SHOCKED by GHD is one of the largest studies ever conducted among the global energy sector C-Suite.
The trilemma
The security shock
Geopolitical tensions are a key contributor to insecurity, with international conflict putting those dependent on imported energy supplies and complex global supply chains at risk.
of energy sector leaders
report that geopolitical tensions are reducing energy security within their country.
of energy sector leaders say their organisation has never felt more pressure from national governments to maintain secure energy supplies.
The energy industry is feeling the pressure from governments to mitigate this shock.
To successfully navigate the energy transition, the sector will have to face a trifecta of issues. Energy will have to be affordable and decarbonised, but crucially there must be energy security to create any sort of reliable system.
The society shock
Every facet of society – from businesses to households – is feeling the effects of the energy crisis.
of energy sector leaders say energy prices are currently the biggest contributor to inflation.
of energy sector leaders say the energy crisis is reducing the standard of living across the globe.
Societal pressure to ensure reliable energy supply and lower bills, while also reducing emissions, is rising.
Affordable, reliable, lower-carbon energy, such as renewable natural gas, should not be taken for granted. We need policies and extensive collaboration between people, companies and governments to create a framework to produce this energy.
The climate shock
The energy sector is on the front line of the battle against the climate crisis, and the switch to a net zero global economy is almost wholly dependent on a swift transition to zero- and low-carbon energy.
of energy sector leaders believe their industry is under more pressure than any other to decarbonise.
believe a global net zero will require the energy sector to achieve ‘net negative’ emissions.
What’s more, they believe the energy sector will have to go further.
Achieving net-zero emissions by 2050 is a daunting challenge. We need to break down our climate goals and commit to interim steps to make real headway. Setting goals too far in the future can impede progress.
The CFO perspective
Building an energy system that moves us towards a lower-carbon future while providing greater resilience against future shocks is essential, yet costly.
The crisis has restricted investment: energy sector CFOs told us that investment levels during the current shock (2020–2022) were USD203 billion lower than they otherwise would have been.
The top three barriers to increased investment in energy infrastructure:
High capital costs
Regulatory and policy uncertainty
Low returns
We currently lack the coordination across the system to deliver the net-zero transition by mid-century. Supply chains need to be perfectly in sync, infrastructure delivery and workforce mobilisation need to be aligned. Ultimately policy also needs to be bipartisan – but this is still too fractured currently. Even if we agree on a set of solutions to the energy crisis, we need to agree to support them together.
Unfortunately, our commitment and collaboration will only last until something else, like energy prices, becomes more important.