One Giant Leap—CERAWeek, Houston

Driving down the I-45, the Gulf Freeway, south from Houston, Siri reminds me “For the Johnson Space Centre - take exit 24 towards NASA Parkway”.  Instead, I turn off earlier towards Texas’s energy heartland. 

It’s the week after the Houston Rodeo (no, not my first), and the centre of Houston is buzzing with big, black limos.  It’s CERAWeek, the “Super Bowl” of global Energy industry conferences.  That’s the “black gold…. Texas tea” type of energy with a dash of geothermal and hydrogen. 

It’s also the week the World Meteorological Organisation has issued its “State of the Global Climate” Report, letting us know that we have, in 2023, reached 1.4 degrees warming (plus or minus 0.12). So are we cooked already?

There are so many impressive people at this conference. Energy Ministers, White House representatives and governments from across the world (including the full range of Australian States and the Commonwealth), innovators in the Department of Energy, regulators, CEOs, VPs Upstream and “New Energies” teams. Plenty of MBAs, traders and the full range of engineers, although not many with renewable energy degrees so far as I can tell. Nor are there any large renewable energy investors, OEMs or developers. It’s hard even to find a picture of a windfarm or solar farm in the halls of the Hilton of the Americas or the George Bush Conference Centre. 

This is the heart of the energy transition, or it should be.  

There seems to be a subtle (or not so subtle) shift happening. There is after many years a reasonably accepted “energy transition” discussion going on, at all levels.  Shareholders have agitated, Governments have pronounced, and there is some big funding being pushed through in some parts of the world. So we should be at net zero…when my kids are my age. 

But the commentary coming out of the plenaries, and in particular some of the CEOs of the large oil companies, seems defensive and protective. Comments from the Aramco CEO, Shell and Total have attracted attention. As reported in the Houston Chronicle:

• “My proposal is this…we should abandon the fantasy of phasing out oil & gas and instead invest in them adequately reflecting realistic demand assumptions” according to Saudi Aramco CEO

• “I think we must find a gradual pace to make the transition. I know it’s urgent but unfortunately society really is conscious of price” says the Total Energies CEO. 

• “The dirty little secret nobody talks about is how much all this is going to cost” says Exxon “It’s time to get started on it”.  

• Shell too seems to be backtracking on its key climate targets. 

So even though we are at 1.5 degrees warming so far, and Big Oil is finally (publicly) satisfied that human induced climate change exists, we should slow down the transition?  Really?

There has been some useful elements of the conference - looking at practical issues around getting the first hydrogen plants off the ground (support levels, early stage funding, electrolyser technology, market demand) and a lot of interest in Sustainable Aviation Fuel (good timing as Energy Estate has just announced our SAF platform, known as E2SAF).  

There has also been some interesting discussion on focussing on “carbon intensity”, measuring, certifying and tracing that, energy efficiency and AI on future mitigation.  

But there has also been a significant affirmation of the ongoing role of high-carbon fuels, the capture and storage of carbon and a big focus on the need for Government to fund the energy transition. 

So is the transition just too hard for some given global “cost of living” pressures? Well, that’s a big theme. The theory is that decarbonisation is expensive. How wrong. Many initiatives are cheaper (wind, solar). Some do require a “green premium” (green hydrogen, green ammonia, green steel), at least for the moment. The real question is whether that premium should be borne by taxpayers or emitters (and thereby consumers of those products). We seem to have accepted at this stage that the emitters need not be responsible for the consequences of their actions, and therefore that all the things that Big Oil see as supporting the transition need taxpayer support (CCUS, hydrogen (supply and demand side), geothermal, small scale modular nuclear).  

That the solar and wind developers aren’t present in those discussions, demonstrating the “first 90%” of electrification is actually cheaper, is telling and influential on the mood of the conference. 

It seems Big Oil aren’t really ready for “one small step…”. 

So, Houston, perhaps it’s time to drop the nomenclature of “new”, “alternative” or even “renewable” energy (or provocatively reverse to the nomenclature to “Old Energy”), encourage and integrate “all” energy (carbon reflective), and to focus on whole-of-demand solutions, across electricity, metals and industrial feedstock. 

We are determined to play our part, unlocking energy “regions” and developing at scale to customer needs. That means developing projects across the energy value chain (wind, solar, PHES, hydrogen, methanol and SAF), with respect to communities and First Nations. It means understanding the strength of a region, its infrastructure, people and resource and matching that with products or energy shapes that customers need.  

We need the talent, systems and resources of Big Oil and their advisers if we are to curb our current trajectory. And we need to harness that in partnership with the broader economy.  Climate change might be an economic threat to carbon-based business models, but that doesn’t make it an existential threat to a business should it choose to adapt.  

Only with all of the innovators, the researchers, the “early stage”, the “scale-ups”, the global energy transition heavyweights and the talent that lies within Big Oil can we make that “one giant leap for mankind” we so urgently need.