Energy Will Be the Key Issue of the 21st Century

Global Energy Day looks at the challenges of meeting demand



IESE’s Energy Club held a one-day conference titled "Global Energy Day" on the Barcelona campus during which a series of experts in the field analyzed the challenges and the changes in the energy market.

After an introduction by Nicolás Giordano, Iván Martén, senior partner and managing director of the Global Leader Energy Practice at the Boston Consulting Group, spoke about "The New Dynamics of Energy."

"Energy will the key issue of the 21st century," Martén said. "We want sustainable energy from a security and environmental point of view but we also want it to be cheap and this combination is impossible, so there have to be trade-offs."

A major problem, he said, is that the implications of energy use are measured in centuries and investment in decades, while political decisions are made in a time frame of four years. Politics make the energy ecosystem very fragile, he said, citing the 2009 Russia gas crisis, the Arab spring, the Fukushima nuclear disaster, Iran’s threat to blockade the Strait of Hormuz and the recent terrorist attack on a gas refinery in Algeria. All of these, he says, make self-sufficiency in energy supply – whether through renewables or shale gas - increasingly attractive.

The demand for coal is growing, Martén said, pointing out that coal is the most balanced fuel in terms of world distribution, whereas 70% of oil reserves are in Russia and the Middle East and 65% of gas is in five, mostly unstable countries. Demand will continue rising fast, especially in non-OECD countries such as China and "there is no revolutionary source of energy that is going to solve the problem of growing demand."

The need to reduce CO2 emissions implies action on both the supply and demand side. Energy efficiency programs are the key in order to cut emissions because renewables can’t fill the gap, he believes. However, renewables offer independence and the cost of wind and solar production is falling. Cheap oil is a thing of the past, he said, because the cost of exploration has gone up and because producing countries need the price to remain high to offset balance of payments.

His talk was followed by a panel on energy security moderated by Alok Thakur. "We tend to speak about the supply side in terms of security but efficiency on the demand side is also key," commented Emilio Estrada, deputy country head for BP in Spain.

For Máximo Whitelaw, sales and marketing manager at Cargill International, "Energy security also involves managing price volatility," while Ricardo Rodríguez Ortiz, manager at Schlumberger Business Consulting, and also an IESE MBA alumnus, said the essence of energy security is ensuring that supplies get to consumers.