Heating Up the Energy Transition Conversation

The summer of 2023 has seen record-setting high temperatures across the U.S. According to the Climate Change Institute at the University of Maine, this past July was the hottest month on Earth since instruments began charting this data in the 19th century. A Pew Research Center poll released in August found we’re changing our minds about climate change – maybe.

The poll showed that 54% of Americans now view climate change as a major threat. This seems like a walk-away finding that’s good enough for most news media outlets – but not so fast. When political identification is factored in, the numbers show substantial polarization. Approximately 78% of Democrats agree that climate change is a major threat compared to only 23% for Republicans.

This polarization has put the climate change conversation in a bind. Federal policies are creating new and often conflicting regulatory burdens to clamp down on CO2 and methane (the primary greenhouse gases) emissions. This has generated “woke” and “extremist” backlashes against initiatives like Environment, Social, and Governance (ESG) programs. Brands, from energy companies to gas and electric utilities, find themselves trapped between simply checking a box, meeting regulatory requirements, or making climate-positive investments capable of creating long-term value.

We often coach our energy and utility clients using the axiom, “options are better than answers,” and then work to develop choice architectures that allow for the best possible decisions to be made based on predictive data. In some situations, doing nothing is a valid option. Inside the energy transition bind, however, doing nothing is a non-starter. Stakeholders on one side or the other of the brands we serve are demanding some sort of action, and none of the choices are easy.

The energy transition is the most complex change ever undertaken by humans in our roughly 165,000 years of being upright and semi-modern. To create heat, we’ve evolved from burning grass, wood, and dung to burning rocks (coal), to harnessing hydro and geothermal energy, to using fuels like gasoline, natural gas, propane, and nuclear (fission) as energy sources.

Today, wind and solar power are taking their place in the source mix while hydrogen, DME-blended fuels, and even nuclear fusion, are all likely to play a role in the journey to a net zero carbon world. Which of these options is going to be the standard to serve our energy needs? We believe the answer has to be “all the above,” and the reason is simple. People need heat.

Energy companies and utilities should create customized strategies because their unique stakeholders ranging from scientists to activists to politicians to everyone in the middle, are very likely acknowledging that we need to accelerate decarbonization. That’s because the case for climate change has been settled. The science is in. Decarbonization is necessary – and achievable.

Just as reliability and affordability are non-negotiable standards, strategies can be both visionary and pragmatic. It’s very possible in this transition to use, for example, fossil-derived fuels and decarbonize at the same time. This is especially true for heavy-duty transportation and power generation applications where ultra-clean drop-in fuels are available today.

Wonderfully pragmatic innovation is occurring in surprising places all around us. Dow Chemical has, for example, partnered with X-Energy to install a small modular nuclear reactor to power its 4,700-acre Seadrift, Texas manufacturing facility. That thinking is eliminating the release of about 440,000 metric tons of CO2e/year. Using the lessons from 5,000 years of sailing, Cargill has installed two 123 ft. tall WindWings on an ocean-going cargo ship. The company expects to save as much as 3 metric tons of fuel a day when the wings are deployed, reducing carbon emissions by as much as 30%.

The good news inside of the energy transition is this: Energy producers and conveyors, as well as utilities generating or transmitting power, have options for moving forward. The bold prediction our team helps clients embrace is that we will achieve net zero, and we will do it sooner than anyone believes is possible. You don’t need to be woke, and you don’t need to go broke. Instead, all you need to do is agree that moving forward is better than the alternative.