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A.T. Kearney Energy Transition Institute - 10 Facts, An Introduction to Energy Transition

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The A.T. Kearney Energy Transition Institute is a nonprofit organization. It provides leading insights on globaltrends in energy transition, technologies, and strategic implications for private sector businesses and publicsector institutions. The Institute is dedicated to combining objective technological insights with economicalperspectives to define the consequences and opportunities for decision makers in a rapidly changing energylandscape. The independence of the Institute fosters unbiased primary insights and the ability to co-createnew ideas with interested sponsors and relevant stakeholders.

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A.T. Kearney Energy Transition Institute - 10 Facts, An Introduction to Energy Transition

  1. 1. 10 Facts: An Introduction to Energy Transition
  2. 2. As energy transition takes off, access to new competitive clean-energy alternatives will accelerate. Businesses and governments that want to capitalize on the opportunities will need to navigate a rapidly changing energy landscape shaped by four key dimensions: Energy security Providing safe and reliable supply of energy to all, including the poorest Energy costs Enabling acceptable energy costs to foster economic growth Social acceptance Deploying energy solutions that are accepted by the civil society Climate change Developing sustainable low carbon solutions suitable in a carbon constrained world Source: A.T. Kearney Energy Transition Institute
  3. 3. 1. Decoupling greenhouse gas emissions from economic growth is improving at only 1% per year. Securing economic growth and energy efficiency will require innovative new approaches. 1960 Notes: GDP in constant USD2014; Energy refers to total primary energy demand; CO2 refers to energy-related CO2 emissions Source: BP (2015) “Statistical review”; World Bank (2015) GDP data; A.T. Kearney Energy Transition Institute 0.4 0.2 0.0 0.3 0.1 1970 Global Primary Energy Consumption per GDP kgofoilequivalent/GDP$ 1980 1990 2000 2010 2020 –0.9%
  4. 4. 2. Energy use has a major impact on our climate— accounting for two-thirds of global greenhouse gas emissions.1 Forward-thinking businesses and governments are investing in solutions that use less energy, reduce costs, and make it easier for consumers to make the transition. 2/3 Remaining 1/3 from forestry/agriculture/waste (25%) and other industrial emissions (9%) Source: IEA, CO2 Emissions from Fuel Combustion Highlights 2016; A.T. Kearney Energy Transition Institute 1 Including CO2 (90%), CH4 (9%), N2O (1%)
  5. 5. 3. Switching from coal to gas could reduce the world’s CO2 emissions by 20% With more than 200 years of gas reserves, utilities and oil and gas companies have a wealth of growth opportunities. Natural gas supply (years) 233 Technically recoverable resources 58 Proved reserves (according to OPEC) 20 Proved reserves (according to RYSTAD) 1 Annual production Sources: IEA, World Energy Outlook 2013; OPEC Annual Statistical Bulletin 2014, Rystad Energy; A.T. Kearney Energy Transition Institute
  6. 6. 4. Carbon capture and storage is essential to keep global warming from rising above the 2°C threshold, but it requires robust carbon pricing mechanisms or direct public financial support to compensate for the immediate high upfront investments that are needed. CO2 Source: A.T. Kearney Energy Transition Institute
  7. 7. 5. With major automakers introducing new models, the global fleet of electric vehicles could see massive growth. However, this will still only be about 10 percent of the world’s vehicles. Improving fuel engine efficiency will remain a priority for our climate for years to come. 2015 2030 140 million+1 million Sources: EA Energy Technology Perspectives 2016 (2DS scenario); A.T. Kearney Energy Transition Institute
  8. 8. 6. Onshore wind and solar PV are the cheapest electricity sources in favorable locations, offering attractive investment opportunities and accelerating the energy transition. 2017 Production costs/kWh 1970s Sources: IRENA (2015), “Renewable Power Generation Costs in 2014”; A.T. Kearney Energy Transition Institute Note: kWh is kilowatt hour.
  9. 9. 7. Up to 20% of electricity is lost during transmission and distribution. Smart-grid technologies can recover most of these losses and reduce CO2 emissions by up to 4 percent in the next 10 to 15 years. Gener- ation Trans- mission Distri- bution Consump- tion Sources: The World Bank, "Electric power transmission and distribution losses, 2011 dataset"; IEA (2012), “ETP 2012”; A.T. Kearney Energy Transition Institute
  10. 10. 8. The global energy transition is being led by new technologies and drastic drops in the cost of electricity storage needed to cope with fluctu- ations in renewable power generation. With the exception of pumped-storage hydroelectricity, electricity storage is at an embryonic stage. Current split of electricity storage 98% Pumped hydro storage 0.7% battery storage 1.3% other1 Sources: BNEF database (November 2015); IRENA database (November 2015); A.T. Kearney Energy Transition Institute 1 Includes thermal; flywheel, hydrogen, and CAES (compressed air energy systems)
  11. 11. 9. The energy industry uses 15% of the world’s supply of fresh water. Meanwhile, two-thirds of the world’s population faces a water shortage. Solar and wind power improves energy security while also alleviating the water shortage in water- stressed regions. Sources: IEA (2012), “World Energy Outlook 2012 – Chapter 17 Water for Energy”; A.T. Kearney Energy Transition Institute Note: calculated using mean data from Meldrum, et al. (2013)
  12. 12. 10. If we used all of the world’s coal, oil, and gas reserves, we would exceed the CO2 threshold to limit global warming below 2°C three times over. Forward-thinking oil and gas companies are already considering ways to optimize their portfolios to avoid stranded assets and are pursuing opportunities in gas and renewable energy. Sources: IPCC (2015) “AR5, Synthesis Report”; A.T. Kearney Energy Transition Institute 1,900 GtCO2 C02 emitted (1870–2011) 1,000 GtCO2 C02 budget remaining in the 21st century
  13. 13. The A.T. Kearney Energy Transition Institute is a nonprofit organization. It provides leading insights on global trends in energy transition, technologies, and strategic implications for private sector businesses and public sector institutions. The Institute is dedicated to combining objective technological insights with economical perspectives to define the consequences and opportunities for decision makers in a rapidly changing energy landscape. The independence of the Institute fosters unbiased primary insights and the ability to co-create new ideas with interested sponsors and relevant stakeholders. For more insights on global trends in energy transition, technologies, and strategic implications for your business or institution, please visit our website or contact our experts. Visit our website Talk to our experts

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