Countries and companies around the world are embarking on the energy transition, facing different opportunities and challenges. Adopting the metaphor of a journey, some will move fast, others more slowly; some will travel together, others will go solo; and all of them are bound to encounter unexpected events.   

Throughout the Rystad Energy Week series of gatherings, we are meeting with clients in three of our major hubs – Singapore, London and Houston – to listen, present and discuss our outlooks and strategic foresight. Having recently attended our Singapore Summit and ahead of meeting with our EMEA contacts in London this week, I am again reminded of regional disparities. As an example, while the APAC region has a strong supply chain for materials and sees no real issue in China being the main provider of these goods and services, Europe and the Americas are very concerned about the concentration in the supply chain.   

In my opening address, I’m diving into the history of energy transitions, showing for instance how the shift from coal to oil in transportation happened extremely fast. From 1945 to 1960, steam locomotives and steamships were completely replaced by new disruptive propulsion technologies for locomotives and ships. Fast forward to today, the disruptive shift will be to go from fossil molecules to renewable electrons as the key source of energy. The difference in global warming from a highly dangerous level of 2.5 degrees Celsius to a far more manageable 1.5 degrees can, in a somewhat simplified manner, be quantified in terms of contributions from 12 disruptive technologies or processes. 

Solar PV heads the list, contributing 0.25 degrees of avoided global warming, followed by batteries, electric vehicles and chemical absorption CCUS, each contributing 0.12 degrees. Wind power, the hydrogen chain and geothermal/heat pumps each have the potential to reduce global warming by 0.08 degrees, while biofuels, high temperature heat storage, circular economy measures and agricultural process changes are collectively poised to deliver the remaining 0.15 degrees of avoided global warming, including reductions to methane emissions. All of this must happen by the 2050s if global warming is to be limited to 1.5 degrees. Today, close monitoring of the pace of solar expansion, EV adoption and CCUS projects show that we still are on a trajectory to achieve this goal. We see no major showstoppers like material shortages, but policy support initiatives such as carbon pricing and selected subsidies will be needed. 

Given this backdrop, which path should key players take in order to get to the chosen destination? New fossil fuel molecules will still be needed for many decades to come, since the underlying well-level decline in oil and gas production from existing fields is happening more quickly than any scenarios for demand decline. Thus, investments in new wells and facilities will still be needed to avoid an energy crisis. So, how should companies balance the task of feeding the current system with molecules while at the same time preparing for a vastly new energy system? These vital topics will be at the center of our discussions at our London Summit this week.