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11 December 2023 12:33 pm
The EU’s Interest in Assisting MENA Countries

The EU’s Interest in Assisting MENA Countries

Nov 27, 2023

In all Demographics and Resource Use: The EU’s Interest in Assisting MENA Countries to look at their respective population growth for better understanding and eventually a serious levy towards better numbers would be of paramount importance.

 

It is by Dr. Massaab Al-Aloosy
Displacement and Migration⠀/⠀Humanitarian Assistance 
EGYPT-POPULATION-POVERTY
A picture shows on February 11, 2020 a general view of al-Atba district of the Egyptian capital Cairo. – Egypt’s population has reached 100 million, the statistics agency said, highlighting the threat of overpopulation in a poverty-stricken country where many live in crowded megacities. (Photo by MOHAMED EL-SHAHED/AFP via Getty Images)
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The world population is currently estimated to be more than 8 billion and will be close to 10 billion by 2050. The extraordinary growth can be attributed to increased longevity as a result of widespread improvement in “public health, nutrition, personal hygiene and medicine, and on the other hand, the persistence of high levels of fertility in many countries.” Most of the population growth is occurring in developing countries, a trend that will continue well into the future. Close to 50% of the projected increase in the world’s population from today until 2050 is anticipated to take place in a few large countries within the developing world, and the share of the developing world population will increase from 66% in 1950 to 86% by 2050. Moreover, the population of the developing world is young and will continue to be for the foreseeable future.

Increases in population will strain the governments of developing countries, translating into more demand for food, water, health care, jobs, and energy, among many other needs. Simply put, it will be more difficult for “low-income and lower-middle-income countries to afford the increase in public expenditures on a per capita basis that is needed to eradicate poverty, end hunger and malnutrition, and ensure universal access to health care, education and other essential services.”

The failure of governments in MENA to address quality-of-life issues as the population grows could lead to a complete collapse of their political systems, as witnessed in countries such as Libya and Syria. Current trends are paving the way for massive migration to European countries, which could experience similar strains in providing satisfactory living conditions. Given its status as a destination for migrants from the MENA region and its proximity to the region, the EU would be an important partner for MENA countries in their efforts to improve quality of life for their residents. The EU could assist MENA countries in adopting effective voluntary family planning, moving toward more reliance on clean and renewable energy, and implementing efficient water management practices.

Demographics and Resource Use: The EU’s Interest in Assisting MENA Countries

Dr. Massaab Al-Aloosy

Middle East  Special Initiatives  Europe  Humanitarian Assistance  Displacement and Migration
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The oil and gas sector must reduce their planet-warming operations

The oil and gas sector must reduce their planet-warming operations

Nov 24, 2023

In the recently published IEA article on a special report, it is put simply that to save the climate, the oil and gas sector must reduce their planet-warming operations. 

 

 

 

 

Oil and gas producers face pivotal choices about their role in the global energy system amid a worsening climate crisis fuelled in large part by their core products, according to a major new special report from the IEA that shows how the industry can take a more responsible approach and contribute positively to the new energy economy.

The Oil and Gas Industry in Net Zero Transitions analyses the implications and opportunities for the industry that would arise from stronger international efforts to reach energy and climate targets. Released ahead of the COP28 climate summit in Dubai, the special report sets out what the global oil and gas sector would need to do to align its operations with the goals of the Paris Agreement.

Even under today’s policy settings, global demand for both oil and gas is set to peak by 2030, according to the latest IEA projections. Stronger action to tackle climate change would mean clear declines in demand for both fuels. If governments deliver in full on their national energy and climate pledges, demand would fall 45% below today’s level by 2050. In a pathway to reaching net zero emissions by mid-century, which is necessary to keep the goal of limiting global warming to 1.5 °C within reach, oil and gas use would decline by more than 75% by 2050.

Yet the oil and gas sector – which provides more than half of global energy supply and employs nearly 12 million workers worldwide – has been a marginal force at best in transitioning to a clean energy system, according to the report. Oil and gas companies currently account for just 1% of clean energy investment globally – and 60% of that comes from just four companies.

“The oil and gas industry is facing a moment of truth at COP28 in Dubai. With the world suffering the impacts of a worsening climate crisis, continuing with business as usual is neither socially nor environmentally responsible,” said IEA Executive Director Fatih Birol. “Oil and gas producers around the world need to make profound decisions about their future place in the global energy sector. The industry needs to commit to genuinely helping the world meet its energy needs and climate goals – which means letting go of the illusion that implausibly large amounts of carbon capture are the solution. This special report shows a fair and feasible way forward in which oil and gas companies take a real stake in the clean energy economy while helping the world avoid the most severe impacts of climate change.”

The global oil and gas industry encompasses a large and diverse range of players – from small, specialised operators to huge national oil companies. Attention often focuses on the role of the private sector majors, but they own less than 13% of global oil and gas production and reserves.

Every company’s transition strategy can and should include a plan to reduce emissions from its own operations, according to the report. The production, transport and processing of oil and gas results in nearly 15% of global energy-related greenhouse emissions – equal to all energy-related greenhouse gas emissions from the United States. As things stand, companies with targets to reduce their own emissions account for less than half of global oil and gas output.

To align with a 1.5 °C scenario, the industry’s own emissions need to decline by 60% by 2030. The emissions intensity of oil and gas producers with the highest emissions is currently five-to-ten times above those with the lowest, showing the vast potential for improvements. Furthermore, strategies to reduce emissions from methane – which accounts for half of the total emissions from oil and gas operations – are well-known and can typically be pursued at low cost.

While oil and gas production is vastly lower in transitions to net zero emissions, it will not disappear – even in a 1.5 °C scenario. Some investment in oil and gas supply is needed to ensure the security of energy supply and provide fuel for sectors in which emissions are harder to abate, according to the report. Yet not every oil and gas company will be able to maintain output – requiring consumers to send clear signals on their direction and speed of travel so that producers can make informed decisions on future spending.

The USD 800 billion currently invested in the oil and gas sector each year is double what is required in 2030 on a pathway that limits warming to 1.5 °C. In that scenario, declines in demand are sufficiently steep that no new long-lead-time conventional oil and gas projects are needed. Some existing oil and gas production would even need to be shut in.

In transitions to net zero, oil and gas is set to become a less profitable and riskier business over time. The report’s analysis finds that the current valuation of private oil and gas companies could fall by 25% from USD 6 trillion today if all national energy and climate goals are reached, and by up to 60% if the world gets on track to limit global warming to 1.5 °C.

Opportunities lie ahead despite these challenges. The report finds that the oil and gas sector is well placed to scale up some crucial technologies for clean energy transitions. In fact, some 30% of the energy consumed in 2050 in a decarbonised energy system comes from technologies that could benefit from the industry’s skills and resources – including hydrogen, carbon capture, offshore wind and liquid biofuels.

However, this would require a step-change in how the sector allocates its financial resources. The oil and gas industry invested around USD 20 billion in clean energy in 2022, or roughly 2.5% of its total capital spending. The report finds that producers looking to align with the aims of the Paris Agreement would need to put 50% of their capital expenditures towards clean energy projects by 2030, on top of the investment required to reduce emissions from their own operations.

The report also notes that carbon capture, currently the linchpin of many firms’ transition strategies, cannot be used to maintain the status quo. If oil and natural gas consumption were to evolve as projected under today’s policy settings, limiting the temperature rise to 1.5 °C would require an entirely inconceivable 32 billion tonnes of carbon captured for utilisation or storage by 2050, including 23 billion tonnes via direct air capture. The amount of electricity needed to power these technologies would be greater than the entire world’s electricity demand today.

“The fossil fuel sector must make tough decisions now, and their choices will have consequences for decades to come,” Dr Birol said. “Clean energy progress will continue with or without oil and gas producers. However, the journey to net zero emissions will be more costly, and harder to navigate, if the sector is not on board.”

 

What is urban mining – and why do we need to do more of it?

What is urban mining – and why do we need to do more of it?

Nov 23, 2023

What is urban mining – and why do we need to do more of it? And why do we need to do more of it? is reviewed in this article.

 

The image above is (Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Charlotte Edmond, Senior Writer, Forum Agenda

 

  • The vast majority of us own a smartphone – and inside each one are metals and minerals that could help the environment.
  • This is an example of urban mining -.the practice of extracting materials from waste – which is a key part of the circular economy.
  • Other materials that could be saved from landfill and incineration include waste from demolition and construction.

 

The number of smartphones in use hit 6.6 billion in 2022. That means the vast majority of the world now owns one. And inside each of those phones is a pinch of multiple different metals and minerals, some of which are rarer and harder and more damaging to extract than others.

But each of these phones also has a limited life – how many people have an old device sitting unused in a drawer somewhere? One piece of research estimates that there are around 7 million unused phones in Switzerland alone, with $10 million worth of embedded gold in them.

It is exactly issues like these that make it so important we get an urban mining system up and running in a sustainable and cost-effective way.

 

What is urban mining?

Urban mining is the idea of extracting valuable materials from waste, much of which would otherwise go to landfill or incineration. This can include common metals and plastics as well as rarer but valuable elements.

Urban mining allows us to salvage materials of which there is a finite supply, and limits the environmental impact of their disposal. Crucially, it also avoids extraction of additional materials, which damages ecosystems and can cause pollution, among other things.

It forms a key part of the circular economy, which promotes a more sustainable use of resources by keeping them in use for as long as possible.

Discover

What is the World Economic Forum doing about the circular economy?

The World Economic Forum’s Platform for Shaping the Future of Consumption is seeking to promote responsible consumption models, which are equitable, enable societal well-being and protect the planet. A key part of the initiative is focused on innovative reuse models.

The waste we can recycle

Electronic waste (e-waste) like phones is a prime candidate for urban mining, where products cannot otherwise be repaired.

There are a growing number of companies which offer to buy back and resell unwanted devices, as well as a wave of repair cafes emerging. But these devices are still not routinely considered an economically viable secondary source of materials like gold, silver, copper, lithium, or cobalt.

Once you factor in the environmental costs of extracting these materials, however, the scales tip in favour of urban mining, research suggests. Many of the participants in the Swiss phone study mentioned above said they would be willing to sell their old phone for less than $5. The market value of the metals within them is under $2, but when you factor in the external costs of extraction the cost of the materials is around $18.

Another strong use case is for waste materials from demolition or construction. Around 850 million tons of construction and demolition waste were created by Europe alone in 2020 – more than a third of all waste generated in the region.

Steel, copper and aluminium are commonly found in demolition waste. And there are also ways which cement – a notoriously polluting material in its production – can be reused and recycled. Some processes even manage to capture and store carbon in the new product. Aggregates and bitumen from worn-out roads can also be recycled into new ones.

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Climate Change and Desertification – A Global Problem

Climate Change and Desertification – A Global Problem

Nov 22, 2023

Climate Change and Desertification – A Global Problem that not only affects the surroundings of the Sahara but the world over.

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The 21st session of the Committee for the Review of the Implementation of the Convention (CRIC 21) to the UNCCD kicked off at the Silk Road Samarkand Congress Center in Samarkand, Uzbekistan, on 13 November 2023, UzA reports. – https://en.inform.kz/news/climate-change-and-desertification-a-global-problem-29c6fb/

It is attended by delegates from 196 countries, about 500 representatives of the European Union, civil societies, and academia.

At the plenary session, the Chairperson of the Senate of the Oliy Majlis Tanzila Narbayeva read out the address from President of the Republic of Uzbekistan Shavkat Mirziyoyev to the event participants.

As noted in the address, Uzbekistan and the entire Central Asian region are fully aware of the negative consequences of climate change in the form of social and environmental problems.

“Today, we are almost alone fighting the devastating consequences of the global catastrophe of the Aral Sea, which is disappearing before the eyes of one generation. All these threats and many other factors directly affect the well-being and health of the population not only in our region, but throughout the world, which requires even greater consolidation and strengthening of partnerships to achieve the key Sustainable Development Goals.

I count on the strong support of the international expert community for Uzbekistan’s initiative to adopt the Samarkand Declaration on Sand and Dust Storms following the current session”, said Shavkat Mirziyoyev in his welcoming address.

UN Secretary-General António Guterres also sent a message to the forum participants. It was read out by the UN Under-Secretary-General and Executive Secretary of the UNCCD Ibrahim Thiaw.

The UN Under-Secretary-General and Executive Secretary of the UNCCD Ibrahim Thiaw, the Minister of Ecology, Environmental Protection and Climate Change of the Republic of Uzbekistan Aziz Abdukhakimov, and representatives of various regions addressed the plenary session.

In the afternoon, the session continued its work in several directions. During these events, the implementation of the UN Convention to Combat Desertification was reviewed. The international forum continues.

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Architecture: 4 universities walking the sustainability talk

Architecture: 4 universities walking the sustainability talk

Nov 21, 2023

Above image is Source: The Chinese University of Hong Kong

Today, the role of an architect extends far beyond creating aesthetically pleasing structures. They are at the forefront of the green building movement, integrating sustainable materials and energy-efficient designs into their projects. Rather than contributing to urban sprawl, they are repurposing existing structures for new functions, minimising the need for additional resources and energy. What’s more profound is that they are contributing to the development of sustainable cities — prioritising pedestrian-friendly designs, green spaces that boost well-being and ensuring efficient public transportation.

Hence why beyond the conventional confines of design and aesthetics, architecture degrees are fast becoming catalysts for change. These are more than just paper qualifications but a crucial means to solving complex problems that span everything from environmental sustainability to social inclusivity.

The architects these universities aim to produce go beyond the traditional boundaries of their profession, recognising the interconnectedness of the built environment with broader societal and environmental issues. Armed with a holistic understanding of the world’s challenges, graduates from these institutions are poised to revolutionise the way we build, live, and interact with our environment.

The Chinese University of Hong Kong

Situated in a globally influential Bi-city region, the School of Architecture at the Chinese University of Hong Kong (CUHK) offers students the chance to explore the socio-spatial challenges of a rapidly transforming urban landscape of Hong Kong and Shenzhen. From dense high-rise districts to tropical country parks, over 200 islands, and heritage sites, this is a vast living laboratory of diverse architectural contexts.

Architecture: 4 universities walking the sustainability talk

CUHK’s MArch is the second part of a two-degree sequence in professional architectural education. Source: The Chinese University of Hong Kong

Location aside, the school also stands out for its dedicated infrastructure. Housed within CUHK’s expansive, green 138.4-hectare campus, it is the only division of its kind in Hong Kong with a purpose-designed building solely devoted to the study of architecture — the 7,700-square metre facility provides students with unlimited access to state-of-the-art resources and a conducive environment for an impactful education. The school operates within the Faculty of Social Science and is uniquely positioned to address issues of Asian urbanism, drawing students passionate about driving social and environmental change.

For aspiring undergraduates, the Bachelor of Social Science (Architectural Studies) provides a solid foundation, instilling creative skills for crafting solutions that seamlessly blend cultural nuances, physical contexts, and cutting-edge environmental technologies. It’s an effective pathway to the School of Architecture’s accredited Master of Architecture (MArch), which prepares students for advanced research, design thinking and speculative spatial practices. Its aim is to evolve learners into leading architects at the heart of social, urban and rural innovation to create solutions for environmental challenges. The Master of Science in Urban Design is just as impactful, a gateway to mastering the art and science of creating vibrant, sustainable, and socially just cities.

All three programmes are accredited by local and international professional institutions. In true CUHK fashion, all three programmes emphasise small group settings, community engagement, and close ties to the booming industry of architecture, offering students unparalleled opportunities for professional and personal growth.

ETH Zürich

Students at the Department of Architecture in ETH Zürich  (D-ARCH) in Switzerland are designing for a different world. Guided by high-quality teaching and informed by research, they are exploring the issues of future cities, energy, climate change and sustainability – and putting their own stamp on them.

Architecture: 4 universities walking the sustainability talk

The Department of Architecture of ETH Zürich is currently home to 2,120 students. Source: ETH Zürich

Faculty here are diverse and highly skilled, with expertise ranging from the development of new construction systems to conservation, from the use of robotics to historiography and sociology. Working in close proximity with students and with the protection of academic freedom, they encourage students in both bachelor’s and master’s programmes to join the search for creative solutions in the field of tension between construction, the satisfaction of living and working needs and the preservation of a livable, designed environment.

The institutes of D-ARCH are: Institute for the History and Theory of Architecture (GTA), the Institute of Technology in Architecture (ITA), the Institute of Historic Building Research and Conservation (IDB) and the Institute of Landscape and Urban Studies (LUS). Within each lies many opportunities to excel in teaching, learning and research.

Each is closely linked with the design studios through the interdisciplinary definition of task, with research findings funnelled into teaching. Further collaboration with other divisions of ETH Zurich – such as the humanities, social and political sciences, as well as the material, environmental and engineering sciences – complement this.

The University of Melbourne

Located in Australia, The University of Melbourne’s Faculty of Architecture, Building and Planning is producing the next generation of architects through a multidisciplinary approach that allows them to become innovative leaders in the field.

Architecture: 4 universities walking the sustainability talk

The Faculty’s multidisciplinary approach prepares students to advance into the world as leading, adaptable professionals in their fields. Source: The University of Melbourne

For example, Bachelor of Design students are given the flexibility to combine in-depth study in a particular area with subjects from other disciplines in design. Master’s programmes equip students with knowledge across a wide range of disciplines and practical learning opportunities to apply real-world knowledge.

The faculty also has a strong international reputation for graduate research, where students and professors focus on the latest debates and engage with industry professionals, policy-makers and the community in analysing and solving complex problems in architecture.

Another unique and beneficial aspect of the faculty is the number of collaborative groups, research hubs, centres and institutes housed within the Faculty that bring together internationally recognised leading experts in the field. These include the Australian Centre for Architectural History, Urban and Cultural Heritage and Connected Cities Lab.

National University of Singapore

The National University of Singapore (NUS) is a leading global university based in Asia, powered by a mission “to transform the way people think and do things through education, research and service.”

Architecture: 4 universities walking the sustainability talk

In the QS World University Rankings 2023, the NUS Department of Built Environment is ranked seventh. Source: National University of Singapore/Facebook

Its School of Design and Environment (SDE) stands apart with its diverse offerings in two departments — Architecture and the Built Environment — and one division — Industrial Design. Since its inception, SDE has remained the sole faculty in Singapore to provide a comprehensive and integrated approach to teaching and research across various disciplines, including architecture, landscape architecture, urban planning and design, project and facilities management, building performance and sustainability, as well as industrial design.

“We provide world-class multi-disciplinary graduate-level courses and research programmes related to design and the built environment,” says Professor Wong Nyuk Hien, Vice Dean (Research), School of Design and Environment.

With nine graduates and three research programmes available at NUS, students can pursue a programme that is aligned with their goals. Among those transformative programmes offered are: Master of Science (Built Environment), Master of Arts (Industrial Design), Master of Science in Project Management, Master of Urban Planning, Master of Landscape Architecture and more.

 *Some of the universities featured in this article are commercial partners of Study International

Bridging the $18 Trillion Gap in Net Zero Capital

Bridging the $18 Trillion Gap in Net Zero Capital

Nov 20, 2023

A $18 Trillion Capital Gap Is Threatening the Energy Transition because Bridging this $18 Trillion Gap in Net Zero Capital would require as eleborated on below.

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Bridging the $18 Trillion Gap in Net Zero Capital

    

By Rebecca Fitz, Maurice Berns, Pattabi Seshadri, Asheesh Sastry, Jesper Nielsen, Ben Gottesdiener, and Betsy Winnike

Key Messages

The analysis by BCG’s Center for Energy Impact of global energy sector investment needed through 2030 to reach emissions reduction goals yielded the following key findings:

  • Capital Challenge. An $18 trillion capital gap exists between current commitments and the investments needed for alignment with net zero goals in 2030. Electricity and end-use sectors account for 90% of that shortfall.
  • Transition Barriers. Higher inflation and supply chain disruptions over the past 24 months have significantly hindered energy transition progress, stifling momentum and increasing costs.
  • Investor Behavior. Rising risks drive investors to seek higher returns, favoring businesses that prioritize capital discipline and cost efficiency even in high-growth renewables markets.
  • Sector Restructuring. Energy sector deals surpassed $320 billion in 2023, as companies optimize capital structures for energy transition investment. Oil and gas companies are leading with acquisitions, while utilities offload more assets to access capital and focus portfolios.
  • Strategic Adaptation. Companies should emphasize refining capital strategies, boosting efficiency, seeking innovative transactions and collaborations, bolstering financial foundations, and fortifying supply chains. These measures are essential to amplify investments, satisfy shareholders, and move toward net zero outcomes.
  • Government Role. Policy reforms, subsidies for low-carbon solutions, and expedited project approvals are essential for accelerating investment.

Navigating the path to a 2030 net-zero-aligned scenario reveals a staggering $18 trillion capital gap between current energy transition commitments and the required investment levels. Electricity and end-use sectors account for 90% of that shortfall. (See Exhibit 1.) With companies in the industry poised to drive 80% of planned energy transition investments through 2030, their strategies and execution plans are paramount.

Bridging the $18 Trillion Gap in Net Zero Capital

However, their journey is riddled with hurdles. In the present climate, higher inflation, persistent supply chain pressures, and rising capital costs cause significant bottlenecks, slowing the pace of the energy transition. The setting is also reshaping investor behavior; companies face more demanding calls for higher returns, more disciplined capital management, and more efficient resource allocation, even within the high-growth renewables space.

The energy sector’s response has been proactive. A flurry of transaction activities signals a strategic push to fine-tune capital frameworks for the energy transition; so far in 2023, total energy sector deals exceed $320 billion. Oil and gas companies have emerged as dominant buyers, while utilities are using carve-outs to raise funds and recalibrate. As capital markets evolve, only projects that strike the right balance between risk and returns will receive sufficient funding. Regions where stakeholders effectively align policy directives and market mechanisms will be the prime recipients of future investments.

To flourish in the face of growing capital demands, energy companies must reassess portfolios, create innovative capital strategies and new partnerships, optimize their financial structures, and emphasize stringent cost and supply chain efficiencies. This report highlights the sector’s crucial capital allocation dynamics and the implications for competitive success in the energy transition.

Follow the Capital: Tracking the Investment Landscape of the Energy Transition

BCG’s Center for Energy Impact recently analyzed the investment plans of the world’s leading energy companies, governments, and private equity players, to compare real-world energy transition investments with net-zero scenario benchmarks.

The study reveals two major trends. One is that energy companies and governments aim to inject an impressive $19 trillion into the energy transition over the next seven years. This includes nearly $2 trillion in new government spending, spurred by US and European legislative initiatives. Company targets suggest a 15% increase in energy expenditures between 2023 and 2027, with an increasing share allocated to low-carbon investments. (See Exhibit 2.)

Bridging the $18 Trillion Gap in Net Zero Capital

Yet the shadows of the war in Ukraine loom large. The repercussions of the conflict, marked by skyrocketing commodity prices in 2022 and 2023, have tightened capital availability, particularly for European utilities—the linchpins of European decarbonization efforts. These financial headwinds, coupled with higher inflation and capital costs, have curbed enthusiasm for new investments.

The Pivotal Role of Policymakers in Accelerating Transition Investment

There is an urgent need for global policymakers to address existing challenges and ensure a fair and efficient shift to low-carbon energy. Energy transition investments are most effective in regions where market structures and policy guidelines align to produce favorable risk-to-reward profiles for capital.

BCG’s Blueprint for the Energy Transition outlines six essential steps for public sector leaders to bridge the investment gap and support the flow of capital into transition projects. These steps include electricity market modifications to produce adequate pricing signals for new investments; faster approval processes for projects, particularly grid expansions; enlarged green investment subsidies through incentives and research grants; and revised liability guidelines to enhance investor confidence.

Strategic Imperatives: Shaping the Energy Transition Through Corporate Action

The energy sector stands out for its intense capital demands, marked by a capital intensity rate that is more than double that of other industries. Accounting for approximately one-third of the world’s yearly capex, it encompasses diverse peer groups, segments, and stakeholder interests. Yet organizations throughout the sector share a mission to amplify investments, satisfy shareholders, and navigate toward net zero outcomes.

To accelerate the energy transition, every company in this sector should treat six actions as mandatory:

  • Refine capital allocation. Evaluate and enhance current allocation processes to weigh trade-offs between traditional investments and low-carbon alternatives, ensuring a comprehensive approach to decision making. Look for processes that need revamping. In particular, low-carbon investments are much more sensitive to cost-of-capital increases than traditional energy sector investments. Improved cost-of-capital assessments across global portfolios would paint a more detailed picture of favorable assets.
  • Focus on efficiency. Emphasize cost and capital efficiency in energy transition investments. Such an approach may entail completely transforming the way a company runs major capital projects and operations. For example, companies are evaluating the factory model that has successfully reduced costs in the US shale sector for use in large-scale renewables and other low-carbon settings.
  • Explore strategic M&A and divestitures. Mergers and acquisitions may work for some companies, while others may benefit from divestments that enable them to concentrate their resources more effectively.
  • Forge new partnerships. Explore alternative deal structures such as minority shareholdings, joint ventures, strategic partnerships, and corporate venturing. These structures can be complex, but they offer strategic flexibility that is essential for navigating capital constraints in certain areas of the energy sector. They also promote specific collaborations to advance decarbonization efforts.
  • Strengthen the balance sheet. A volatile market forces companies to adopt robust financial strategies. The disparity in valuations between US oil and gas majors and their European counterparts highlights the importance of financial resilience, as does the surge in total shareholder returns by more debt-averse utilities in 2023.
  • Stress-test the supply chain. It is crucial to rigorously evaluate supply chains for cost efficiency, carbon intensity, and resilience. Reevaluating supplier relationships and identifying dependencies can cut costs and minimize risks.

 

The energy transition’s immense capital demands underscore the need for companies and policymakers to adopt robust and innovative approaches. As the world advances toward its net zero goal, harmonizing investment strategies with collaborative solutions is paramount. Although the energy sector is already making strides, consistent policy support and forward-thinking financial maneuvers are crucial to bridging the existing gaps and ensuring an ordered, equitable, and sustainable shift to a greener future.

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