The Energy Transition

Access to modern energy has led to unprecedented economic growth and tremendous advances in society’s standard of living.  Fossil fuel companies have played, and continue to play, a big role in this success story by supplying customers with affordable and reliable sources of energy.  But the world is transitioning to a low-carbon economy, and energy companies are faced with some difficult decisions.

  • Shifting Energy Demand

  • Outdated Business Models

  • Advances in Low-Carbon Energy

  • Reduced Access to Capital

Every successful business must begin with a single question:
what do we offer in the marketplace?

For decades, the answer for successful energy companies has been to bring reliable and affordable energy products to the marketplace. As the world rethinks carbon-based energy products, no question is more critical for decision-makers in the energy business than this one: are we an energy company – or a fossil fuel company?

If the answer is, “we’re a fossil fuel company,” then the path is both narrowing – and changing, its imperatives both conventional and unconventional. Fossil fuel companies can try to hold on to the outdated business models that have sustained them for past generations, spending hundreds of millions of dollars industry-wide to dissuade governments from going where 198 countries and billions of consumers have already decided to go. Or, fossil fuel companies can recognize that for decades to come, the world will still demand fossil fuels, but extracting and burning them cleaner with fewer emissions is a business imperative not a luxury, and finding new lower carbon uses for old fuel sources is equally imperative – whether it is in hydrogen production, manufacturing, chemicals or medicine.

If the answer is “we’re an energy company,” then the path is clear – and it reaches out far beyond the horizon: successful energy businesses will create value by providing the marketplace with affordable and reliable sources of energy – but unlike in years past, the marketplace will demand that they be low-carbon. That means energy companies must revisit all their basic assumptions about the business environment they operate in, their mission, definitions of success, the value placed on research and development, leadership, core competencies — and innovation. Only by facing up to the demands of tomorrow’s marketplace today can energy businesses transform themselves into sustainable profit-centers for a sustainable future.

 

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