Will we see an oil company go bankrupt? “Yes, it’s inevitable – if the changes we’re seeing in the market are anything to go by,” said Sam Kimmins of The Climate Group, at the Financial Times’ Energy Transition Strategies Summit in London.
“Despite ongoing fossil fuel subsidies we’ve seen the cost of renewables continue to fall, making them an increasingly affordable option for business,” said Kimmins, who heads up The Climate Group and CDP’s RE100 initiative for leading companies that have committed to 100% renewable power.
Kimmins was speaking on the panel ‘The industry plays long and short’, moderated by Andrew Ward, Energy Editor, Financial Times, alongside fellow panellists Trevor Sikorski, Head of Natural Gas and Carbon Research, Energy Aspects; Kingsmill Bond, New Energy Strategist, TS Lombard; and Alexander Voight, Founder and CEO, Lumenion Energy and GRIPS.
The discussion addressed the likelihood of scenarios such as reaching ‘zero carbon’ by 2050 – in an audience vote, two thirds felt this was unlikely, despite the pressing need to address climate change.
While 89% of audience felt it was unlikely that oil prices would return to $100 a barrel, the panel was open to the possibility.
There was a 50/50 split on whether emerging markets would leapfrog to renewables, but Kimmins was optimistic: “RE100 members like Apple, H&M, Tesco and Walmart are pushing renewables into their supply chains, helping to accelerate the growth of renewables markets.”
Image credit: FT Live
The energy transition: How far, how fast?
Earlier in the day, there was a panel about the speed of the energy transition away from fossil fuels, including James Basden, Partner and Global Head of Utilities, Oliver Wyman; Lord Adair Turner, Chairman, Institute for New Economic Thinking and Chair of the Energy Transitions Commission; Spencer Dale, Group Chief Economist, BP; and Juliet Davenport, Founder and CEO, Good Energy. It was moderated by Ed Crooks, US Industry and Energy Editor, Financial Times.
The timely discussion came as IRENA published a new report showing renewable energy already employs 9.8 million people worldwide, up from 7.1 million in 2012 – and with twice as many US jobs in solar compared to coal.
“In 2015 more money was invested in renewables than fossil fuels for the first time,” said Basden, in a keynote speech.
“There has been a fast transition, but we need to go faster still if we’re to deliver on our COP21 commitments,” he continued, highlighting the role of emerging battery technologies and electric vehicles.
“Consistent market signals are important so that investors can see the demand is there.”
Lord Turner said he was embarrassed that the UK’s Committee on Climate Change had failed to predict such a substantial fall in the cost of wind power, and hoped he would not feel the same 10 years from now.
He said he believed power grids could be run almost entirely on renewables alongside battery storage and small gas turbines, but that it would be harder for heavy industry and aviation to switch to renewables and that other sectors would have to go further.
Dale highlighted energy forecasts predicting increasing demand for energy until 2030, especially from developing countries.
Davenport spoke of the power of consumers in driving positive change. “This transition will not play by the rules,” she said, highlighting the demand for renewable power being created by companies like The LEGO Group, which joined RE100 last week.
Image credit: FT Live
There was a further discussion on whether it was possible to have an energy system based entirely on renewable sources – something business leaders called for at COP22 in November.
There was also a session on whether you can make money in renewables – during which keynote speaker Nancy Pfund, Founder and Managing Partner, DBL Partners, showed the logos of companies that have joined the RE100 campaign. “To make money in renewables you have to create companies that innovate and delight;” she said, “Tesla is the best example.”
Supportive policy
Throughout the day, speakers referred to the role of policy makers in driving forward the transition to renewable power.
“Electric vehicles are coming of age, in part driven by Chinese policy,” said James Basden. But he underlined that policy support globally was “nowhere near” strong enough currently to limit global warming to 2°C, let alone 1°C.
Lord Turner criticised the UK government on failing to publish its Clean Growth Plan on time, also highlighting that a greater emphasis was needed on carbon pricing.
Johannes Teyssen, CEO, E.ON said the energy transition was being driven not by German politics but by technology and customer demand – he said policy should be the enabler.
The soundbite of the day came from Kingsmill Bond. “Everyone thinks the most important green energy figure is Elon Musk. It isn’t. It’s Piyush Goyal,” he said, referring to India’s power minister.
To find out more about the FT Energy Transition Strategies Summit, click here.