The World’s Pivot to Clean Energy

The global population is facing a critical time in climate policy. Climate change has evolved from being a distant and abstract concept to a tangible reality. In 2023, we experienced the highest temperatures in 120,000 years. The world also saw the worst wildfires in recorded history, the most notable being in Canada, Greece, Spain, and Hawaii.

The existing energy framework we have was built for a different climate. Today, this system is no longer sufficient because of rising temperatures and more extreme weather – very hot summers and blistering winters. Hence, the world needs to find a balance between managing the existing levels of climate change and trying to hold off the rate of global warming.

The last few decades have seen the world rapidly develop clean energy technologies like wind- and solar-generated power. Electric cars are also accessible. We also have international frameworks in place like the Paris Agreement and the annual United Nations Climate Change Conferences which we colloquially refer to as COP. Energy transition has become a major talking point but, aside from being a popular topic, it is something the energy industry has come to take seriously.

In fact, oil and gas companies have been investing in renewables since the 1980s. Today, oil companies are committed to investing billions of dollars in energy efficiency. These companies are actually very well placed to lead the energy transition: they already have experience with large-scale projects, storage and transportation, and a deep understanding of the energy needs of consumers.

What we as the global population also need to consider is the affordability of clean energy for poorer countries. Roughly US$1 trillion is needed in investments in the power sector for developing countries to meet their climate goals. Demetrios Papathanasiou, Global Director of Energy and Extractives at the World Bank, says that “poorer countries are stuck in a vicious cycle where they pay more for electricity, cannot afford the high upfront cost of clean energy, and are locked into fossil fuel projects. In essence, they are paying a triple penalty for the energy transition.”

Furthermore, many of these countries do not have the strong governance that is so fundamental to signal to investors that the country is suitable for private investment into its clean energy transition.

Even in developed countries at the household level, high upfront costs of clean energy solutions make them inaccessible for those with lower incomes. Despite the long-term promise of electricity bill savings, making that switch can cost two-thirds of someone’s yearly salary.

The global move towards clean energy therefore requires solutions from governments and large corporations to uplift those who cannot afford it. At Cathay Petroleum, our teams are consistently researching our options to invest in clean energy with a view to support the global energy transition.

Sources:

Jacob, Julia, and Dan Peck. “Record-Breaking Wildfires Have Occurred All over the Northern Hemisphere during 2023, New Report Finds.” ABC News, ABC News Network, abcnews.go.com/US/record-breaking-wildfires-occurred-northern-hemisphere-2023-new/story?id=103169036. Accessed 19 Dec. 2023.

“‘I Wasn’t the Obvious Choice’: Meet the Oil Man Tasked with Saving the Planet.” The Guardian, Guardian News and Media, 7 Oct. 2023, www.theguardian.com/environment/2023/oct/07/meet-the-oil-man-tasked-with-saving-the-planet-cop28.

International Energy Agency (2023), World Energy Outlook 2023, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2023, License: CC BY 4.0 (report)

Kienzler, Clemens, et al. “How Oil and Gas Companies Can Be Successful in Renewable Power.” McKinsey & Company, McKinsey & Company, 27 Feb. 2023, www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/how-oil-and-gas-companies-can-be-successful-in-renewable-power.

“Breaking down Barriers to Clean Energy Transition.” World Bank, World Bank Group, 18 May 2023, www.worldbank.org/en/news/feature/2023/05/16/breaking-down-barriers-to-clean-energy-transition.