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The Agony and the Ecstasy of the Energy Transition *

My view of the energy landscape is shaped by a perspective shaped by living on all six continents. Each region presents unique challenges, contributing to a varied and uneven pace in the energy transition. I hold the belief that global society will not accept energy supplies that impede economic growth or lifestyle. Additionally, I am convinced that the energy trilemma, encompassing security/access, affordability, and sustainability, cannot not be reduced to a singular focus on sustainability alone. Such an approach would invariably lead to recurring crises concerning security/access and affordability. After a career in gas, oil and electricity, I have moved beyond advocating for any single form of energy, acknowledging the necessity of all eight primary energy sources in a changing mix to sustain the world economy and society. While renewables are generally considered ‘cleaner’ than hydrocarbon energies, the substantial lifecycle impacts associated with their manufacturing and disposal, refraining from categorising them strictly as ‘green’ or ‘clean’. Drawing on my experiences living through major troubled transitions in South Africa, Russia, the UK’s entry and exit from the European Union, I now know that transitions are inherently messy, marked by winners, losers, and collateral damage.

Question: How do you think about and approach the tension between the urgency to reduce carbon emissions and the pace of efforts to do so?

In my view, the energy transition represents several simultaneous shifts, not only on the demand and supply fronts but also from depending on hydrocarbon-producing/exporting nations to those nations specialising in the production of solar panels, turbines, batteries, and metals. This transition extends to national budgets, redirecting revenues and subsidies from hydrocarbons to renewable energies. Moreover, it marks a shift from a constant, 24/7 energy availability to a more intermittent model, where solar power is available for about 25% of the time for power generation, and wind fluctuates between 30-50%. Undertaking the energy transition to Net Zero by 2050 is the most extensive political, industrial, and social change initiative ever undertaken, presenting a formidable challenge within a rapid 35-year timeframe.

What do you see as the biggest drivers to accelerate the transition to renewable energy? The biggest obstacles?

The primary drivers propelling the transition toward renewable energy are multifaceted. Firstly, the Paris Agreement plays a pivotal role, setting national targets (NDCs) for the reduction of greenhouse gas emissions. Another crucial lever involves the comparative cleanliness of solar, wind, and electric vehicles compared to their coal, oil, and internal combustion engine counterparts. The rapid adoption of solar power across diverse regions such as the USA, Mexico, Chile, Southern Europe, Africa, India, China, the Middle East, and Australia. The transition to electric vehicles, spearheaded by Tesla and subsequently embraced by major manufacturers, particularly the rise of Chinese BYD, further accelerates this shift.

Conversely, formidable obstacles hinder the transition to renewable energy. Public apprehension and opposition persist regarding the expansion of nuclear, onshore wind, and hydro energy sources. The global energy system’s scale is often underestimated, adding complexity and time to the transition

process. Governments and commentators grapple with the challenge of translating energy transition policies into tangible implications for energy security, accessibility, and affordability for both consumers and taxpayers. Additionally, unrealistic expectations regarding the production volumes and prices of renewable hydrogen, even with subsidies, pose a substantial challenge. Furthermore, a deficit in electricity storage technology hampers efforts to address the intermittency of solar and wind energy sources.

What excites you most about this time? What breaks your heart about this time?

What excites me most during this period is the remarkable pace at which China is advancing its renewable energy infrastructure—installing solar facilities in both mountains and deserts, as well as developing wind projects in desert and offshore regions. Equally inspiring is China’s manufacturing prowess, producing solar panels and wind turbines for both domestic use and the international market. I find encouragement in the earnest endeavours of the Biden administration to propel the energy transition in the USA without compromising national energy security or excessively relying on the emerging technological powerhouse that is China. The increasing adoption of electric vehicles in Europe and China adds to my optimism, as does the vigorous debates and assessments witnessed at COP28, where all involved parties are engaged in the conversation.

Conversely, what weighs heavily on my heart is the growing polarisation within the energy industry and society in response to transformative changes. The vilification of the hydrocarbon industry, characterised by persistent labels such as ‘dirty,’ ‘polluting,’ and ‘immoral,’ is disheartening. Furthermore, the level of government intervention in energy markets, manifested through targets, regulations, and subsidies that often burden taxpayers and consumers, is a cause for concern. The dichotomy of subsidies and regulations aimed at facilitating the Energy Transition, inadvertently creating daunting complexities for companies to navigate, also contributes to a somber outlook. The already intricate energy transition is further complicated by the Russia-Ukraine war, adding another layer of challenges to an already intricate landscape.

What capacities of leadership will be most needed in the next 5-10-20 years to enable organizations to make the required shift to “net positive” (or net zero) organizations?
It is different, depending on the type of organization.

For the leadership of governments in energy importing countries, the imperative is to discern judiciously the pace at which each nation can navigate the energy transition. This discernment must navigate the intricate balance of energy access, security, pricing, employment, and debt considerations. Concurrently, the leadership of energy exporting countries faces the responsibility of astutely evaluating the trajectory of their internal energy transition. This evaluation must be done amidst challenges related to employment, re-skilling, tax revenue, resistance to change, all while maintaining a commitment to exporting energy.

Within energy supply companies with mixed hydrocarbon/renewable portfolios, leadership must guide their staff through the complexities of handling the demonization often associated with hydrocarbons. Navigating repeated shifts in strategic direction in pursuit of profitability in renewables adds an additional layer of challenge. Meanwhile, leadership of energy supply companies exclusively invested in renewables must assist their teams in managing the highs of renewable growth and confronting the lows associated with repeated fluctuations in profitability and valuation.

In energy-consuming companies, leadership is tasked with managing technological shifts toward the utilisation of electricity and (currently unavailable, high priced) hydrogen for energy, departing from traditional hydrocarbon reliance. These leaders will have to contend with relentless pressures to achieve annual energy efficiency improvements ranging from 2-4%. The dynamics and demands vary across sectors, depending on the percentage of input costs come from energy.

Tell a specific story of something that fuels your optimism?

For decades, African governments, energy companies, and communities have grappled with a dearth of natural energy resources, particularly outside the resource-rich countries like Nigeria, South Africa, Angola, and Algeria. This scarcity has forced reliance on wood as a primary energy source, equivalent to a staggering 10 million barrels of oil per day, contributing to extensive deforestation across the continent. However, a transformative shift is underway. The simplicity and versatility of solar installations, ranging from Watt to kiloWatt and MegaWatt scales, offer a more accessible alternative compared to wind, LNG, and large-scale oil and gas plants. Coupled with abundant solar resources spanning major parts of the continent and the cost-effectiveness of solar power, albeit available for a quarter of the time, this combination is expediting the deployment of solar solutions in Africa. This surge encompasses large-scale grid solutions, microgrids, and home-based solar solutions, marking a substantial stride towards addressing the longstanding energy challenges on the continent.

LinkedIn: Andy Calitz

*The opinions of our guest author do not necessarily reflect the opinions of Genii Earth.

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