A few thoughts on the energy and climate mood in #Davos2018 this year as my train rolls away through the gorgeous Swiss countryside. Three big themes around climate, energy markets, technology.
The most striking thing about the mood in Davos this year is the tremendous optimism business leaders have about the global economic outlook. That's bullish for energy demand and prices (not great for GHG emissions btw)
Many of the most prominent world leaders noted the threat of climate change as among the top challenges the world faces today. Modi placed it first, along with terrorism & globalization backlash. Macron pledged to shut down coal plants by 2021.
Leaders lamented Trump's retreat from climate action, particularly US withdrawal from the Paris agreement, and applauded China's leadership to promote renewables & reduce GHG emissions and pollution (even as its emissions rose last year, see NYT story)
In general, there was a mood of optimism & excitement about the energy transition. A sense that Trump can't slow things down because tech is advancing, other nations, cities, states are leading & businesses are stepping up to the climate challenge with new pressure from investors
For me, the optimism was encouraging, but far too much happy talk that ignores the reality of climate math--how vast the gap remains between where we are headed and what is needed to hit Paris targets, nevertheless 2 degrees.
On energy, big story is US--in 2 ways. First, reemergence as a global energy superpower, w oil output set to overtake Russia & Saudi. Energy firms and producers buoyed by recent price rise but worried rapid rise of shale will send down again. Get ready for volatility @Bob_McNally
Second, concerns about geopolitical risk--and how much of that now emanates from Washington because of unpredictability and reckless rhetoric from Trump.
Other top geopolitical concerns are N Korea along with Sunni-Shia tensions in the Middle East.
Populism and retreat from free trade and globalization also high on agenda, with risks to energy markets. Trudeau came to defend benefits of NAFTA. Trump's solar tariff decision exacerbates worries about possible trade war.
Al-Falih hinted that 2018 IPO timing was flexible, reiterated commitment to producer agreement, and played down hype about shale.
Novak seemed to go out of his way to remind everyone that all agreements must come to an end. Russia remains concerned about impact of high prices on other source of supply & ruble.
The dominant role of China in all things energy was evident in all discussions. Leaders applauded China's efforts to boost renewables and reduce GHG emissions and air pollution
China's the leader in clean energy and natural gas, and their efforts to "make skies blue again" viewed as supporting natural gas market (has already lifted LNG prices nearly 2X)
On technology, business leaders, including tradition energy companies, recognize that the pace of change should not be underestimated. Rapid declines in costs of batteries, renewables & more were rightly celebrated.
You can't walk 3 feet in Davos this year without running into a session on blockchain. Rightly looking beyond the bitcoin hype, there's huge interest in how blockchain technology will disrupt industries.
You can't walk 3 feet in Davos this year without running into a session on blockchain. Rightly looking beyond the bitcoin hype, there's huge interest in how blockchain technology will disrupt industries.
In energy this means everything from distributed microgrids to connected homes to oil and gas trading. Also much discussion of how machine learning, AI and big data would continue to disrupt how the traditional energy sector operates.
Many believe the rise of EVs, mobility as a shared service, and autonomous vehicles could bring decline in oil demand quickly while others like energy ministers/CEOs were more skeptical.
Even with aggressive assumptions about rise of EVs, cars are only 25% of oil demand, and growth in trucks, marine, aviation and petchem would mean oil demand still grows. Even with peak oil demand, @IEABirol rightly reminded new investment still needed to offset declines.
All in all, a fascinating few days-and good reminder that the research agenda we've set out @ColumbiaUEnergy around issues like carbon pricing, peak oil demand, changing gas mkt, & data sciences will be highly relevant in the years to come. Check it out at energypolicy.columbia.edu
