Energy panorama 2008

2008 marks the end of an economic cycle and a turnaround in energy demand. With the subprime crisis in the United States, the indicators already pointed to the possibility of an economic slowdown in 2007, but the intensity of the shock waves that swept through the Western financial system, followed by the world economy as a whole, came as a surprise. The second half of 2008 saw a rapid and sharp deterioration in the situation, with the IMF regularly revising its forecasts for world economic growth downwards for 2008 but also – and more importantly – for 2009. No country has been spared in this now global economy.
 
Since economic activity and energy consumption are closely linked, the current economic crisis is not without an impact on the energy markets.
In this respect, 2008 was a year of sharp contrasts, as well as one of records. Driven by an anticipated growing imbalance between supply and demand, the price of oil consistently broke records throughout the first six months of the year, peaking in July at almost 150 US dollars per barrel, before falling back to a third of this level by the end of the year as awareness grew of the extent of the crisis and its inevitable impact on world oil consumption.
 
This phenomenon was not specific to black gold. There was a similar trend in the price of coal during the course of 2008; and, in addition to fossil fuels, numerous other raw materials were affected.
 
So 2008 saw a sudden end to four years of exceptional growth, driving raw material prices ever upwards in an attempt to limit demand. However, we must not conclude that we have entered an era of plenty. The easing of the markets and current production overcapacities will continue only for as long as there is no growth. Ultimately, given the massive requirements of emerging countries, the same causes will produce the same effects. The growth potential of non-OECD countries and the thirst for raw materials that goes hand-in-hand with this will continue to be considerable whatever the case.
 
With respect to energy – and oil in particular –, past tensions are liable to re-emerge relatively quickly. In the long term, the fundamentals have not actually changed, particularly the concentration of reserves and the increasing difficulties involved in renewing them. In addition, tackling climate change is more crucial than ever. The energy transition is still very much on the agenda, therefore, and the short-term economic difficulties currently being encountered must not obscure the need to prepare for this transition.
 
Without adequate investment and a proactive energy and environmental policy, there is a real risk of major tensions in the energy sector. With this type of scenario, which could be termed “laxist” or “improvident”, the markets would be regulated by prices, as they were during the 2004 to 2008 period.
 
If we are to avoid falling into this kind of rut, it seems that there is a clear need to develop clean technologies quickly and gain better control of energy consumption. Although energy consumption per GDP unit has fallen significantly in OECD countries since 1973, per capita consumption continues to rise. The aim is now to reverse this trend.
 
Energy efficiency in non-OECD countries is also crucial to ensuring the planet’s energy and environmental balance. Chinese growth since 2004 is an indication of what will also happen in India and numerous other emerging countries. It is said that “To put all the Chinese on four wheels, we would need five planets”. How many planets would be needed to see four billion people get close to Western standards?
 
Soaring energy prices and a growing awareness of climate change are contributing to some major changes of direction. In France, the Grenelle de l'Environnement environment forum set the tone back in 2007. At the end of 2008, the European Union adopted its "Climate-Energy package", establishing some ambitious objectives taking us forward to 2020. Across the Atlantic, the new US administration has laid down the foundations for an "Energy New Deal".
 
The economic crisis has not jeopardized these new directions – quite the contrary. Indeed, it is now clear to all that innovative solutions in the field of transport, clean energies and control of CO2 emissions also represent potential sources of new jobs in the future. Innovation, a vector for economic growth, is therefore very much on the agenda for 2009 and offers us hope for the future.

+ Thematic technical reports, complements of the annual Panorama seminar