My Post yesterday revisited the intersections that shape our future. Convergence across multiple domains sets these intersections in motion. In this context, convergence refers to a virtuous cycle where events in one domain spur action in another. The great inventions (electricity, telephone, and internal combustion engine) were clustered together at the end of the 19th century, forming a virtuous cycle that drove a period of astounding innovation. Several Catalysts drove an enabling convergence across the economy, science, technology, business, geopolitics, and a broader set of societal issues.
One scenario explored in the post yesterday was Energy. The current global pandemic is wrought with uncertainty. Does it accelerate aspects of our future, inhibit advancement, or accomplish both? Broadly speaking, it is both, and in the case of energy, some are positioning it as an Accelerant. This Article by Julia Horowitz describes the possible driver: a plunge in oil demand triggered by the pandemic. Ms. Horowitz mentions that UBS analysts estimate that earnings in the sector were down 172% on average last quarter compared to the same period a year ago. She states that pressure is mounting on producers to make big strategy moves that companies have long resisted.
Case in point: said last week that it would slash oil and gas production and pour billions of dollars into clean energy, speeding up a transition it teased earlier this year. The company estimates a considerable (upwards of 75%) drop in demand for fossil fuels in the next 30 years. BP chairman Helge Lund had this to say: “Energy markets have begun a process of fundamental lasting change, shifting increasingly towards low carbon and renewables. Over the longer term, the demand for both oil and gas will be increasingly challenged.” There are several behind-the-scenes factors that contribute to this acceleration. Some banks are backing away from lending money to the industry, and shareholders are being pressured by activists to stay clear of hydrocarbons.
It was back in 2014 when I wrote about the Energy Internet. In his book titled The Zero Marginal Cost Society, Rifkin describes how Internet technology and renewable energies are merging to create an energy Internet that changes the way power is generated and distributed in society — a paradigm shift in energy similar to what occurred in computing. He describes an emergent system with synergies between Five Pillars that drive this paradigm shift:
- Shifting to renewable energy
- Transforming buildings into micro-power plants to collect renewable energies
- Deploying hydrogen and other storage technologies to store intermittent energies
- Using Internet technology to transform the power grid into an energy Internet
- Transitioning the transport fleet to electric plug-in and fuel cell vehicles that can buy and sell green electricity on a smart, continental, interactive power grid
Progress has been steady but slow in most cases. But as catalysts have done throughout history, the pandemic may drive a tipping point. Explore more about COVID-19 via these earlier posts.