Energy transition: wheel of time?

This 15-page note reflects on the last 15-years of energy, the world and our own experiences. Energy transition mega-trends do not move in straight lines. The world has often changed direction, getting waylaid by unexpected crises. Thus we wonder if energy transition goals, policies, and solutions may shift?

This note is based on anecdotal experiences, looking back at events remembered across 15-years covering the energy industry, and beyond. If you had lived through these experiences (and honestly, some of these over-extrapolations), how would this re-shape your view of the world’s transition towards net zero?

The world’s transition to net zero is described on pages 2-3, and we think this has become something of a consensus view, meant to play out following “straight line” extrapolations, which have note served us well in our analytical career.

Our experiences of world events are re-capped on pages 4-6, noting frequent ‘shocks’ and ‘crises’, changing the direction of big trends in human history, often unpredictably.

Our experiences in energy markets are re-capped on pages 7-11. The main focus transformed from ‘finding and developing more energy’ (2011-14) to ‘cutting costs and raising efficiency’ (2015-18) to ‘ESG and decarbonization’ (2019-22).

Five conclusions are drawn from these anecdotes on pages 12-14. Doom-mongering has tended to be wrong. The real crises have been the ones that no-one predicted. Straight-line extrapolations have been painfully wrong. Mega-trends exist, but their progress waxes and wanes over time.

Conclusions. We wonder whether the energy transition mega-trends could see a few years of waning progress in the mid-2020s, despite its long-run importance. Low-cost, pragmatic and resilient solutions may fare best in this timeframe.

To learn more about our thoughts and insights on energy transition and how we evaluate some of the short- and medium-term options to alleviate energy shortages, please see our article here.

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