The energy transition away from fossil fuels slowed last year, a study from consultancy firm L.E.K. Consulting has claimed.
The L.E.K. Global Energy Study incorporated insights from approximately 40 roundtable discussions along with quantitative survey data involving about 300 senior executives in the energy industry.
It found that the proportion of energy executives who listed ‘continued oil & gas focus’ as a top-three investment area for the next five years has risen to more than 70%.
In terms of identifying their biggest sustainability commitment, meanwhile, decarbonising existing operations was top of the list.
‘From aspiration to moderation’
“The approach to energy transition investment in the energy industry is moving from aspiration to moderation,” commented study co-author Franco Ciulla, managing director at L.E.K. “Companies that were previously looking closely at new technologies and extensions are now saying, ‘we’re going to use that money better within our core.”
Within the oil and gas industry specifically, decarbonisation of existing operations was also top of the agenda, as well as investment in energy transition technologies that would enable re-purposing of existing infrastructure.
With this in mind, 39% of respondents indicated that they may invest in carbon capture and storage as an energy transition technology over the next five years. Similarly, another 39% identified hydrogen technology as a potential investment target.
Additionally, about a quarter (25%) mentioned renewable fuels, while 17% named electric vehicle (EV) infrastructure as potential areas for investment.
‘When, not if’
“While many energy companies are shifting their current priorities when it comes to energy transition, it certainly isn’t ending,” added report co-author Rebecca Scottorn, a Managing Director at L.E.K.
“Energy transition is a ‘when,’ not an ‘if.’ But at this point in time, oil and gas companies, in particular, are finding it difficult to invest in new technologies and projects and are thus focusing more on decarbonising existing infrastructure and operations.”
According to the study, oil and gas companies anticipate that the proportion of their investment budget allocated to decarbonisation will rise from 21% today to 26% in five years.
Among all energy executives, 50% identified solar power as the renewable technology they are most likely to invest in over the next five years. Energy storage systems followed closely, with 33% of respondents indicating interest, while 29% mentioned wind energy, and 27% mentioned hydrogen technology as potential investment targets.
Looking for information about why sustainability is important in business? Make www.sustainabilityonline.net your first choice.
