Nick Butler: The energy market has changed dramatically in the last 20 years. Growth now comes from Asia rather than Europe or the US. Shale gas and oil have been developed, transforming the established pattern of trade. Renewables have seen costs fall year by year. At the macro level, demand has risen with tens of millions of new consumers able to buy the energy they need for the first time. Counter-intuitively, perhaps, prices for most forms of supply have fallen. One element of the picture, however, has not changed. In 2000 just over 80 per cent of total energy demand was met by hydrocarbons – oil, gas and coal. In 2018, that percentage was exactly the same. As a result, with absolute volumes higher, emissions have inevitably continued to grow. By this measure, the energy transition has hardly begun. The question is whether there will be another change in the energy market which will meet the challenge of climate change and the risk of global warming. One technology offers some hope precisely because it is based not on science fiction or any great breakthrough in science or engineering. Nor does it require the imposition of a global system of carbon pricing which, however rational, remains politically impossible. The most likely and promising advance of the next 20 years is the creation of a truly global energy market built around long distance high-voltage power grids. Historically, the power losses suffered along large transmission distances have constrained the ability of local grids to smooth out fluctuating energy demand and supply across different time zones and international borders. But transmission systems that are more capable of preserving the bulk of their power over many hundreds of miles now exist. Over time, however, the impact could be enormous. The historic idea that energy policy needs to be managed and controlled within national boundaries would be overtaken by the simple economic benefits of accessing low-cost global supplies. The diversity of inputs to the system would answer concerns about energy security. Just like the internet, a global power grid would transform the way in which we live.
FT 12th March 2019 read more »