Two dynamics will loom large over Wednesday’s ‘Transformation of Energy’ session at the World Economic Forum: the oil price’s relentless slide to recent 12-year lows and November’s COP21 deal in Paris where political leaders surprised many with their determination to agree climate targets.
These trends highlight the slow but inexorable shift from a hydrocarbon-dominated economy to a broader mix of fuel sources – and the bumps and jolts this will inflict on the international energy system along the way.
Oil prices will of course rebound cyclically as companies rein in investment and supplies tighten. Hydrocarbons will continue to power the world’s energy system for decades to come.
But the signal to the market given by the COP21 deal – as well as the ‘Mission Innovation’ group’s pledge to double R&D into new energy technology – sets the stage for a period of intense competition between rival technologies to establish a new breed of energy leaders.
We can expect these leaders to be characterised by a convergence of energy, biotech, automotive and nanotechnology. They will range from large-scale low carbon initiatives – China, for example, is building 40 new nuclear plants in the next five years – all the way through to microtechnology to manage energy demand.
Big Energy of 2050 will look very different from Big Oil of decades past. Traditional hydrocarbon suppliers and power generators will need to adapt and reposition – as the challenge from the new technologies threaten the old guard with an existential ‘Kodak moment.’
At the same time they will need to rebuild trust in the face of tighter regulation, tougher environmental scrutiny and increased public scepticism towards big business.
To meet this challenge energy companies new and old must show how they enable their customers to power their desired quality of life – while also empowering them to control their energy use and manage emissions.
Three priorities stand out:
Storytelling: compelling, transparent positioning, with the right audiences in the right conversations, both online and off
Issues management: benchmarking what your peers, competitors and other industries are doing as a frame for how to approach your own opportunities and challenges
Stakeholder outreach: building trust and engaging effectively with your core audiences
Communicating clearly, confidently and consistently in these areas will be the platform on which the industry’s new champions can reset their relationship with employees, investors, regulators and customers – and lay a strong foundation for the future energy world.