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Article   |   David Clark   |   20.11.2022

Navigating through the energy trilemma in uncertain times

We are in the midst of an energy trilemma.

The unsettled times in which we find ourselves have seen a switch in focus of our priorities in response to events unfolding in a turbulent world, leaving us with the question of how we balance our energy security, affordability, and sustainability.

It’s less than a year since 120 world leaders converged on Glasgow for COP 26, fuelled, we hoped, with a concerted realisation that time is running out on the climate change agenda. The time for talking is past; the time for acting is now.

As a result, COP 26 saw some serious commitments being made towards decarbonising the energy industry. They didn’t go as far as many might have hoped, nevertheless some real milestones were set. The challenge now is to translate those commitments into real solutions and live projects.

In Scotland and across the rest of the UK, that led to an even greater focus on the need to prioritise the energy transition, to move from a dependence on hydrocarbons in favour of a more sustainable, cleaner energy mix.

On February 24, the Russian invasion of Ukraine rocked a world already turned on its head by a global pandemic. As the impact of what that meant for our energy supply and security became increasingly evident, policy underwent a U-turn, oil and gas were no longer bad words and we saw a ramping up of actions designed to not only rejuvenate, but to accelerate the production of hydrocarbons as a primary source of energy.

Short-term solutions are needed that respond to today’s immediate needs for energy security and affordability, yet ensures sustainability isn’t pushed onto the back burner and continues to be a priority with long-term strategic planning for growth.

How we address the energy market and its mix of economic demand and political pressure is a significant challenge. The headwinds that will create the uncertainty of economic growth as we continue our recovery from COVID, should not be underestimated.

In countries across the world, we are seeing different responses from governments as they try to provide a safety net and relief for consumers and businesses.

Getting the balance right will be extremely difficult with politics driving short-term decision making as opposed to more strategic, impactful medium and longer-term activity.

No one doubts that working towards real, sustainable solutions to the energy trilemma is complex. But critically this must be about long-term thinking, long-term transition, long-term implication and there will never be a quick, easy answer.

Our energy transitions from hydrocarbons to renewable energies to something else, always brings more complexities than what has gone before. It’s about more than just a change in energy infrastructure and supply, it’s about how we consume energy, how we store it and how we move it around.

The reality of past decision-making around committing to a single solution of supply infrastructure then not following through, is part of what we’re seeing come to the fore now. In France for example, we saw fantastic development of a nuclear feed, but they took the foot off the pedal and are now seeing the problems it has created because they don’t have a next phase of production coming through.

There is a question too as to whether the high costs of power we are currently experiencing will help or hinder the energy transition. The reality is that we must tackle those issues together. Unpopular as it is in many quarters, the need for hydrocarbons will remain a crucial part of our energy mix for decades to come. But alongside that we must continue to press ahead with the energy transition.

From a UK PLC perspective, it’s encouraging to see positive language in the government’s messages that will change the status of the oil and gas sector from being the bad boy in the room and, as part of the industry as a whole, become more of an engaged partner which can help identify solutions for the future.

Alongside that, we must also move forward with some of the early-stage development of add on activities to oil and gas production to drive forward some of the new projects surrounding carbon storage, gas storage and critically, some of the mixed energy transition solutions. This includes projects around the electrification and decarbonisation of production assets with the ultimate goal of newer energy solutions and how we are going to store and transport those.

World leaders gathered for COP 27 in Egypt, but it will be COP 28 in UAE 2023 that will shine a much stronger light on where we are in progressing the commitments made in Glasgow against performance.

David Clark, CEO

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David Clark, CEO, Vysus Group

One of the biggest questions facing us is how we meet the ambitious targets set by governments for the production of those newer energy solutions and for increasing local content through the supply chain.

The complexity of building the capacity, capability and the supply chain is enormous. Thanks to oil and gas, we already have a wealth of engineers and the project delivery muscle to deliver large-scale, multi-decade projects. The UK already produces a significant proportion of the world’s fixed wind energy, but in reality our supply chain needs significant development to reach these aspirational goals.

Identifying ways to build up our supply chain and localising it to make it effective and globally competitive is a massive challenge, the solution to which lies to a large extent with the multi-billion investment that can make it happen.

There is much debate on whether we should try to do it all, against a realisation or acceptance that we simply do not have the capacity and infrastructure to make this happen if we are to meet our production targets. Our focus should perhaps be on building on what we know we do well, exporting our globally-leading skills and expertise to the wider market.

In achieving our goals, collaboration will be key and as part of that, the route to progress must be smoother, more straightforward and more cooperative. Anyone who has tried to do anything from a planning perspective knows that it can be a pretty tortuous process – and that’s just one part of the equation.

To be successful, we must take a more integrated approach to our energy creation, our energy story.

The challenge going forward is to acknowledge the overlap between agencies such as, OEUK, Renewables UK, Scottish Renewables, Crown Estate and Crown Estate Scotland, various levels of government and the National Grid. They must work in tandem to realise achievement.

We have targets set through ScotWind, but how do we actually plug that in, where is the grid infrastructure and how do we build a coherent, interconnected system are all questions that must be answered.

We have the skills, the expertise developed over decades in the oil and gas sector and we now have to join the dots on the regulator picture to enable us to accelerate our transition.

It’s always going to be a challenge. Politics is a reality. We’ve seen a succession of energy ministers come and go through BEIS and its predecessors, each time a learning cycle and new engagement creating and adding to new challenges.

World leaders gathered for COP 27 in Egypt, but it will be COP 28 in UAE 2023 that will shine a much stronger light on where we are in progressing the commitments made in Glasgow against performance.

That will bring the reality. That will emphasise how crucial it is that we move on from the rhetoric to real progress before we run out of time.

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