"Energy is good. Emissions are bad." - my lessons from WEF 2022

At this year’s World Economic Forum in Davos , Switzerland, energy, climate change, and geopolitics dominated the agenda. I was fortunate to attend many sessions with customers, partners, and fellow leaders, including Amin Nasser and the Aramco team, Adena Friedman of NASDAQ, Ilham Kadri of Solvay, H.E. Eng. Tarek El-Molla of Egypt, Anders Opedal of Equinor, Felipe Bayon of Ecopetrol, Dan Yergin, Fatih Birol, Peter Parry, Andy Brown, and so many more.

As Davos ends today, I want to share my notes with you. At the top of my notepad I wrote a summarizing phrase: “Energy is good. Emissions are bad.” Here is some more detail:

First, the world expects energy security and energy transition to be advanced together – yet many skeptics challenge if that is even possible. At Davos we discussed the rising challenge of real supply shortages, as well as energy poverty in parts of the world, while just as many want to drive towards solving climate change. We have a huge risk of protracted high energy prices and continued inflation if we do not launch a sustainable path forward soon. A responsible energy mix, especially with natural gas, CCUS, hydrogen, and LNG, must be part of the solution.?Policies and regulatory frameworks must reflect this reality, reducing emissions over fuel types.

Second, history teaches us much about crises. Energy shortages including the 1970s oil crisis led to huge gains in efficiency innovation, such as raising MPG on cars and scaling then-newer forms of electricity (nuclear power). We can learn from this. Industrial companies can raise efficiencies of current energy infrastructure, driving towards lower emissions and meeting demand better. It can less expensive, faster, and more impactful to push towards net-zero in this way. I strongly urge our global leaders to rethink their net-zero roadmaps if efficiency gains are not a priority.

Lastly, I was reminded that our sustainable future can’t only focus on “big oil” but also “big shovels.” The “big shovels” concept has been discussed by my friend Dan Yergin before , and I heard it again at WEF. “Big shovels” refers to the commodities required to make the energy transition a reality. Commodities such as copper, lithium, cobalt, and rare earth minerals are needed in huge quantities to handle electrification. In some cases, more than twice the quantities of these commodities will be needed by the 2030s compared to today.

Are our policies supporting “big shovel” growth? Are commodity producers ready to manage their rising emissions as a result of more mining? The consensus this week is that we are not ready, with policies lagging in support and too much focus away from raw materials and on the end results of electrification. Positively, the technology to help reduce big shovel emissions exists today, so many other factors including financing and regulation need to catch up.

I would like to hear your thoughts. What are your ideas on how we progress “good” energy while tackling “bad” emissions?