Deborah Yedlin is president and chief executive officer of the Calgary Chamber of Commerce.
After countless sessions and cups of coffee at the planet’s largest energy conference last month in Houston, it’s safe to say delegates left with a better understanding of the trilemma of energy, its security and climate change.
Much has changed in the decade that I have been attending CERAWeek presented by S&P Global. The presence of members from the Organization of Petroleum Exporting Countries isn’t as strong, Russia is absent, discussions about supply and demand include renewable energy sources, technology and data science, and now mining is part of the conversation. One chief executive officer from a B.C. copper mining company introduced himself on a panel as being in the energy sector, because the copper produced is vital to the world’s electrification ambitions. That was a first.
It’s a new world. What was front and centre at the conference this time: the power of the U.S. Inflation Reduction Act, Europe’s joining Japan and other Asian countries in having energy security at the top of the agenda, and the challenges of reaching net zero, including myriad scientific disciplines and sectors spanning everything from energy and technology to mining.
Also a first was the litany of criticism levelled at European governments by CEOs from various European countries, with some saying the continent’s energy policy is being flawed because it abandoned both the concept of security of supply and affordability, and concentrated on renewables and decarbonization. Equally frustrating for them – relative to what is in place in Europe – was the ease of the simplicity of the Inflation Reduction Act’s structure – making it easy to implement and finance.
“The IRA has predictability, and broad possibilities for investment. In Europe, everything is forbidden. The IRA is a great opportunity and Repsol will be there,” Repsol CEO Josu Jon said.
He wasn’t the only one. TotalEnergies CEO Patrick Pouyanné was equally critical of Europe’s approach.
Daniel Yergin, Pulitzer Prize-winning author and conference chair of CERAWeek, speaking on the sidelines one evening, said: “The IRA is acting as a magnet for companies all over the world … to come to the United States and take advantage of it.”
He explained that its power lies in the incentives appealing to commercial instincts, rather than being prescriptive. It’s not just about carrots – but big carrots.
“Canada’s government, like other governments, needs to rethink what it’s doing in light of the power and impact the IRA will have,” he added.
The reality is, the world is still using hydrocarbons. And it will, for decades to come. With few exceptions, many of the technologies needed to support the decarbonization efforts are still in the nascent stages of development.
The sure things, tools such as carbon capture and storage or carbon capture utilization and storage, are important today and will underpin the decarbonization of many industries; all options will underpin decarbonization efforts for decades to come.
All of this needs to be seen in the context of the world’s energy security needs – and that’s where Mr. Yergin’s focus goes to the importance of liquefied natural gas with U.S. exports to Europe having become foundational to energy security on the continent.
“North American energy is now recognized as essential to energy security. Vladimir Putin demonstrated the business case for LNG,” Mr. Yergin said, adding Europe would prefer to import from its partners.
This might elicit a so-what shrug from some – but it reflects an understanding that Europe is competing with Japan and other Asian countries for LNG imports, in addition to a broader concern that China’s economic reopening could further squeeze global energy supplies.
This very complex problem – presented by the twin challenges of energy security and climate change – can only be solved by working together, across industries, disciplines and political lines.
The CERAWeek conference offers comprehensive guideposts – of what is and what could be. This year, with the emphasis on technology, the recurring themes of net-zero commitments by energy producers and an unprecedented display of innovation and innovators offered a window into the future – and ultimately, it is one of tremendous possibility. The federal budget tabled Tuesday gets Canada closer to realizing what is possible.