Last week at the world’s premier energy conference, CERAWeek 2019 convened stakeholders, subject matter experts, and leaders from across the energy industry to discuss the most pressing challenges, trends, and advancements to look forward to in 2019, the next decade, and beyond. The goal of the program is to “provide comprehensive insight into the global and regional energy future by addressing key issues—from markets and geopolitics to technology, project costs, energy and the environment, finance, operational excellence and cyber risks.” The content is robust, and the dialogue is insightful.
This year, several key takeaways emerged from the vast array of breakout sessions and conversations. Below is an overview of three of the most prominent themes discussed at the event.
1. The Energy Producer’s Dual Mandate: Need for more energy that is cleaner than ever.
In the evolving global marketplace, one reigning fact remains constant despite the myriad changing dynamics facing the energy industry today: demand for energy is growing, and it must be cleaner than ever before. Policy makers, oil and gas executives, members of science and academia, and much of the public acknowledge climate change is a threat. This threat must be mitigated by meeting increasing demand through sustainable means. Climate change has historically been viewed through the lens of the contention between environmentalists and the oil and gas industry, but CERAWeek 2019 demonstrated noted commitment from the world’s chief producers of hydrocarbons to meet the challenge of this dual mandate as a collaborative group.
Achieving this clean energy goal cannot come without significant private investment and supportive public policy. Investment continues to pour into major pathways of energy research: efficiency, electrification, hydrogen, biofuels, and Carbon Capture, Use and Sequestration (CCUS) to name a few. The next calendar year will also see a host of policies placing a price on emissions, perhaps as many as 57 emissions trading systems or carbon taxes worldwide according to the World Bank. Among these initiatives are policies impacting the transportation industry, including the introduction of carbon pricing for fuels consumed in several Canadian provinces, and a tightening global sulfur cap for fuels consumed by the commercial maritime industry.
2. US energy abundance provides ample supply, grows confidence of US foreign policy
With 2019 well underway, it has become increasingly evident that the US has been in recent history, and will continue to be, heavily relied upon to meet the world’s growing demand for energy. In addition to expectations for the US to become a net energy exporter by 2021, the International Energy Agency’s (IEA) latest Five-Year Outlook projects the US will surpass Russia and Saudi Arabia in oil export volumes, and account for 70 percent of world production growth by 2024. US LNG production is also taking off. Demand continues to increase across Asia-Pacific countries and the prospects of more US LNG reaching European markets continues to be discussed by US policy-makers.
US energy abundance is changing more than the flow of commodities around the world. As Fatih Birol, the IEA’s executive director noted within the March 2019 Five-Year Outlook, “The US has emerged as a major energy exporting country and as such, will influence the flow of energy trade for years to come with several implications for the geopolitics of energy.” US Secretary of State Michael R. Pompeo took these thoughts a step further during a keynote address, “We’re not just exporting American energy, we’re exporting our commercial value system to our friends and to our partners.”
Energy abundance has directly allowed the US to pursue economic sanctions on Iran and Venezuela, two major oil producers whose exports the US may not have considered sanctioning to such a degree prior to the current shale revolution. US energy abundance has also slowed US trade deficit growth and enabled its aggressive foreign trade policy. The importance of US energy and access to its energy infrastructure for Canada, Mexico, China, and the EU has, and will continue to, factor prominently in trade negotiations through 2019.
3. Technology’s role in disrupting and transforming energy supply chains
Technology emerged as a central tenet at CERAWeek several years ago, and the 2019 conference continued to expand its place on the agenda in a content track called the “Innovation Agora.”
It is no secret that technology will be the facilitator of the energy market’s transformation. Technology is core to enabling innovative solutions of the future, and without direct investment and commitment to furthering the energy industry’s technological capabilities, sustainability and efficiency goals cannot be reached.
We should think about the development of next-gen energy similarly to how we can now look back on the emergence of one key disruptive trend seen in the last decade: the US fracking industry. Fracking was a key catalyst for the shale boom, and without its rapid adoption, the US would not be the heavy-hitting player in the global energy landscape that it is today. The scaling and deployment of fracking helps to show technological progress toward industry disruption is slow until a breakthrough creates a path toward commercial viability. Once commercially manufactured, new energy technologies have the potential to quickly penetrate the market and disrupt status quo.
What will be the next disruptive technology? The conference featured a host of possibilities. Microsoft and Amazon are both leading the push for cloud-based solutions in oil and gas—and were also, unsurprisingly, lead sponsors of the event. Power generation is projected to see vast improvements in wind and solar, with the greatest need for downstream facilities to have smarter grids and more decentralized power networks. Vehicle autonomy and safety features were a focus, driving the desire for better safety and efficiency standards. And finally, cyber security, AI, digital twins, and the internet of things—among other things—were at the forefront of innovation in an increasingly digital age.
Year after year, CERAWeek proves to be the most valuable and comprehensive energy conference across the globe. Our team of experts looks forward to the insights and conversations had each year, as it contributes to our continuous commitment to be the most informed transportation energy experts for our clients. Understanding the energy landscape at large helps inform client strategy and positions them to navigate not only for the challenges of today, but for success in the future.
For more information about our experience, or any of the concepts discussed above, please contact us.