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Energy companies  should be planning for an industrial revolution driven by renewables


FT 4th March 2019 Nick Butler: A radical outlook needs strategy to match. Energy companies  should be planning for an industrial revolution driven by renewables. By
2035, renewables (solar and wind) will account for more than 50 per of
global power generation; electric vehicles will be the low-cost option for
car, van and small-truck drivers; oil demand will be declining; and gas
demand will have peaked.
Total energy demand will be plateauing despite a
growing global economy and a still-rising population. This is not, as you
might imagine, the latest summary of aspirations from a campaign group such
as Greenpeace or Friends of the Earth. Nor is it an ambitious claim by one
of the renewables trade associations.
In fact, all the statements above are
drawn from a serious, considered projection produced by McKinsey, the
global management consultancy. The key is the falling cost of renewables,
which are set “to become cheaper than existing coal and gas in most regions
by 2030”, McKinsey says. That will encourage electrification across the
global economy, driving efficiency by replacing less productive forms of
supply.
Over the next 20-30 years the energy business is set for an
industrial revolution. The 20th-century energy economy, centred on coal and
oil, is giving way to something very different. And this transition has
ceased to be a matter for the distant future or something that can be
pushed off by industry leaders to the next generation of executives. The
complacency that smothers hard thinking in most of the major energy
companies is outdated. In an industry that thinks on a 20-year horizon,
2035 is within the immediate planning horizon.
The revolution is happening
now. Establishing a corporate strategy for producing value in very
different market conditions should be a priority for all in the sector. We
are entering the season when energy companies produce their annual reports
and hold their AGMs. Shareholders, large and small, would be well advised
to ask the managers and non-executives who work for them to set out in
detail their plans for the transition. I would be delighted to publish a
collection of the answers.

https://www.ft.com/content/f3a201d6-3a7b-11e9-b72b-2c7f526ca5d0

March 5, 2019 - Posted by | 2 WORLD, renewable

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