Data Management
Figure 1: World Energy Consumption (Mtoe)
Given the extent of the
economic downturn, and
the corresponding political
urgency to build a new
green energy economy, it is
unlikely that the demand
curve will recover in the
medium-term. How
producers and suppliers
respond to the new demand
curve will influence future
energy prices and these new
World primary energy consumption slowed in 2007, but growth of 2.4% was still above the 10-year average.
demand curve risks will
Coal remained the fastest-growing fuel, but oil consumption grew slowly. Oil is still the world's leading fuel,
but has lost global market share for six consecutive years, while coal has gained market share for six years.
require efficient and
Source: BP Statistical Review of World Energy, 2008
effective management.
of long-term oil demand into their vision of where they want Political Uncertainty
or expect to be in twenty years time. It cannot be too soon for Aside from the recession-induced demand uncertainty, the
companies to begin to re-focus their investment and long-term next year will also see the market potentially exposed to
growth strategies to ensure sustainability in the transition to a heightened political and regulatory uncertainty.
post-hydrocarbon world.” Although the prospects for a UK general election this year
When the demand curve shifts downward on price-related have receded, there are European Parliament elections in June
issues, i.e. prices are too high and demand corrects and in September Germany, Europe’s largest energy economy,
accordingly, there is a tendency for consumers and industry to goes to the polls. Both could strongly influence the European
seek alternative energy sources or more efficient technologies energy markets and thus induce more uncertainty, particularly
that consume less fuel. Thus, when prices retract there is not a from a regulatory perspective.
return to previous demand levels and the curve remains Germany’s political parties are divided on the role of nuclear
depressed relative to the previous level. to meet mid-term climate goals. Germany has pledged to cut
So can a similar demand curve analogy be drawn with a fall GHG emissions 40% relative to 1990 by 2020, 18% lower
in power demand due to the ongoing economic downturn? compared with 2007 emissions. But although nuclear is
Arguably it can. The current economic downturn provides virtually emissions free, delaying the closure of Germany’s 17
policy makers with an opportunity to re-structure the energy nuclear plants would make renewable energy projects
market, with the Obama administration joining the EU in unnecessary to install and thus undermine renewable
calling for the development of a more robust green economy. development.
But the demand curve will still remain depressed during the Green group Deutsche Umwelthilfe argues that a rapid
transition to a new green energy market as a consequence of growth in renewables along with massive energy saving efforts
higher energy prices and potential future supply constraints. would be able to replace nuclear energy as well as to cover the
Two factors suggest energy prices will gap between current and targeted
increase with a shift to a green energy
... the next European
emission levels, but that a revision of the
economy. First, green energy is more
Commission ... will have to
nuclear phase-out programme would
expensive than traditional fossil fuel stop the dynamic growth of clean energy
energy. Secondly, any significant long-
decide (again) how to
and would mean clean energy could not
term shift to a more renewable-centric progress EU energy policy be deployed quick enough to meet long-
energy policy would reduce Opec’s term emission goals. But the pro-nuclear
demand certainty with the cartel almost certainly likely to lobby argues that nuclear energy is essential to meet the EU
respond by delaying, or even cancelling, new exploration and 20:20:20 emission targets and that the energy gap left by
production and thus pushing up oil (and other energy product) closing the nuclear capacity could not be filled just with
prices through new supply constraints. renewables or gas, and therefore would require coal-fired plant.
worldPower 2009 81
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