Cutting subsidies, diversifying economies, growing investment in renewables: with energy prices stabilizing at a lower level, how should the world respond?
The link between cheap oil and economic growth has been broken. So, what next for developments in the energy market? How will it be affected by trends such as the growth - and falling cost - of renewable energy, sluggish growth, resurging financial crises and lack of investment?
Stabilising the oil price
This session starts with a glance at the impact of OPEC’s cuts to production and their impact on the oil price.
Khalid Al-Falih, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources, highlights that OPEC members are complying with, and even exceeding, the production limits. However, he cannot rule out that further cuts may be necessary.
Moving away from oil
Fatih Birol, head of the International Energy Agency, says that higher prices, while they have had a stabilising effect, may also put downward pressure on the demand for oil. An increasingly important element in the mix is shale oil, especially from the US, the influx of which could also affect prices, he says.
While Birol proposes that the industry needs to differentiate away from oil, Khalid Al-Falih responds that he is not concerned about the impact of shale oil.
Alternative energy sources
Isabelle Kocher, CEO of Engie Group, points to another major energy trend, renewables, affecting the sector. She also sees a lot of growth potential in areas such as gas and distributed energy, and brings up the impact of electric vehicles will have on the demand for oil.
While Engie is preparing itself for this shift - for example by developing integrated systems and IoT competencies - she insists: “This is a transition, it won’t happen overnight. We try to manage it like a transition.”
Along similar lines, Saudi Arabia is currently reinventing itself as part of its Vision 2030 plan, which Khalid Al-Falih explains is as much about diversifying the economy as it is about diversifying energy resources.
The US question
The new US administration and its likely policies toward OPEC and other oil-producing nations like Russia are also being tabled, alongside questions about the country’s commitment to the climate change agreement.
Isabelle Kocher’s view is that the Paris agreement would be slowed down if the US exited but not affected fundamentally.