The importance of energy is inescapable, touching every aspect of our daily lives. We’re challenged as a nation to meet the multi-dimensional demands of energy security, access and affordability, while simultaneously transitioning to our clean energy future.
According to numerous speakers at CERAWeek’s 2023 energy conference sponsored by S&P Global Mobility, “…global crises have redefined how the world understands the future of energy. Successive upheavals caused by pandemic, recovery and war created massive imbalances between the energy the world needs and the capacity to deliver it. The world is now reassessing how energy security, transition and affordability must work together to drive global growth and prosperity.”
The global energy industry has taken on a new imperative: to build a system that is equally secure, sustainable, and affordable to meet the global demand for fuels that drive the global economy while also designing this system to redress climate change. Shifts are needed and occurring in investment, policy, and technology to meet this once-in-a-lifetime challenge.
Secretary of Energy Jennifer Granholm’s address to the conference noted that global investments in clean energy matched those in fossil fuel production for the very first time in 2022. She affirmed that oil and gas will remain part of our energy mix for years to come. Noting that, “…even the boldest projections for clean energy deployment suggest that, in the middle of this century, we’ll be using abated fossil fuels, calling for the need to advance the technologies for abating fossil emissions, and to advance the technologies for clean sources.”
As this transition progresses, our energy mix will change, and she laid out the many new government incentives, policies, and opportunities for energy companies to engage in key aspects of the transition such as the production of hydrogen and accessing geothermal energy.
The magnitude of the challenge of the energy transition is informed by history, as S&P Global Mobility Vice Chairman Daniel Yergin, explained in an interview with David Blackmon in Forbes. He drew parallels on the dynamic of the transition from coal to oil, which started in the 1860s. “Oil took the number one place from coal in the 1960s and today the world used three times as much coal in 2022 – it’s the highest use of coal ever. So, this energy transition is really going to be a different thing than, say, a quarter century. You're going to change the energy foundation of a $100 trillion world economy that today is over 80% hydrocarbons.”
Nowhere is action on decarbonization, and moves toward a clean energy transition, greater than in California. The state has a long history tied to the oil and gas industry. When asked about how the oil and gas industry differentiates between short-term energy affordability and medium-long-term decarbonization delivery, Cathy Reheis-Boyd, executive director of the Western States Petroleum Association said in an interview, “There’s one thing that everybody agrees on, we must continue to provide communities the energy they need. That balance of affordability and decarbonization is the challenge. I think it’s a misconception to think this industry is opposed to sustainable innovation because that's the farthest thing from the truth. We have unique expertise in capitalizing on the science and the facts of how one gets from where we are, and to where we want to go.”
Energy leaders have it right. The energy sources that supply us today are vitally important in helping bridge to the clean energy future. Traditional energy and oil and gas companies have the capabilities, the capital, and the courage to be leaders in the clean energy transition. And that’s exactly what they’re doing.