Calls for smarter energy delivery and consumption have flowed with renewed urgency in recent years. Geopolitical uncertainty around sources of crude oil and natural gas has driven diplomatic agendas and domestic welfare planning, as well as putting increased pressure on household and private sector budgets.
Analysis from the OECD shows multiple European countries have announced or implemented support packages of up to 2% of GDP to cushion high energy prices and food costs, with 66% of aid being price support, and nearly all being untargeted. Such measures to blunt prices tend to support demand, rather than curb it, which may manage acute situations without helping in the longer term.
The success of any true transformation of the energy industry, as it is for the world, relies on finding the sustainability levers whose effects ripple far beyond single or even cyclical market events. This includes safeguarding and investing in a workforce which has the skills now and can gain the skills needed later.
Sustainability is a concern and opportunity for all.
The lead-up to the COP27 climate conference reflected familiar calls for bold action to combat the myriad challenges of climate change, and big investments are already being made toward energy transition. In 2022, the International Energy Agency (IEA) estimated that $1.4 trillion would be invested in clean energy, accounting for over three-quarters of the growth in overall energy investment.
But efforts to cut greenhouse gas emissions to achieve net zero by 2050 will require substantially more. IEA analysis concluded that annual investments in clean energy would have to reach $4 trillion by 2030 to meet those goals, and that substantial capital would have to be redeployed from fossil fuel industries in favor of renewable energy. Capital previously destined for oilfields has been, and will increasingly be, put into windmills, solar panels and green hydrogen production plants.
Those investments will come not only in the form of assets, but also in retraining, retooling and reorganizing companies’ workforces.