The session kicked off with a discussion on the energy trilemma, with Nicolaisen drawing attention to the need to balance reliable, sustainable, and affordable energy. He noted that since 2015, the focus has shifted towards sustainability, but some argue that it has gone too far, exemplified by the International Energy Agency’s net zero emission scenario that advises against funding fossil fuels. Nicolaisen warns against this dangerous message, as fossil fuels remain essential to our energy system.
“I think it’s very important for us to stay nuanced here and to realize that even in the more progressive scenarios, we need capital to continue to flow through the fossil-based part of the industry,” Nicolaisen stated.
Hansen suggested thinking of the energy trilemma as a hierarchy of needs, noting that “2022 is a good example of governments prioritizing reliable energy and then affordable and sustainable energy.” He added that the energy transition should consider the dimensions of ‘sovereign energy,’ which includes job creation, domestic investments, competitiveness, technology leadership, and control over supply chains, with a strong focus on industry.
In terms of policy developments, Hansen explained that there is a trend of countries shifting towards protectionism and domestic sourcing, citing the U.S. inflation reduction as an example. The E.U. has responded with their Green Deal Industrial plan, focusing on net zero technologies and critical minerals. This shift represents a departure from the free market economy towards more protectionism and reshoring.
Additionally, Murti expressed concerns about the energy transition, noting that there seems to be a presumption that with enough will and policy, we can quickly shift our global energy systems to renewables and clean energy technologies within a decade or so. However, billions of people still rely on fossil fuels for energy, and it may not be feasible to transition so rapidly. Murti acknowledges that capital is investing more in new energy technologies but warns that the transition may be messy.
Murti, who has experience in investing, believes that the goal of an investor is to invest in profitable companies or companies that will grow into profitability, and the requirement for companies to have plans to decarbonize will be imposed by society globally. He argues that it is not fair to label only fossil fuel companies as the “bad guys” when many industries contribute to emissions. He suggests that companies in all sectors need to have plans to reduce their emissions, and predicts that energy markets will be volatile and economic growth will be more challenged if companies do not take steps to decarbonize.
Regarding the challenges that labor markets may impose on governments as the energy transition unfolds, Maclean-Quick stated that, “The primary engine of any organization these days is its human capital, and as the world has shifted throughout the years to low-cost country sourcing, there are different economic opportunities that have presented themselves. You’ve essentially now got quite a mobile workforce and with the changes to workforce preferences, there is now a great deal more power that sits within the employee.”
Furthermore, she emphasized the importance of understanding people dynamics and creating a culture of engagement and communication in the workplace. She noted the shift towards emotional intelligence and the need for leaders to harness the potency of human emotion in the workplace. Referencing a Gallup study showing that only 21% of employees are engaged in their workplace, she suggests that a more human-centered approach is needed to create a culture that promotes creativity and delivery.