Energy Market Trends and Scope for Sustainable Development

Larisa S. Shakhovskaya

and Victoria I. Timonina

Department «Economy and enterprises», Volgograd State Technical University, Volgograd, Russia

Department of economic theory, Financial University under the Government of the Russian Federation, Moscow, Russia

Keywords: Energy, Sustainable Development, Energy Security, Environmental Sustainability, Technological Order.

Abstract: Sustainable energy development is commonly characterized in terms of economic, environmental, and social

components. Sustainable energy development can be considered at 3 levels: State level; Energy sector level;

Energy enterprise level. There is no uniform approach to defining sustainable energy development in world

practice. Сan be identified technological order only for assessing energy sustainability at the State level.

Relevance is that the development of a comprehensive assessment of the sustainability of energy is a

promising avenue for identifying the energy priorities of countries, implementing more efficient energy

policies, analyses the sustainability of energy industries and enterprises.

1 INTRODUCTION

In times of energy crisis, many experts have written

about the transition from limited resources to almost

inexhaustible or renewable energy resources.

Suggestions were made about nuclear power and the

establishment of Nuclear Power Plants. From 1980 to

1990, energy market players began to focus on

environmental problems by proposing renewable

energy (RE) - based cleaner energy systems. At the

same time, demands were made for the

inexhaustibility of the energy resources used and, at

the same time, for a clean environmental policy that

is consistent with the principles of sustainable

development, i.e. the uninterrupted supply of energy

and the development of national energy.

The market economy is now facing new

challenges in the area of sustainable development,

particularly in the area of energy and the

environment. Society needs a global economic

transformation that promotes a rapid transition to

sustainable infrastructure, technology and a more

equitable distribution of resources.

It is the transition to sustainable development that

is understood as the establishment of a balanced

system that combines environmental security and

economic efficiency.

https://orcid.org/0000-0002-3700-2435

https://orcid.org/0000-0003-2344-6497

However, sustainable development, as opposed to

economic growth, implies the creation of an

economic structure capable of generating future

economic growth and, of course, of further

development. This, in turn, allows the economic

system to replace sources of growth that have been

depleted (as a result of human activities).

2 METHODOLOGY

According to C. Y. Glaziev’s concept of technology

(Glaziev, 1993, the period 2010 - 2018 can be

attributed to the embryonic phase, and 2018 is the

beginning of the growth phase of the technological

system, which will continue until 2040 (see fig. 1).

Figure 1: Phases of technological orders.

Shakhovskaya, L. and Timonina, V.

Energy Market Trends and Scope for Sustainable Development.

DOI: 10.5220/0010664200003223

In Proceedings of the 1st International Scientiﬁc Forum on Sustainable Development of Socio-economic Systems (WFSDS 2021), pages 76-81

ISBN: 978-989-758-597-5

New energy for the Sixth technological order will

be nuclear power. The Sixth technological order will

enter the stage of maturity as early as the 30th to 40th

years of the 21st century, and in this context the

problem of ensuring the technological safety of

Russia is extremely relevant:

 ensuring the State’s scientific, technical and

technological independence from external

threats;

 restriction of penetration into the territory of

the State of morally obsolete technologies

which ‘harm’ economy, ecology and human

health (Bashmakov, 2009).

Each of the different orders of development went

through different stages, which differed as a measure

of its impact on overall economic growth in the

country (see fig. 2).

It is worth mentioning as a methodology the

available models of the technology market, where the

following groups of countries can be ascribed to the

role and place in the world division of labour in the

area of scientific and technological progress:

countries that are ‘stuck’ on the periphery of

economic progress and countries - leaders of world

technical and economic progress. The latter create the

most advanced production technology and the most

efficient economic mechanisms, in terms of the rate

of growth of national wealth.

The catch-up model is characteristic of countries

in the ‘level’ of world technical and economic

progress. The main feature of this model is that

development is based on technologies and economic

mechanisms that have in turn been developed in the

lead countries. For example, such as Japan, which has

achieved high levels of economic development in

resource-constrained environments, while relying on

borrowed technologies. That is the historical factor in

Japan’s economic miracle.

The next model is a ‘simulation’ model of

economic development. The model is based on the

premise that simulation policy favours the selection,

rather than the creation, of technologies that have

been developed by economically more advanced

foreign countries.

Experience has shown that the specificity of such

development or technology policy has allowed many

countries to avoid the high cost of developing

innovative technologies (investment in the relevant

sector of the economy), it also avoided the

commercial risk that inevitably accompanies all

innovation in a market economy.

Experience has shown that the specificity of such

development or technology policy has allowed many

countries to avoid the high cost of developing

innovative technologies (investment in the relevant

sector of the economy), it also avoided the

commercial risk that inevitably accompanies all

innovation in a market economy.

As the products became obsolete on the market,

licenses for their production were sold to the

countries of the ‘second technological order’. These

include Korea, Malaysia, Thailand, and others. And

because these countries have a competitive advantage

the form of cheap labour, a liberal monetary and

Figure 2: Technological change (Glaziev, 2009).

•The main resource is the energy of water.

•The main industry is the textile industry.

•The key factor is textile machines.

First technological order

•The main resource is steam energy, coal.

•The main industry is transport, black metallurgy.

•The key factor is the steam engine, the steam drives of the machines.

Second technological order

•The main resource is electrical energy.

•The main industry is heavy machinery

•The electric motor is the key factor

Third technological order

•The main resource is hydrocarbon energy.

•The main industries are petroleum refining.

•The key factor is the internal combustion engine.

Fourth technological order

•The main resource is nuclear power.

•Major industries are elctronics, information technology.

•The key factor is the microelectronic components.

Fifth technological order

Energy Market Trends and Scope for Sustainable Development

fiscal regime, they become ‘attractive’ for TNC

investment in mass production. This was the process

of setting up and implementing mass production of

consumer goods such as electronics, household

appliances, automobiles, etc. Such countries follow a

strategy of ‘catching-up development’, but the lack of

a developed scientific and research industry is a major

weakness in their long-term development strategy.

‘The Adaptation’ economic development model is

oriented towards the adoption of foreign

technologies. This is the case for countries at the

‘third technological order’ where technologies are

used to produce low-cost products, in countries with

low per capita incomes. ‘Transitional’ model of

economic development developed in the countries of

the post-Soviet area. Between industrialized and

developing countries (the core and periphery of the

world economy), they are characterized by high

energy consumption, modern consumer standards,

resource-resource orientation of the economy, a high

share of labour in industry and construction, and the

existence of agrarian underdeveloped regions

(Seidakhmetov and Elshibekova, 2011).

3 RESULTS OF THE RESEARCH

Over the past decade, we have witnessed a paradigm

shift that has transformed various sectors of the

economy, especially the energy sector. The concept

of sustainable development has created a modern

energy paradigm that responds to current trends in the

world economy. Table 1 presents a chronology of the

current energy paradigm with the changes and events

that caused them.

Table 1: Stages and elements of energy paradigm-building in sustainable development (Spittler et al, 2019).

Year Development Concept Energy

1970s

Stockholm Conference on the Human

Environment

The limits of fossil

resources and their impacts.

Environmental impact.

Energy security

The oil crisis;

Establishment of the IEA;

Establishment of OPEC

Energy Modeling Forum (EMF)

1980s

The Brundtland Report,

Intergovernmental Panel on Climate

Change (IPCC)

Sustainable development Establishment of the

World Energy Council;

Cost concept of stored energy

and energy supply curves

1990s UN Conference on Environment and

Development in Rio, Brazil

Signing of the agreement UNFCCC,

Agenda 21 of the 1st IPCC Report

Climate change Merger of energy and climate

studies;

Contribution of energy

researchers to Special report on

Emission Scenarios;

2000s Millennium Development Goals (MDGs),

Report of the 9th UN Session,

Commission on Sustainable

Development,

The World Summit on Sustainable

Development,

Kyoto Protocol,

Creation EU ETS

Energy is a key element for

sustainable development.

Link between energy and

socio-economic

development (energy-to-

poverty ratio, urbanization,

population dynamics).

Mutual impacts of energy

systems

IAEA, IEA;

World Energy Assessment -

Energy and Sustainable

Development Challenges

UNDP

First EU Energy Action Plan

(20/20/20 goals)

2010-

b.c.

Sustainable Development Goals (SDGs),

Paris agreement

Short- and long-term

objectives

Synergies and trade-offs

between different

development goals

Limits of RES and their

implications

Impact of climate change on

energy systems

Launching sustainable energy

for all

Climate change mitigation

strategy;

Strategy for adaptation to

climate change; Discussions on

climate and energy equity;

Projects for deep

decarbonization

WFSDS 2021 - INTERNATIONAL SCIENTIFIC FORUM ON SUSTAINABLE DEVELOPMENT OF SOCIO-ECONOMIC SYSTEMS

Given the speed with which natural and socio-

economic phenomena and the current global energy

paradigm are changing, it is necessary to improve the

key elements and mechanisms of the energy sector at

all levels. The transition to a new energy paradigm in

the XXI century will not happen naturally but must be

accompanied by the development of innovative

technologies and the removal of political barriers by

all States of the world.

In 2018, the Club of Rome presented a new report

‘Come On! Capitalism, Short-termism, Population

and the Destruction of the Planet’(Weizsaecker and

Wijkman, 2018). A key idea of the report, which was

prepared by the two presidents of the Rome Club

Ernst W. von Weizsaecker and Anders Wijkman, is

the idea of ‘the new Enlightenment’, which should

result in a holistic world view - humanistic and open

development, valued sustainability and looking to the

future.

According to E.-W. von Weizsaecker, for the

Sixth technological erder, the principle is industrial

ecology and green nanotechnology, which allow

achieving sustainability and maximum resource

productivity.

The analysis of long-term development trends

leads to two important conclusions regarding the

sources and types of energy of the future:

1) A key factor in the restructuring of world

energy - limiting greenhouse gas emissions;

2) The demand for carbon-free energy sources in

the world may lead to the abandonment of traditional

energy production technologies.

Thus, if renewable energy (RE) can really

compete with traditional fuels, governments and large

corporations (including global corporations) will turn

to the ‘green’ energy industry for new capacity, which

will reduce the demand for hydrocarbon energy.

Renewable energy is currently the fastest growing

source of energy. RE development is a critical energy

strategy for the future. RE have less impact on the

environment and are of strategic importance for

present and future generations.

RE in the world continues to grow despite

economic recession and political instability. In 2018,

RE in the electricity industry increased by 14%,

slightly below the 10-year average growth (16%). RE

consumption and share of electricity generation vary

considerably across regions and countries (see table 2

and fig. 3).

Consider the impact of energy on sustainable

development criteria from the perspective of efficient

consumption of natural resources and the limitation

of negative environmental impacts. The efficiency of

the use of any energy resource can be assessed on the

basis of the total quantity of resources, their

affordability and depletion, the intensity of the energy

produced, the degree of water supply and the degree

of land use.

Significant quantities of natural gas were used in

the electricity sector (37.9 per cent), industrial sectors

(34.2 per cent), construction (21.0 per cent) and

transport (1.4 per cent), respectively. Coal was

consumed mainly in the electricity sector - 2,251.5

million tons (58.6%) and in industry (primarily

metallurgy) - 1,374 million tons (38.8%) (see fig. 4).

Table 2: Summary statistics on key indicators of GDP, RE (consumption), TS (traditional sources) (consumption) for the

period 2010 - 2019 (billion dollars) (Statistical Review of World Energy, 2019; The Climate Group).

Year World Russia

GDP

(billion

dollar)

RE:

consumption

(billion tons)

TS:

consumption

(billion tons)

GDP

(billion

dollar)

RE:

consumption

(billion tons)

TS:

consumption

(billion tons)

2010 60168 0.1439 11.4576 1222.6 0.0001 0.6479

2011 65955 0.1701 11.9969 1524.9 0.0001 0.6732

2012 73281 0.2036 12.2517 2051.7 0.0001 0.6948

2013 74890 0.2385 12.3953 2210.3 0.0001 0.6951

2014 76990 0.2807 12.5853 2297.1 0.0001 0.6867

2015 79045 0.3173 12.6715 2063.7 0.0001 0.6891

2016 74760 0.3667 12.7383 1365.9 0.0002 0.6815

2017 75848 0.4196 12.8567 1283.2 0.0002 0.6737

2018 80684 0.4868 13.0243 1577.5 0.0003 0.698

2019 85791 0.5613 13.3036 1657.6 0.0003 0.7205

Energy Market Trends and Scope for Sustainable Development

Figure 3: Energy production and consumption (data 2019) (Nuclear Energy Agency, 2000).

Figure 4. Specific emissions of greenhouse gases.

Organic and nuclear power generation will have

synergistic effects related to the use of conventional

and non-conventional hydrocarbons, methane

conversion, coal gasification, etc. and the production

of hydrogen from water using nuclear technologies

(Velikhov et al, 2008).

In this case, the energy sector will develop as a

single complex, allowing for the best use of any

energy technology: oil and gas for high-value raw

materials for chemistry, transportation fuels and

export earnings; coal - as an energy source for

electricity generation, heat for households,

metallurgy and other industries; nuclear power - to

replace coal, oil and gas in the production of cheap

electricity, reliable supply of energy to remote areas,

export of high technology, production of clean

hydrogen in quantities necessary for the needs of the

economy. Nuclear hydrogen technologies exist and

do not require significant investments that

fundamentally alter the energy mix.

4 DISCUSSION OF THE RESULTS

Considering the situation of electricity generation in

the Russian Federation, this is the case. About 700

million tons of energy are currently consumed for

primary energy production; almost 90 per cent of total

consumption is accounted for by fossil fuels (oil,

natural gas, coal).

In the long-term projections developed by the

Russian Ministry of Energy, fossil energy resources

continue to dominate energy supply; with a 24%

increase in energy consumption by 2035, gas and coal

consumption is expected to increase by 24% and 9%

respectively.

The need to move no later than 2020 - 2030 to the

‘Low Carbon Russia’ scenarios is well founded,

otherwise the opportunities and prospects for

economic growth will be greatly hampered by energy

scarcity and its high cost (Bashmakov, 2009;

Bashmakov and Mysakak, 2014; Lugovoi et al,

2015).

Analysis of the report prepared by the

International Energy Agency ‘World Energy Outlook

2017’ leads to the following conclusions:

- World oil demand is projected to increase by

10% by 2040, natural gas consumption by 45% (Total

world gas production by 2040 will exceed 5.3 trillion

cubic metres.);

- Russia will produce 718 billion cubic meters of

gas by 2025 and 788 billion cubic meters by 2040

while remaining the leader in gas exports in both the

medium and long term: the share of Russian gas in the

world will be 37% by 2025 and 40% by 2040.

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Oil Gas Coal Atomic

energy

Hydro Biofuels RE

Production Consumption

200

400

600

800

1000

1200

WFSDS 2021 - INTERNATIONAL SCIENTIFIC FORUM ON SUSTAINABLE DEVELOPMENT OF SOCIO-ECONOMIC SYSTEMS

Currently, only three countries - the United States

(about 50% of total gas production), Canada and

China - produce oil shale gas in commercial volumes.

Production transaction costs are estimated at 12 to 20

dollars per barrel, including labour costs, taxes,

energy costs, field maintenance and transportation to

trunk systems or other oil transport facilities; capital

costs are estimated at 9.7 to 12.6 dollars per barrel

(Grushevenko, 2012).

The results of the analysis of the current status and

prospects of shale oil production in the projection of

the development of the Russian oil and gas complex

make it possible to draw the following conclusions:

- Low shale oil production costs are likely to lead

to tighter price competition and lower world prices

for traditional oil;

- Technological innovation in production will

play a key role in shaping the future of the oil market;

- There is a need to develop Russian exploration

technologies and the necessary technological basis.

In terms of technical support for exploration and

oil production, the share of import security for pump-

compressor equipment was 61 per cent only a few

years ago; offshore equipment - 78%. Currently, the

bulk of purchases in the oil industry are made by

domestic goods and services (Zorina, 2016).

5 CONCLUSION

The transition of humankind to a sustainable

development path is imminent and requires

substantial refinement of the methodology for the

study of long-term energy development, especially at

the regional and global levels. Consequently, the

article emphasizes that compared to ‘green’ energy, it

is necessary to ensure a minimum of energy

consumption in developing countries and to integrate

the coordination of energy development not only on a

global but also on a national basis, regional levels.

Only by finding an environmentally sustainable

way to produce and use energy can we hope for an

energy-secure future.

To talk about energy in the context of sustainable

development is to address the social dimension of the

problem. The production and use of energy should not

only be compatible with the priorities of society with

regard to the environment, but it should also be

organized in such a way as to support social cohesion.

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Energy Market Trends and Scope for Sustainable Development