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Energy Security Trumps Sustainability


In the last year, energy security has trumped sustainability.

That’s what Tom Ellacott, Wood Mackenzie’s Senior Vice President for Corporate Research, said in a statement sent to Rigzone, adding that “companies, too, have benefited from recent commodity prices and margins to deliver record cash flow”.

“That is not to say that decarbonizations goals cannot be met and priorities cannot change, but to spur activity, there needs to be a recalibration of current risks and rewards for investment in low carbon technologies, as well as new incentives from both government stakeholders and financial institutions,” Ellacott said in the statement.

“There’s no one answer, but smart oil and gas and natural resources companies will realize that protecting the status quo would be a mistake and start to manage their portfolios to reflect a balanced approach of managing legacy output and carbon management,” he added.

In the statement, Wood Mackenzie noted that, according to a new report from the business, “companies can address this complex dynamic in three key ways”.

“Nurturing legacy cash cows while simultaneously shifting to a transition-growth mindset, incorporating transition risks and rewards into differentiated investment hurdles rates, and using new business models to enable growth and close valuation discounts,” the company added.

G7 Climate Minister Meeting

In a communiqué following a meeting in Sapporo, Japan, last weekend, the G7 Ministers of Climate, Energy, and the Environment highlighted “the real, urgent need and opportunity to increase energy security and accelerate clean energy transitions at the same time by diversifying supply, sources and routes” in order to “address the current energy crisis and achieve our common goal of net-zero emissions by 2050”.

“We emphasize that an accelerated clean energy transition towards net-zero is key to improving security, stability and affordability of global energy supply,” the ministers noted in the statement.

“We underline our commitment, in the context of a global effort, to accelerate the phase-out of unabated fossil fuels so as to achieve net zero in energy systems by 2050 at the latest in line with the trajectories required to limit global average temperatures to 1.5°C above preindustrial levels, and call on others to join us in taking the same action,” the ministers added.

In the communiqué, the ministers also emphasized the need to support a national level just transition of workforce “and to create decent work and quality jobs for all”.

“To this end, we will further promote our continuous efforts to support and prepare workers and communities, including through inclusive social dialogue, skills development and transfer, social protection, education, reskilling and training, at local, regional and national levels, in line with the International Labour Organization’s 2015 Guidelines for a Just Transition,” the ministers stated.

Energy Security Like Oxygen

In a report sent to Rigzone in March last year, BofA Global Research argued that energy security is like oxygen to the economy, adding that companies and consumers tend not to notice it until they begin to lose it.

“But once supplies run out, economic activity comes to a standstill and little else matters,” BofA Global Research stated in the report.

“With low spare OPEC+ production capacity, low inventories, and the Russia and Ukraine conflict unfolding, energy security has become a key focus for markets,” BofA Global Research added in that report.


One Comment on "Energy Security Trumps Sustainability"

  1. Phil McKracken on Tue, 25th Apr 2023 1:05 pm 

    Apple trees are sustainable, the ocean waves are sustainable. But what these people claim is sustainable are just machines that will break down and need to be rebuilt. As long as they are deluded by the lie of renewable energy all that they say is based on the lie.

    Get your horse now, while they are still available.

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