take a sustainability lens.
Energy as a mega trend has a multiplicity of facets, not all of which can be included in this report. We focus our discussion on energy issues including the diversification of energy sources, and innovations in access, storage, and distribution of energy, with a strong focus on the transport sector and electricity market developments.
The demand for energy continues to rise, linked to demographic and economic growth, especially in the transport, industry, and construction sectors. With developing countries’ growing energy needs, it is expected that global energy demand will rise by 40-60% by 2050 if we do not make additional energy savings.
In parallel, the increasing awareness, pressure and need to reduce emissions and improve energy security demonstrate the need to reconsider energy production and use patterns across the globe. Already, the diversification of energy sources highlights progress in this area, with wind, solar, water, nuclear fusion, geothermal, bioenergy and others paving the way towards low-carbon economies.
By ‘energy sources’, we consider here the resources or technical systems from which energy can be extracted or recovered to be transported by a medium such as fuel or electricity (see ISO/IEC 13273-1:2015 Energy efficiency and renewable energy sources — Common international terminology — Part 1: Energy efficiency and ISO/IEC 13273-2:2015 Energy efficiency and renewable energy sources — Common international terminology — Part 2: Renewable energy sources). Although batteries technically fit this definition, they will be reviewed in the Energy Storage section of this report.
While progress has been made worldwide to address climate targets, the constantly increasing energy needs of our global economy mean that GhG emission levels will have to fall by two-thirds by 2050 to remain on track with Paris Agreement targets, highlighting the urgency of decarbonization and energy saving measures.
Developments in renewable technologies show promise, and renewables are the fastest growing means of energy production globally with countries like China, the US, Germany, France, and Spain investing heavily in these technologies. By renewables, we mean all sources of energy that are not depleted upon extraction, because they replenish at a rate faster than extraction can occur. This includes solar, wind, hydro, and geothermal power sources. As economies become more reliant on electricity as a key energy carrier, renewables could, in combination with nuclear energy, address over half of total electricity generation capacity by 2050.
In addition, renewables are becoming competitive with fossil fuels faster than expected as prices drop, which has already started to disrupt the global energy sector. The costs of producing solar energy in particular is expected to continue to fall as third generation photovoltaics (designed for high power conversion efficiency, low cost and efficient use of material) and concentrated solar power (CSP, using focused sunlight to generate heat and energy through conventional steam turbines) continue to develop.
Another alternative to fossil fuel that may play a significant role in the decarbonization process is nuclear energy. Although nuclear energy production is unpopular in some countries due to the radioactive waste it creates and its connection to several recent accidents, it is nevertheless expected to increase in the future, with countries like China, India, South Korea and Finland planning to continue using nuclear power. In addition, technological innovations mean fusion fuel (deuterium and tritium) can now also be extracted more sustainably from water and sea water, and guidelines on waste management should increase its popularity in the future.
The future of fossil fuels
Current low-emission and renewable technologies cannot keep up with increasing global energy demand. As a result, dependence on the use of coal and oil is likely to continue for the next 20 years, with projections showing that hydrocarbons might still meet around 70% of overall energy demand by 2050, even though demand is also expected to decelerate in the 2040s.[2,6] Trade routes may shift, however, as countries in Europe reduce their reliance on fossil fuels and energy demand increases in emerging economies (especially with an expected growth in the number of cars), leading to a rise in oil trade between Asia and the Middle East. Asia might become the largest global market for oil exports, with scenarios suggesting that around 75% of the world’s oil will be used in Asia, and China will likely consume more oil than the US as early as 2030.
The risk of continuing to rely on fossil fuel is that as demand for energy and resources grow, competition will increase to access lowering supplies, which could lead to conflict and international disputes. Technological advances to open up new energy sources and to make renewable energy exploitation more efficient and cost-effective can address this challenge in the long run.
At the same time, transition away from coal is predicted with renewables like wind, solar and hydropower to surpass coal as the main source of electricity by 2030. Recent announcements during the 2021 United Nations Climate Change Conference (COP 26) seem to support this prediction, with China and the US announcing a collaboration on environmental standards related to reducing emissions of greenhouse gases in the 2020s.
The case of shale and liquid natural gas
Shale oil and liquid natural gas (LNG) are also increasingly relied on as fossil energy sources. While they have been used for years, recent technological innovations have opened more commercially viable reserves globally, shifting the balance of power from traditional oil exporters to the US, for example, which has become the world’s leading oil producer.[4,9] As a region, southwest Asia/the Middle East is still expected to remain the largest hydrocarbon-based producing region in the next decades, but these countries are likely to become net energy importers as reliance on fossil fuel decreases. In this context, it is predicted that LNG will become a key export resource.
The continued expansion of fracking will, however, strongly depend on the evolution of international efforts towards a low-carbon economy, as drilling involves vast amounts of water, can contaminate groundwater and release harmful greenhouse gases. With the COP 26 commitment of Ford, GM and four other automakers as well as thirty governments to phase out sales of new gasoline and diesel-fueled vehicles by 2040, it is likely there will be pressure to increase investment in renewables rather than in shale and LNG.
The strategy of shifting to sustainable energy sources could dramatically change the outlook of the energy sector and our capacity to limit climate change. But although renewable sources of energy evolve rapidly, they are unlikely to sustain demand unless radical/disruptive innovations make them cheaper and more efficient, in combination with international agreements to impose emissions standards and subsidies to support the transition.
A key opportunity for the future is to consider green energy and alternative energy sources as a competitive advantage rather than a costly transition, representing opportunities for development and job creation in future economies.[3,6]
- Common international terminologyPart 1: Energy efficiency
- Common international terminologyPart 2: Renewable energy sources
Energy storage encompasses multiple technologies to accumulate or retain energy in either thermal (e.g., solar thermal plants), chemical (current batteries) or mechanical/kinetic (e.g., hydro, or compressed air) systems which can then be released when needed. The desired shift towards a net-zero economy is driving innovation in energy storage and research into direct power conversion.[2,4] Our increasingly complex energy sector is supplying more and more interdependent technologies which will require more efficient and cheaper tools to address energy demand. As a result, innovation in battery technologies, fuel alternatives, energy efficient (smart) appliances/buildings/cities, process energy improvements (industry), and direct power conversion technologies such as fuel cells should be expected to distribute power to an increasing amount of people in the near future.
Energy storage will play a crucial role in delivering lower-cost renewable energy in a more flexible and reliable manner. A major driver of energy storage technologies is to better integrate intermittent renewable energy sources into the grid. As intermittency requires another energy source to fill in gaps, energy storage – and large battery banks especially – can provide a solution. The race for leadership in energy storage solutions that increase the market infiltration/diffusion of renewables has already begun, with organizations investing heavily in new battery technologies. Giant battery ‘gigafactories’ are being built around the globe to address the demand, as a testament to this increased interest.
As of today, no battery can store and release significant volumes of electricity in an affordable manner. The next generations of batteries will need improvements to battery life and energy density, and battery production will also need to become cleaner and more efficient. Lithium-ion is the current leading battery technology, powering laptops and electric cars alike, but rare and expensive materials required to build these batteries means they also need to evolve. Battery technology has already significantly improved over the last two decades and continues to date. Extensive research and development are currently underway to improve battery chemistry and identify better battery constituents to allow more energy density at lower costs. Engineers are looking at new cathode materials like graphene or hexagonal boron nitride, and at replacing lithium with sodium, aluminum, or zinc to build cheaper products. Alternative research into solid-state batteries might also pave the way forward. Such changes could lead to smaller batteries that last longer, charge faster and conduct less heat.[2,7]
A consideration for the future, however, is the cost of energy storage using batteries. Storing and discharging electricity comes at a cost (capital + energy consumption and losses) which must be added to electricity production costs. Using power directly can ultimately be cheaper and investing in the efficient distribution and sharing/trading of direct power sources could be a viable alternative long term investment choice.
Power to X – Direct power conversion
Power to X technologies, also known as direct power conversion, are technologies aiming to transform sources of energy (e.g., renewable sources like sunlight or wind and gases like hydrogen and methane) directly into heat, electricity, chemicals, or fuel through a process of electrolysis or synthesis. This energy can then be stored or used to manufacture goods and power various systems. Power to X technologies therefore provide potential avenues to help decarbonize high-emitting industries such as construction, manufacturing, and transport.
Green hydrogen has received particular attention for its potential to transform the energy sector, with the International Energy Agency (IEA) highlighting the role it could play in reducing global emissions. Green hydrogen is carbon-neutral and is produced using electrolysis from renewable resources, as opposed to the steam reforming of natural gases (fossil fuel) used to produce grey and blue hydrogen. Until recently, the high costs of producing and storing green hydrogen have been a major barrier to its widespread use, but technological advances (e.g., better electrolysers and surplus electricity) are now making green hydrogen an attractive option – trend reports suggest that efficient electrolysers to produce green hydrogen as cheaply as its grey or blue counterpart could be developed within the next decade. In addition, projects such as Gigastack explore the production of green hydrogen at industrial scale, integrating electrolysers directly into offshore wind farms to produce green hydrogen.
Challenges remain however for the efficient storage and conversion of hydrogen and other Power to X innovations, and existing infrastructure will need updating to effectively integrate these technologies. A current transition strategy for lower carbon fuel sources is the integration of hydrogen into natural gas networks (to prepare for the development of power-to-gas processes), which improves the energy efficiency of the resulting fuel mix.
According to some forecasts, energy use in the transport sector might rise by 45% of 2010 figures by 2040. Improving energy efficiency and transitioning to alternative technologies to power the transport sector is therefore essential to achieve greenhouse gas reduction targets and reduce overall power consumption.
The desire to shift our energy use away from fossil fuels has propelled research into “clean cars”, which are leading innovation in energy storage and distribution, with vehicles readily available in some markets. ‘Clean cars’ can be defined as electrically propelled vehicles using hydrogen fuel cells, batteries or a combination of methods also known as hybrid. This last category does, however, still rely partly on combustion engines, so considering them as clean is debatable. The main challenges facing clean cars are ensuring fuel economy for consumers, delivering performance and reliability at a cost competitive with conventional vehicles, and ensuring that electrical grids have the capacity to cope with the increased demand from clean cars. However, the emergence of clean cars also opens up possibilities of using the transport network as distributed energy storage system in future smart grids.[4,11] In such a system, electric cars could act as batteries to absorb grid excess power during times of low demand and reinject energy in power grids at peak hours.
Hybrid and electric engines should soon become the norm for personal vehicles and are expected to successfully compete with internal combustion engines by 2030 thanks to new generation batteries. Similarly, the rise of shale gas and biofuels suggests the share of natural gas-powered vehicles could also increase in regions where it is abundant (and therefore cheaper), though difficulties in storing natural gas (pressurized tanks) is a challenge that still needs addressing. The shape of the private vehicle market and which system take the lead will strongly depend on incoming innovations and be driven by consumer choices in developing countries.
Commercial fleets, however, are still likely to rely on fossil fuel and diesel for some time to come. For alternative engines to truly compete with conventional vehicles, improvements will be required in terms of battery cost, size/weight and power to increase the range possible on a single charge; the number of charging points available; and the charging time required to power up the car.[1,2,4] One key technology to watch is hydrogen-powered fuel cells as a potential solution for shipping and heavy vehicles. Commercial transport (buses, commercial vehicles, delivery fleets, trucks) is often seen as the most promising sector to promote hydrogen as an energy carrier in order to cut emissions, though costs and efficiency improvements are required before the technology is ready to be scaled up.
Innovations in other categories of the transport sector are also emerging, including hybrid systems for ships and aircraft. For ships, using natural gas, marine diesel gas or heavy fuel oil to power a tri-fuel diesel electric propulsion system is entering the market as a possible alternative. Another is the current transition towards shore-side power, whereby shipping ports provide electric power to ships while at berth instead of them relying on their engines. This transition is slow, however, filled with distrust and minimal investments. For planes, a full transition to electric is likely further down the line (2050+), whether it be battery or solar based, though battery powered electric aircrafts could start being deployed as early as 2025 for flights under 800km.
The digitalization of the energy sector
The digitalization of our economies, with advances in, for example, the ‘Internet of things’ (IoT) and big data analytics, has radically changed energy transmission and distribution requirements and demand. Although this implies greater energy use, it also holds promises to optimize energy usage. The era of smart technologies is predicted to rapidly expand in the coming years, but these technologies also raise new security and privacy questions that will need to be addressed (see ’Tech risks’). Similarly, electricity grids will become more complex, with more actors involved, creating greater challenges for risk management and greater potential for systemic failure.
‘Smart’ technologies are not well defined, but generally refer to three kinds of objects – smart devices that can be programmed and have some level of automation but no connectivity (e.g., a smart thermostat or coffee machine); smart connected devices that are controlled via Bluetooth, Wi-Fi etc. (e.g., wearables, smartphones), and IoT devices that connect to the internet and can send and receive data to and from other devices/systems.
In terms of energy storage and distribution, smart technologies (such as smart grids) will blur the lines between supplier and end user, by allowing businesses and households alike to track and generate their own energy supplies (and even share/sell their surplus). By including operational and energy measures along the supply chain (e.g., smart meters), and thanks to big data analytics and machine learning, smart technologies could predict system failures or allow devices and systems to adjust energy use in response to specific conditions, such as being active when supply is abundant and inactive or in battery-saving mode when supply is limited.[1,2] This could lead to overall energy savings and more efficiency in the system.
Beyond those promises, smart technologies as a whole raise new security and privacy questions, such as how household energy data is collected and stored in order to predict grid conditions. Guidelines and regulations will be required to protect users and promote good practice in how to deal with sensitive data and ensure privacy and security (see ‘Data privacy’).
Ultra-high-voltage-direct-current transmission lines
Ultra-high-voltage-direct-current (UHVDC) transmission lines are expected to become the key electricity transmission technology to enable more efficient bulk power transfer over long distances than alternating current (AC). Currently, over 250 gigawatts of interconnectors and high-voltage transmission links are installed globally, which is expected to increase exponentially towards 2030 with countries like China, India, the US, and the EU heavily investing in the technology.
The higher voltage available in energy transmission technologies will enable the movement of energy as electricity over long distances rather than relying on moving energy resources themselves. By carrying electricity directly from the source to where it is needed/used, it will be more efficient and potentially cheaper than existing technologies, making it attractive to use and giving it the power to change the economics of energy distribution. This will have a significant impact on shipping, in particular, which will no longer be needed to transport large quantities of coal and oil. Some estimates suggest that “energy related shipping might decline by 50% for coal and 25% for oil by 2050”.
It will also promote emissions reductions and the transition to a low carbon economy. UHVDC can increase the attractiveness of renewables by addressing their “lack” of reliability – by transferring electricity from areas with a surplus or high production capacity to other areas across interconnected systems, operators can adjust supply and demand efficiently. This is possible thanks to innovative sensors and controls that allow minute by minute variance in direction and magnitude of flow. In addition, the reduced need to ship energy resources will help lower emissions from the transport industry.
Finally, UHVDC can also connect more people to the energy supply system. While the IEA reports that over 750 million people still do not have access to electricity, access is increasing rapidly. New transmission technologies could accelerate the spread of access to electricity and even lead developing countries to ‘leapfrog’ in the energy sector – over the next 30 years, many countries in Africa are expected to potentially skip development phases that older economies have transitioned through and move straight into digital and sustainable infrastructure. As a region where a majority of the population does not have electricity access, this is expected to dramatically change power dynamics in the energy sector. It is also an opportunity for African countries rich in natural resources to combine the development goal of electricity access with low carbon resilient development.
The future of distribution: From state-based centralized systems to regional and local solutions
Regional solutions: sub-national interconnected energy networks
In the context established above, countries currently face a choice between pursuing electrification and distribution as a national agenda, or through an approach of energy interdependence at regional or local levels.[1,17]
Considering the commercial cost of investment in new transmission lines and other energy technologies, as well as resource limitations in any single country, cooperation and energy trade between countries yields many benefits. It can minimize energy production costs and increase regional surplus through sharing infrastructure and resources and taking advantage of the different renewable energy profiles of participating countries in order to adjust supply and demand efficiently. “In Sub-Saharan Africa, where the cost of energy supply is among the highest in the world, regional trade may reduce costs by an average of 40%”. Latin America can serve as an example, as countries have largely invested in regional energy systems to reduce energy costs, improve reliability and diversify the region’s energy sources (see, for example, the Central American Electrical Interconnection System, SIEPAC, and the Andean Electrical Interconnection System).
However, this regional approach is not without significant challenges including those related to cooperation across multiple jurisdictions/countries with varied infrastructures and legislation and the fact that existing electricity grid facilities in both developing and developed countries will need to be updated to accommodate renewable energy sources, which are different from infrastructures used for fossil fuels.
Local solutions: beyond the grid
An alternative to mega-grids is the development of local/small-scale distributed energy systems that do not require power-grid connection: microgrids. With such innovations, homes, cities, and local equipment could act as electricity production, storage, and distribution tools, removing local communities’ reliance on centralized/state-based grids. This can lead to more resilient communities, with increased supply security for remote communities with reduced grid access or in the event of natural disasters. It could also provide opportunities to generate income. However, with more actors involved, the complexity of the energy system would increase, and with it, the risk of failures.
- Global connectivity outlook to 2030 (World Bank, 2019)
- Global strategic trends. The future starts today (UK Ministry of Defence, 2018)
- Global Trends and the future of Latin America. Why and how Latin America should think about the future (Inter-American Dialogue, 2016)
- Future outlook. 100 Global trends for 2050 (UAE Ministry of Cabinet Affairs and the Future, 2017)
- Global risks 2035 update. Decline or new renaissance? (Atlantic Council, 2019)
- Global trends to 2030. Challenges and choices for Europe (European Strategy and Policy Analysis System, 2019)
- Ten trends that will shape science in the 2020s (Smithsonian Magazine, 2020)
- U.S.-China Joint Glasgow Declaration on Enhancing Climate Action in the 2020s (U.S. Department of State, 2021)
- Latin America and the Caribbean 2030. Future scenarios (Inter-American Development Bank, 2016)
- 6 automakers and 30 countries say they’ll phase out gasoline car (New York Times, 2021)
- Future possibilities report 2020 (UAE Government, 2020)
- Future technology for prosperity. Horizon scanning by Europe's technology leaders (European Commission, 2019)
- Top 10 emerging technologies of 2020 (World Economic Forum, 2020)
- Technical and economic conditions for injecting hydrogen into natural gas networks (GRTgaz, 2019)
- Shore-side power. A key role to play in greener shipping (Ship Technology, 2016)
- Access to electricity (International Energy Agency, 2020)
- Foresight Africa. Top priorities for the continent 2020-2030 (Brookings Institute, 2020)
- Global trends. Paradox of progress (US National Intelligence Council, 2017)