Energy 2.0? What will be the 2025 Trends?

Musing over the key trends to shape the Energy industry over the last few days whilst on holiday with the family back in the UK. Firstly…..it’s amazing how quickly you forget how cold it is up North! As I was standing in line waiting to pick up a rental car, dressed in shorts (which were very appropriate when I left Houston, not so appropriate when Storm Bert is hitting the UK and there was snow on the ground!!), my teeth chattering, my legs shaking, and my wife reminding me I was dressed incorrectly for the time of the year! We picked up a Hybrid car….first time I have had one of these was my thought, but I have to say I am (so far) mightily impressed. The combination of the ‘gas’ and regenerative braking technology has made a huge difference to the miles per gallon, could be made even better if we had anywhere to plug the car in. Which brings me onto 2 of what I think are 4 key trends in 2025++

Anything associated with GAS

As we think about how the USA starts to evolve again under a new but old administration, you can’t help but think that Gas is going to be important. If Gas is important, then does decarbonization of gas become important also? Does the export of LNG start again from the USA in order position the US as a larger, more global player in the Energy markets?

I think the answer to these questions is YES….without getting too political, Europe relies too much on Russian gas even with all the ongoing efforts to decarbonize, therefore in order to reduce the reliance on Russia, Europe needs gas from elsewhere….will they turn to the USA? If they do there are new regulations coming in from the EU that requires all imported gas to be of a certain ‘clean’ standard. This I believe will force the USA to clean up its gas in order to comply. At the moment there is a LNG pause on to countries without Free Trade Agreements with the USA and the EU is one of those….I suspect this will get unlocked quickly

This then leads us to think more about the importance of CCUS in this new world. CCUS today is not economic but is seen as the main way to decarbonize the gas value chain. I can see how in the next 4 years how CCUS is made to become viable with government subsidies being positioned to solve this economic challenge (which let’s face it is around how to make capturing the CO2 cheaper)

EV’s

It probably will not take a rocket scientist to make the leap that with largest EV manufacturer in the world being led by the guy that will head up the Department of Government Efficiency (DOGE) to think that this will lead to EV’s and EV technology to be front and center of any government policy. My view on this is that there needs to be a concerted effort to drive the range of EV’s up and make the infrastructure more readily available and faster to charge. This is where I think the hybrid concept starts to gain traction…..is a combination of Gas and Electric a more viable way forward? Keep the flexibility to ‘fuel’ up vs the emissions advantage of EV’s?? This I think will be a point to keep a keen eye on.

That then brings me on to what I think are 2 other key trends for 2025….

Infrastructure and particularly Electricity GRIDS

I believe that the USA will focus on creating jobs and inward investment by going large on infrastructure projects. The one that is crying out in my opinion is stabilization of the grid and ensuring it is both available for increased demands and less fragile given the increase in wild climate events (Hurricanes, Tornadoes etc) that we have seen and witnessed over the last few years. My tornado story this year (first time to experience one) is one of making sure you heed the warnings and not think you can get home before it, my hurricane experience was that without gas generator backup, life gets harder very quickly.

The three girds in the USA need to be connected to provide stability and resilience (in my opinion) and I know this is a topic of conversation at government level, so there is some hope. At least $2.2B has been pledged by the current administration to prepare for growing demand, protect against extreme weather and lower costs….this investment is probably just the tip of the iceberg that is needed but still shows the general direction of travel

Climate investment

So what does Trump 2.0 mean for the investment in climate activities?

The rhetoric goes from whole scale disbandment to some for of not that bad. The opinion that I am starting to form is one of ‘not too bad’. Yes I think there will be some form of walking backwards from the funding that the Inflation Reduction Act brings, I think wind and solar may be in the ‘at risk’ category but only because they can be made economic today to some degree therefore why tip more money into something we know how to do? Funding for CCUS, H2 and EV I think will be the focus?

There is no doubt that the Paris agreement and the USA’s involvement is probably going to become sticky but again I think this is purely based on making sure that the targets and goals are realistic rather than ‘pie in the sky’ with no concept of $. I think global markets are going to demand that climate investments continue and the USA will want to still be part of the global investment environment for years to come therefore I do think we may not see the whole scale backing off that people are predicting….couple this with what I think are the key areas above and maybe it is just a refocus of efforts and $

To pull this all together, I am a Senior Advisor to a boutique Sustainability and Climate investment practice called Enzo Advisors. I think the team we have there are more than capable of listening to the beats of the market as we go forward and then translating that into tangible action to drive $ to the bottom line…..give us the opportunity to show you what we can do. I have never been on an advisory board this strong in all my years……

Appreciate your thoughts

J