The current trend toward remote working and operations in business will likely continue to grow, not least as a way of managing the risk of future disruptions. Consequently, energy consumption can be expected to fall, supported by sustained energy conservation measures.
Alongside this, electrification and renewable energy will keep expanding. Investments in fossil fuel are already declining. This is partially in response to climate change, but also a reaction to ever-smaller returns, as evidenced by the continued drop in the oil price.
However, electrification faces two key challenges.
The first is the intermittency of renewable energy. One approach here is the development of large-scale storage, with one of the world’s biggest schemes, Advanced Clean Energy Storage, underway in Utah in the United States. It explores different types of storage for excess renewable energy, including powering the process of electrolysis to produce hydrogen.
Hydrogen is also widely seen as a solution to the second challenge: easing the path of sectors for which it is hard to electrify or reduce CO₂ emissions, such as heavy transport, aviation, and industries such as steel and cement production.
A wide range of government policy schemes is underway to support their move to hydrogen. For example, the European Commission (EC) has just announced its hydrogen strategy to develop what is currently a niche market to scale.
Successful decarbonization rests on lowering emissions whererever and however we can. For emerging and developing markets, for example, LNG will also play an important role as an interim step toward full decarbonization.
Since 2000, developing economies’ electricity demand has nearly tripled, due to industrialization, the growing middle-classes, and increased access to electricity.
In the short to medium term, the use of LNG as a cleaner-burning fossil fuel will allow these markets to expand economically and at pace – until renewables and hydrogen reaches maturity in these markets.