22nd Edition World Energy Markets Observatory

The 22^nd edition World Energy Markets Observatory (WEMO) reveals a world struggling to take deliberate and drastic steps against climate change while simultaneously addressing the immediate challenges related to the COVID-19 pandemic.

This year’s World Energy Markets Observatory report explores how the energy sector can balance these competing priorities. Here we present practical ideas for how utilities, policymakers and private companies can embrace a strategy that builds short-term resiliency while improving long-term sustainability.

1. Energy demand slowed in 2019, though global GHG emissions continued to grow.

Global energy consumption grew at a modest rate of 0.7%. While energy-related CO2 emissions are down 0.4%, total global GHG emissions have risen 0.6%. Our research reveals that even in Europe, the most advanced region in terms of climate change, current policies and measures fall well short of long-term decarbonization objectives and the 1.5-2° scenario identified by the International Energy Agency (IEA).

2. The use of renewables will accelerate as generation and storage technologies continue to mature.

2019 worldwide investments in wind and solar climbed 3% while European capacity surged by 42%. Batteries remain a critical enabler of at-scale adoption of intermittent renewable generation—a promise that may be realized as production costs continue to fall and new megafactories are being planned worldwide.

3. Green recovery packages related to COVID-19 can help accelerate the climate change agenda.

COVID-19 may be an unlikely impetus for change if governments leverage economic stimulus bills and recovery packages to accelerate and prioritize “green” initiatives. Our research indicates some leverage in recovery packages to do this, including: increasing the share of renewables and green hydrogen, especially within the mobility sector; electrifying some usages, such as EV development; refurbishing buildings to support energy efficiency measures; enabling the smart grid at scale to support industry transformation as well as commodities and networks convergence; and encouraging incremental behavior change among consumers, including a reduction in travel.

4. Oil & Gas majors are diversifying their business, though many need to invest more outside the core.

Unprecedented levels of disruption and volatility within the O&G industry have significantly impacted organizations’ profitability and put pressure on their license to operate. As carbon pressure on core products continues to mount, O&G companies will need to develop a long-term strategy to diversify their revenue from traditional production. For many organizations, this means pursuing options outside the core area of business of pure oil and gas exploration and production. At present, the majority of organizations—with the exception of EU majors—invest just 1% outside the core business.

5. Utilities transformation roadmaps must be reconsidered post COVID.

As the energy sector grapples with the effects of the global pandemic, a transformation strategy based on the shift to energy services is no longer a viable growth opportunity. Organizations must refocus their digital transformation agenda around the acceleration and the prioritization of energy transition.

This year’s results are showcased in an interactive eBook. Access or download the book for more details about our findings, additional data and insights from our global team of energy experts.

The World Energy Markets Observatory (WEMO) is Capgemini’s annual thought leadership and research report that tracks the development and transformation of electricity and gas markets in Europe, North America, Australia, Southeast Asia, India and China. Now in its 22^nd edition, WEMO examines the following topics: climate change & regulatory policies; energy transition; infrastructure & adequacy of supply; supply & final customer; transformation; and financials.