Energy transformation and climate market top GES agenda

LBS’ Energy and Environment Club unpicks the global energy landscape and transformation of the climate market at the 2023 Global Energy Summit

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Partnerships, policy, energy security and improved infrastructure resilience and adaptability – those were the main energy transition must-haves highlighted at the 2023 Global Energy Summit hosted on 13 and 14 November by London Business School’s Energy and Environment Club.

A forum for academic and business thought-leaders to explore and debate ideas on the future of the energy industry, this year’s delegates were treated to expert insight from many of the major industry players into how to reduce the demand for old energy, increase the adoption of renewables and improve existing technologies.

The Summit looked at many of the challenges associated with the transition to clean energy, plus the opportunities that exist through collaboration and partnerships, not only as a way to share risk, cost and capital, but as a way to move faster and use complementary skills.

Day One of the summit focused on the transformation of energy players, with keynote speaker and LBS alumnus Geoff Versteeg, a Partner in Energy & Natural Resources at Bain & Company, sharing his thoughts on the status of the energy market. Insight from industry experts on decarbonisation from the point of view of energy suppliers and side initiatives, as well as energy utility transformation, followed.

Day Two lifted the lid on the global landscape of the climate market, with keynote speaker Veronica Poole, Vice Chair of Deloitte UK providing an overview of global sustainability reporting standards. There was also a focus on policy and strategy support for the transformation, the infrastructure required for a decarbonised energy system and the role of finance in accelerating innovation. 

Just weeks ahead of the start of COP28, the scale of the challenge is obvious with global energy investment in clean energy needing to triple by 2030 to achieve a 1.5°C scenario. While asset managers are committing private capital to support Net Zero, it is hard to get big amounts of money moving quickly when there is regulatory and policy uncertainty. For the energy transition to succeed, it will be crucial to get corporate development and M&A right, to stress-test and scale major capital projects delivery.

Unprecedented opportunities as well as risks are emerging, so a coherent, adaptable strategy is required to navigate the transition, with players in the energy sector needing to build commercial muscles and mindsets; open new markets via policy and excel at stakeholder management.

Energy security and supply chain security are key concerns, with supply chains crucial to energy security. Localised supply chains can be a big challenge in terms of ensuring there is enough raw material and there are also unintended consequences such as child labour and deforestation. Regulation is starting to shift to recognise ESG risks linked to supply chain security such as end of life responsibilities.

Numerous challenges were highlighted throughout the Summit, such as the need for more energy storage and more renewables in order to balance the grid system. Indeed, one of the overarching messages of the Summit was the need for greater investment in the grid system, with one-third of European grids more than 40 years old. The need for investment in hardware producing companies was also emphasized as being crucial.

It takes time for supply markets to mature and it can be challenging to convince investors to make decisions about technologies that haven’t matured yet. Long-term policy setting is therefore seen as crucial to encourage 30-year investments, not five-year investments. Suppliers and partners need long-term commitments so they can develop their capacity.

It is clear from the discussions that transparency and consistency will be key to the transition. There have been tectonic shifts in the regulation of sustainability (ESG) reporting in recent years and data transparency is absolutely critical. Planet, prosperity, people requires integrated thinking and consistent data that can confirm business decisions.

Achieving Net Zero by 2050 is an increasingly daunting task, but to borrow from John F Kennedy “We do these things not because they are easy, but because they are hard.” Climate change is the biggest problem facing our world and that is precisely why now is such an incredibly exciting time to work in the energy industry.