COVID-19 Crisis Scenarios - Summary - COVID-19|JUNE 2020 - World Energy Council
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COVID-19 Crisis Scenarios Summary COVID-19 | JUNE 2020
COVID-19 CRISIS SCENARIOS
INTRODUCTION
In less than six months COVID-19 has resulted in
dramatic changes across the globe, with 8.1 million
confirmed infections and over 439,000 deaths.1
In response to the crisis the World Energy Council
(the Council) has developed four scenarios to sup-
port the global energy community in addressing the
new and urgent leadership question of how we can
emerge from the COVID-19 crisis as a more resilient
society and continue to accelerate a successful global
energy transition.
The Council aims to provide plausible and impartial
scenarios as a reference set for the global energy
community. We are using this set of scenarios to build
a new leadership dialogue platform on which we will
convene energy transition ecosystem players. Used
as a set, these scenarios can prompt better quality
strategic conversation on the reallocation of invest-
ments, exit strategies and policy pathfinding needed
to enable orderly global energy transition as the world
emerges from crisis.
Many of the after-effects of COVID-19 will be with
us for some time, and it may take a while to return to
normal or a new normal. Our scenarios are designed
to see what is emerging even within the current fog
of uncertainty.
1
As of 15 June 2020, https://www.worldometers.info/coronavirus/
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© World Energy Council 2020 | www.worldenergy.org | @WECoucilCOVID-19 CRISIS SCENARIOS
PLAUSIBLE ALTERNATIVE SCENARIOS
How will this pandemic change the future? quickly will the global economy recover? Will Critical uncertainties
While no one can answer this question, we recovery happen in a way that builds trust
can identify the relevant signals of change within and between countries, through wider
and create plausible scenarios for what lies collaboration, or will governments and the
ahead. public emphasise more self-reliance?
Once the pandemic is fully under control
Countries have focused their immediate globally – and this might take 2-4 years –
concerns on addressing the challenge posed countries will be able to examine the lega-
AMBITION
by the large number of those infected who cy of COVID-19. Will countries return to a Return to pre-pandemic normal
need hospitalisation. Other responses have pre-pandemic agenda? Or will they engage vs. transformational transition
included utilizing ‘social distancing’, increas- with a more ambitious transformational
ing hospital capacity and investing in the de- agenda? And what are the implications for
velopment of diagnostics, therapeutics and energy?
a vaccine. Even with this intensity of focused
attention across the world, much remains un- There are many shapers of the future, but
known about the epidemiology of COVID-19. three are particularly critical for govern-
ments and enterprises: TRUST
The “unknowns” of the COVID crisis cover
every aspect of global response and recov- Global collaborative approach vs.
The degree of ambition in addressing a
ery. How pernicious is the pandemic? How diverse approaches with greater
wider resilience agenda, including climate
well will countries cope? Will the pandemic self-reliance
change, or a reversion to the old agenda.
be solved quickly with a medical technology
fix, or will it require sustained behavioural Whether countries trust each other in
changes? addressing the pandemic and other global
challenges, or whether recovery efforts rein-
The costs of tackling the pandemic world- force self-reliance.
wide have been already massive – an esti- CONTROL OF THE VIRUS
mated $10 trillion to date as countries have Whether a global vaccine is found to solve
been in lockdown, and economic activity has the pandemic or sustained behavioral chang- Seasonal/stop-start vs.
been in a historically deep recession. How es are needed. techno/medical-fix vs.
behaviour change
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© World Energy Council 2020 | www.worldenergy.org | @WECoucilCOVID-19 CRISIS SCENARIOS
Notably we have aligned the faster collab- Scenarios framework
orative resolution of the pandemic with
the discovery and rapid global dissemina-
tion of a vaccine, whereas the slower reso-
lution is associated with countries solving Transformational
the pandemic locally, primarily through transition
behavioural changes.
We examine four challenging scenarios bottom-up diverse collaborative
that explore the trust-ambition-control experiments to create a opportunities
framework. human-centred transition for transformation
RE-RECORD FAST-FORWARD
The four scenarios and their taglines are Diverse
shown below: approaches & Global
self-reliance collaboration
PAUSE: collaboration aiming at a return
to normalcy
FAST-FORWARD: collaborative op-
portunities for transformation REWIND PAUSE
a turn away from collaboration
REWIND: a turn away from globalisa- globalization to repair aiming at a return
tion to repair the local economy the local economy to normalcy
RE-RECORD: bottom-up diverse
experiments to create a human-centred Back to pre-pandemic
transition normal
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© World Energy Council 2020 | www.worldenergy.org | @WECoucilCOVID-19 CRISIS SCENARIOS
Let us examine these scenarios in a little more detail, beginning with the two ‘high trust’ scenarios, in which medical tech-
no-fixes largely resolve the pandemic by the end of 2021.
HIGH-TRUST SCENARIOS
PAUSE FAST-FORWARD
After the imposed pause of the global pandemic While the pandemic has put economic growth At the moment, quantification of COVID-19
lockdowns, societies open up and collaborate in patterns in reverse, it has put transformation and scenarios can only be illustrative. However, we
an attempt to return to a pre-pandemic normal. collaborative innovation on fast-forward. Suc- assume for each of the two ‘high trust’ scenarios
The advent of a vaccine and a desire to collabo- cessfully tackling COVID-19 through effective that global GDP declines by 5% in 2020 with a
rate enables containment of the virus by 2022. scientific collaboration, using big data, combined bounce-back in 2021, and then an annual rise at
Energy demand slowly rises, although not to 2019 lab resources and rapid scale-up of vaccine man- historical rates to 2024. Such a recovery would
levels, and oil prices begin to recover, in part be- ufacture invigorates the economy. A new world boost demand for electricity, low-carbon sources
cause the crisis has left fewer energy companies order is beginning to develop, with China on the would outpace coal-fired generation, and world
in the game. The slow recovery advantages big rise. Effective partnerships create technolo- oil demand would reach 2019 levels by 2022.
global corporations and the rich, leaving the poor gy-enabled redundancy and resilience rather than
and the poorly financed even further behind. efficient supply chains designed for lowest cost. In Pause there is a strong focus on resolving eco-
nomic challenges. In Fast-forward a rise of public
The slow rise in oil prices promises to make Collaboration among oil producers to control support for addressing resilience challenges gives
renewables competitive again, but only after a supply allows oil prices to rise. Against these pric- governments confidence in recovery policies that
long recovery. With economies heavily scarred, es, renewable energy becomes more competi- deliver on both economic and climate goals.
the international community focuses more on tive, especially when renewable infrastructures
stability, not transformation, and many countries can be built on a collaborative basis. Collabora-
attempt to set up the old international supply tion also forms the basis of progress on climate
chains. Debt and uncertainty make it tough to change policy implementation – even though this
finance new projects, significantly slowing the progress towards a just transition, while faster
transition to a new energy economy. Most gov- than was expected, is still too slow to reach the
ernments respond to the looming climate crisis reasonable 2030 emissions targets necessary
with policies that emphasize stability rather than for putting countries on-track to meeting 2050
change. Although no one is willing to give up the commitments.
Paris ambitions, there is a general acceptance
that progress will be slower than expected.
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© World Energy Council 2020 | www.worldenergy.org | @WECoucilCOVID-19 CRISIS SCENARIOS
In the two ‘low trust’ scenarios, medical techno-fixes are slow in coming, and the pandemic is resolved by the end of 2023,
largely through diverse country-specific behavioural fixes.
LOW-TRUST SCENARIOS
REWIND er this, and some even continue developing their infrastructure. Financial investment begins to mi-
renewable energy capacities. But poor countries grate from fossil fuels to mixtures of fossil fuels
Globalisation is rejected in a “me-first” drive to are left to their own resources, with a number and renewables on diverse pathways to circular
repair the local economy. Vaccine development relying more heavily on domestic resources such economies and hybrid energy system. These
is slow, and governments look to behavioural as coal. local experiments, enabled by technology, begin
fixes to tackle the virus. By the end of 2022 the to re-record the old version of the global energy
US, UK and China all develop promising vaccines, RE-RECORD infrastructure, with the creation of new, locally
giving priority to their own populations. Not all focused renewables, storage and regenerative
countries without vaccines handle the virus well, The period to 2023 is grueling. Bottom-up options.
nor do they effectively manage the dramatic loss diverse experiments create a human-centered
of economic activity. The global pandemic has transition. Vaccines and treatments proliferate in For each of the two ‘low trust’ scenarios we as-
exposed the vulnerability of global supply chains a confusing, non-coordinated fashion, with very sume global GDP declines by 8% in 2020 with an
and the dangers of interdependence. different outcomes on a city-by-city level. The annual rise at historical rates to 2024. With such
slow economic recovery following the pandemic a recovery wind and solar power would increase
Most countries respond by pulling back, in a kind is accompanied by social unrest. Globalisation their share of generation to nearly 9% in 2020.
of rewinding of a taken-for-granted global order. is on the backfoot. In most countries, work-
Some sectors, notably energy, agriculture, and ers at the low end of the scale, who have been In Rewind energy security remains the corner-
pharma, face a growing protectionist movement acknowledged as ‘essential’, begin to demand stone of policy. There are diverse approaches to
as trade becomes less global and more bilateral. greater equality and a more just society, starting climate change from disinterest to wide support,
An inward-turning, domestic focus creates a wid- with recovery programs that focus on job oppor- but overall progress remains inadequate.
ening gap between rich and poor countries, with tunities.
uneven recovery at every level. Re-record involves very different degrees of
Under the three-pronged nudging of low-wage success (and failure) in addressing the pandemic
This global decoupling extends to the energy workers, local environmental activists, and the and a breakdown of global cooperation. In many
transition as well. As demand rebounds in rich increasingly influential corporate social respon- countries the power to act is increasingly sub-re-
countries, a delay in the increase of capacity leads sibility movement, governments offer national gional and local community focused. There is so-
to a sharp rise in oil prices. Rich countries weath- incentives for transformations in the energy cial unrest in some areas, but also the pervasive
rise of constructive local solutions.
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© World Energy Council 2020 | www.worldenergy.org | @WECoucilCOVID-19 CRISIS SCENARIOS
THE USE OF SCENARIOS METHODOLOGY
Scenarios provide an inclusive and strategic The Council is following an agile scenar-
framework that enables big-picture thinking io-building process that gathers informed
and supports decision-making under uncer- insights across the globally diverse energy
tainty. Scenarios are designed to be used community and engages leadership perspec-
as a set to explore and navigate what might tives on emerging developments.
happen, not what should happen. They
help to stress test and design strategic and Key steps of this process include:
policy options and facilitate a better-quality
strategic dialogue on the future of energy 1. Assessing impacts of the crisis on organ-
systems. isations and countries through global com-
munity pulse surveys and regional experts’
While it is impossible to predict the future conversations.
of energy, we can prepare and shape what
comes after crisis. The Council promotes 2. Identifying critical uncertainties, develop-
and uses plausibility-based COVID-19 crisis ing a flexible scenarios framework and ex-
scenarios to prompt leadership conversa- ploring emerging leadership themes.
tion on reallocation of investments, exit
strategies and a possible new integrated 3. Using the scenarios framework to build an
policy path to enable orderly global energy ‘open source’ strategic early warning system
transition as the world emerges from crisis. to identify and track signals of change and
clarify implications for the pace and direction
We recognise this moment as unique in of global energy transition.
recent history – an opportunity to direct in-
vestments to global energy transition and to 4. Using the scenarios to prompt leadership
design strategies and policy paths to secur- conversation on investments, strategies and
ing clean, affordable, reliable and equitable policies to enable orderly global energy
energy for all. transition.
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© World Energy Council 2020 | www.worldenergy.org | @WECoucilCOVID-19 CRISIS SCENARIOS
ANNEX: COMPARISON TABLE
PAUSE REWIND RE-RECORD FAST-FORWARD
The advent of a vaccine Vaccine development is Vaccines and treatments prolif- Scientific collaboration using
and a desire to collaborate slow and governments look erate in a confusing, non-coordi- big data, combined lab re-
Epidemiology enables containment of to behavioural fixes to nated fashion with very different sources and rapid scale-up of
the virus by 2022. tackle the virus. city-by-city outcomes. manufacturing is effective.
The international economy Domestic focus creates a The slow economic recovery is Collaborative innovation
focuses on an attempt to widening gap between rich and accompanied by social unrest leads to a global recovery.
Economics return to pre-pandemic poor countries, with slow, un- and a local focus.
normal. even recovery at every level.
The international commu- Countries turn from globali- Globalisation A new world order is be-
nity focuses on stability. sation in a “me-first” drive to is declining. ginning to develop, with
Geopolitics repair the local economy. China on the rise.
Most governments em- Global decoupling extends to Local experiments, enabled Collaboration forms the basis
phasize resilience, with energy transition as well. by technology, lead to the of progress on climate change
slow progress on fulfilling creation of a new regenera- policy implementation.
Environment
COP21 ambitions. tive track.
Social fabric holds Social fabric is frayed Shift in social norms triggers Social resilience is
in most countries. in many countries. decentralised people power. strengthened.
Society
Debt and uncertainty make it Energy sector faces growing Investment migrates from fossil Collaboration in building
tough to finance new energy protectionism as trade becomes fuels to mixtures of fossil fuels renewable infrastructure
projects, slowing the transi- less global and more bilateral. and renewables on diverse path- leads to more competitive
Energy tion to a new energy economy. ways and hybrid system. renewable energy.
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© World Energy Council 2020 | www.worldenergy.org | @WECoucilPublished by the World Energy Council 2020
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Covid-19 Crisis Scenarios
Summary
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