2022 was one of the most successful years for the oil and gas industry; the industry is estimated to have made income of USD 4trn vs an average of USD 1.4-1.5trn in previous years. The six largest western oil companies made more money than in any year in the history of the industry: over USD 200bn.
While the climate emergency is becoming more pressing by the day, our country is continuing its usual policy of (very) small steps at a slow pace. And while solar power is now the cheapest source of electricity, we continue to rely heavily on fossil fuels.
Sovereignty and energy independence being intimately linked, the transition towards decarbonized energy will necessarily be accompanied by a redistribution of geopolitical cards.
2023 will be a year of unprecedented policy support.
As Al Gore said at the opening of COP 27 in Sharm El-Sheikh in November, we cannot choose our misfortunes, but we can choose the benefits that come from them, especially when it comes to renewable energy. Indeed, we are in the early stages of a sustainability revolution that will have the scale of the industrial revolution and the speed of the digital revolution.
At present, the energy mix in the European Union is 42% fossil fuels, 35% renewable energies and 22% nuclear energy. And as the current crisis has unfortunately highlighted, most of the gas consumed in Europe comes from Russia (see graph below).
The drama unfolding in Ukraine signals the end of energy “recklessness” for Europe. The transition to a decarbonised economy has become a top political priority, guaranteeing our future independence.
The Inflation Reduction Act (IRA) was signed in law by President Biden on 16 August 2022 after House Democrats approved the biggest-ever federal investment against climate change with a 220 to 207 vote.
The Inflation Reduction Act (IRA) was signed in law by President Biden on 16 August 2022 after House Democrats approved the biggest-ever federal investment against climate change with a 220 to 207 vote. The package targets USD 369bn of spending on energy and climate change. To illustrate the monumental size, some are pointing out the spending will be four times more than Obama’s Recovery Act of 2009 for climate initiatives. The impact will be far-reaching – even pushing some technologies, in our view, past tipping points. The legislation aims to cut emissions by at least 40% by 2030.
All things considered, the clean energy sector seems to be ready to enjoy a unique alignment of the stars. Indeed, never before have policy and regulation together driven clean energy forward with such force and with so much visibility.