While environmental activists protested outside CERAweek earlier this month, inside the conference almost every speaker was talking about what their organisation is doing to tackle climate change. The perception may be that international energy events focus solely on brokering deals and demonstrating technological prowess, but underpinning all discussions are the critical issues that affect our planet.
Climate change is not something you can escape. Each winter, I spend weekends ski touring up the glaciers of the Mer de Glace and Bassin d’Argentières around Chamonix. The glaciers have melted and shrunk drastically in the last 40 years. I have friends in their 70s who remember the glacier when it was almost 100m higher: they point out the scars the recently melted glacier has left on the mountain flanks. Climate change is having a visceral effect on our world.
For the last couple of years, every plenary lunch session I have attended at CERAweek has focused on climate change issues. Man-made global warming is not being swept under the carpet: it’s at the forefront of our agendas in the energy sector. As the CEO of Xcoal, Ernie Thrasher noted, ultimately we will be 100% renewables. And indeed, we can’t afford not to go carbon neutral, and maybe even reverse the trend all the way to carbon negative.
This journey is being led by the top – as it needs to be. CERAweek co-founder Daniel Yergin has done a great job of making sure that climate change is not just a trending topic at the conference. Big players across the industry are making it a priority including the group chief executive of BP, Bob Dudley. BP was an early player in renewables, but some initial missteps were made. BP originally invested in manufacturing solar panels – it then shifted to a more fruitful strategy, producing energy through renewables. This model is now clearly on the supermajors’ roadmap and it’s encouraging to see the steps forward we are making.
In the media, much is made of the fact that there is a real lack of thought leadership at a federal level in the USA, but at a state and municipal level, there is actually a lot of engagement. And indeed, the US’s emissions have gone down, while Germany announced an emission rise for the second year in a row in January 2019. It may be surprising considering the two countries have very different priorities, but the reason behind that is that the US has invested heavily in gas, while Germany still looks to coal. All fossil fuels are not equal.
The dual challenge is not just the transition between fossil fuels to renewable energy, but also how this will play out in the developing world, where people will consume more energy as conditions improve. Different countries have different infrastructures and indeed, political climates and priorities that cannot be discounted. Currently, there are 1 billion people who don’t have access to electricity – a shocking statistic and a brutal reality. As we all know, coal is a big player in the developing world, which comes with its own environmental and safety issues. But it was more economically friendly, and once CAPEX has been invested, then a transition to renewable energies is pushed back. A provocative idea is to support other countries decommission coal power plants midway through their design life of 40 to 50 years. At Akselos, we’re doing our bit by providing technology scalable at the planetary scale that will support the transition, but at every stage we must ask what is the most financially viable and environmentally beneficial option for all involved?
There’s a real challenge here and there’s no doubt that big changes are ahead of us. Saudi Arabia is now funding $150bn natural gas program. High profile stakeholders have posited that the last coal fired power plants will be built in the next two years – for the simple reason that nobody will finance it.
Paddy Padmanathan, the CEO and president of ACWA Power noted that as human beings, we can make foolish mistakes, but we are also capable of genius – especially when it comes to problem solving. Now that climate change is a priority, if politicians support us, change is within our grasp.
While climate change touches every industry, the energy sector needs to lead. It’s now a question of pace – we do not have the benefit of time any more. As an industry, we have to move at an exponential rate to make the energy transition as smooth and as fast as possible for everyone. Each year must be faster than the previous one.
By Thomas Leurent, CEO