The decoupling of GDP and energy growth: A CEO guide
Energy intensity is decreasing, renewables are gaining, and new efficiencies are on the way. Here’s how to build the resilience you need to navigate rapid change.
It’s long been axiomatic that economic growth and energy demand are linked. As economies grow, energy demand increases; if energy is constrained, GDP growth pulls back in turn. That’s been the case since the dawn of the Industrial Revolution, if not long before.
But past is not always prologue. Our latest global energy perspective—part of a multiyear research effort examining the supply and demand of 55 types of energy across 30 sectors in some 146 countries—suggests that we’re beginning to see a decoupling between the rates of economic growth and energy demand, which in the decades ahead will become even more pronounced.
That’s not because the world will be less “energy hungry.” People will continue to use energy in their daily lives, and happily, in the decades ahead, more people will have access to more modern appliances and on-the-grid housing. Businesses will still need energy to run; economies will require it to grow. Nonetheless, new technologies and larger trends should cause the energy demand curve to flatten.
Indeed, the energy landscape as we know it is poised for foundational change between now and 2050. What does this mean for companies and their leaders? For starters, your core business model may be tested, and new opportunities—and challenges—beyond it will almost certainly arise. Moreover, determining the right path will require companies to adapt both urgently and in measured stages. Navigating the great decoupling will take resilience. Farsighted leaders should start preparing now.
Energy and industrialization: A slow burn
Energy demand has long tracked economic growth. So much so that for the past two centuries, the amounts of energy that economies need have increased virtually in lockstep with the amounts of wealth that economies create. And, to a remarkable degree, wealth creation has depended on a society’s proficiency at burning things.
In 1800, the fuel of choice was biomass, such as wood from fallen trees. Even during the latter half of the 19th century, after the United States and parts of Europe had begun to industrialize, many economies ran primarily on biomass. Biomass was highly inefficient as fuel, as almost all of its embodied energy was lost in its burning. Still, before widespread industrialization, the conversion loss was bearable; generally, there was enough wood to burn to make economies grow. The resulting wealth creation wasn’t enormous, but it was pointing up. Primary energy demand (the demand for energy in its raw form, before it has been converted to secondary energy such as electricity or district heating) pointed up as well, growing at about 1 percent per year from 1850 to 1900.
Περισσότερα εδώ: https://www.mckinsey.com
