The challenge is that the transformation concerns all levels of the energy system – a system consisting of many stakeholders who must all contribute with their share in the transition. These stakeholders can be categorised as key actors and key enablers. Key actors are accountable for one or several activities in the energy system, such as energy production, storage, distribution or in energy end-use sectors. Key enablers are stakeholders outside the energy sectors, who influence the operation of the energy system. These can be public authorities and regulators, research and knowledge institutions, financiers, non-governmental organisations and retailers. There are also manufacturers with their own supply chains providing the products and technologies used in the energy system.
Collaboration between the key actors and the key enablers will ease the transition to a low-carbon energy system. It is, for example, important that the stakeholders involved in the transition agree on transition pathways to avoid any uncertainty around the necessary long-term investments that also have to work in tandem. The energy system of the future will look very different to what we have been used to over the past century. The interconnectedness of the future energy system will be unmatched and the different system levels, sectors, technologies, markets and actors will change. This will happen in such a profound way that the operational principles and business models of the energy system will look remarkably different in the not so distant future.
Digitalisation is an important instrument for energy transition. It will enable the flexible management of energy system networks and make the system more intelligent, reliable and efficient. This will impact both energy demand and supply. The electricity sector and smart grids are at the center of digitalisation. Ultimately, digitalisation will extend to energy production and to all end-use sectors by providing system balance with flexible integration and optimised operation of the system. As an example, demand response programs in buildings, industry and transport provide flexibility without requiring investments in new electricity infrastructure. In energy end-use sectors, digital technologies are already widely used. The industrial sector has used process controls and automation for decades. This development will continue and expand, improving the efficiency of energy and material use.
In buildings, the role of smart home services and energy management services and applications is increasing rapidly. In the transport sector, digital solutions for trucks and logistics could reduce energy use for road freight considerably. Alternatively, impacts of automation, connectivity and shared mobility services are harder to predict. The impact of digitalisation on energy demand is two-sided. It can bring large improvements in energy efficiency for all end-use sectors. However, the prevalence of more devices and data centres could cause a large net increase in energy use, if not managed carefully. Parallel to the opportunities, digitalisation gives rise to new security and privacy risks, as well as disrupting markets and businesses. An example is the growth of Internet of Things (IoT) which will have significant benefits for different levels of the energy system, but it also increases the risk of the energy system being targeted in cyberattacks.
— Mika Anttonen, Chairman of the Board, St1 Nordic Oy
One of the biggest challenges that St1 perceives is the difficulty of radically changing the rules dictating how the energy system works, and the underlying incentives for reducing emissions. We have outlined some of these rules and incentives in the earlier chapters, like the need for a carbon market (ref chapter 10).
Not everyone will agree with our view. Some are afraid that a carbon market facilitating carbon sequestration through afforestation is just an easy way out for polluters. We are, however, convinced that the time has come to drastically change the pace and scope of climate efforts. We no longer have the luxury of incremental change. The information is there, what we need now is action.
