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Survey: Businesses Don’t Believe Energy Transition Is Viable

The business world seems to have doubts about the economic viability of the energy transition, a survey by Standard Chartered has suggested.

According to the survey called Zeronomics, as much as 64 percent of the 250 senior executive respondents don’t think the energy transition to net-zero emissions is commercially viable when it comes to their company.

This finding, which hints that the energy transition may simply be too expensive for many companies, chimes in with another: that the majority of companies need to invest money that they don’t have in their shift to net zero.

Standard Chartered reported that both the executives and the 100 investors among its respondents agreed that lack of sufficient financing was the number-one problem to businesses’ transition to net-zero, with as much as 85 percent of companies needing medium or high levels of investment for the energy transition. Among heavy polluters, this percentage rises to 91 percent.

The problem is serious because the majority of the industry executive respondents said they expected 60 percent of the funding they needed for their shift to net zero to come from internal sources and the rest from external.

There’s more bad news, too. Less than half of StanChart’s industry executive respondents said their companies fully supported the Paris Agreement and its emission targets. However, a majority of 71 percent among industry executive respondents said their companies had net zero plans and expected to make the most progress on these plans between 2030 and 2050.

The delayed progress might have something to do with the lack of standardized measurements for emissions, disclosure standards, and ratings since as many as 81 of the business respondents said such standards would go a long way towards accelerating energy transition efforts. However, according to forecasters, the world needs to make the most progress over the next ten years and not later if the Paris Agreement targets are to be hit.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on March 26 2021 said:
    Three major factors raise question marks about the viability of global energy transition. The first is that as long as the global economy runs on oil and natural gas, there will never be zero emissions.

    The second factor is that energy transition could never succeed without major contributions from natural gas and nuclear energy. Dependence on natural gas makes the notion of zero emissions an illusion.

    The third factor is that reprogramming companies into energy transition modes needs a lot of investments which either they don’t have or they will have to borrow to achieve and many of them are unwilling to go ahead with it.

    Exxon Mobil CEO Darren Woods and Occidental Petroleum CEO Vicky Hollub succinctly and eloquently made their position very clear at the CERAWeek conference in March this year when both said that “reducing carbon emissions from fossil fuels and not the actual use of fossil fuels, offers the best way to combat climate change”. In a nutshell, oil and natural gas are here to stay well into the future.

    Exxon and Occidental could have been echoing the real sentiments of the global oil industry when they expressed the belief that the best way they can contribute to global emission reduction and combatting climate change is to reduce emissions in their oil and gas production and not by greenwashing themselves.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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