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Energy Gang
Energy addition, not energy transition? What does it mean for the future of our energy system, and the climate? | Special episode recorded at ADIPEC, the world’s largest energy event
00:45:16
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- [00:01]
A
In the United States, we seem to have quite a bit of politicization of energy. One side, one kind of tribe, has an affinity for these types of energy supplies. Another one thinks that those are terrible and that it's only this way to go. But I'm telling you, we really need all of the above.
- [00:16]
B
The transition will happen when it's economically viable. No greater example of that is solar or even onshore and offshore wind. When they become viable, it just happens. It doesn't really matter about policy.
- [00:27]
C
The energy transition, for it to succeed, we need all the fuels on board not to continue producing in the same way we have been producing. Lots of technologies out there to reduce the industry's impact on the environment. But really, I think, and I'm a strong believer, that the energy transition is about complementarity and substitution. It's too early for substitution.
- [00:50]
D
This episode of the Energy Gang is brought to you by Adipec. The world's largest energy event, Adepec 2025 took place in Abu Dhabi from the 3rd to the 6th of November under the theme Energy Intelligence Impact, it brought together the entire energy ecosystem to address a dual imperative strengthening today's energy systems and scaling intelligence solutions that advance global Progress. More than 205,000 attendees and 2,250 exhibiting companies gathered to exchange ideas on forge partnerships and mobilize investment, showcasing solutions that deliver energy to more people, more affordably and with lower carbon intensity. Across 380 sessions, over 1800 expert speakers explored how the convergence of energy, AI, investment and emerging economies is reshaping markets and driving opportunities worldwide. Following this year's success, ADEPEC returns to Abu Dhabi from the 2nd to the 5th of November 2026. Discover more@adipec.com hello and welcome to the Energy Gang, a discussion show from Wood Mackenzie about the fast changing world of energy. I'm Ed Crookes and all week we've been at adepec, the world's largest energy conference, which is held in Abu Dhabi. It is a vast event, more than 200,000 people attend and it's also a place where you can see many of the most influential people who are shaping the world of energy. Now, one of the big themes here has been the idea of energy addition as opposed to energy transition. What it refers to is the thought that newer sources of energy, in particular renewables and also other low carbon technologies such as green hydrogen, are being added to the world's established energy sources, meaning oil, gas and coal, rather than replacing them. To round off our conference, I spoke to a range of people about that idea, did they think that was the right way to describe the way the global energy system is changing? And if it is true, what are its implications? First of all, I spoke to Carol Mackley. She's had a long career in energy and now has an advisory firm called Crystal Energy. She's also Secretary General of the Arab Energy Club. I asked her first for her impressions on this year's ADIPEC as the conference drew to a close.
- [02:53]
C
I'm not new to adipec, so I don't like to comment only on this year's adipec. I like to take a look at all the previous ADIPEC sessions that I attended over the years and easily that goes over 10 years and it's amazing. So each year you do find a main theme. So we cover all themes related to energy, but there is always one theme that dominates the discussions and this year in particular, AI digital technologies. And it's not just in the discussions that dominated the pros and cons, the challenges, the impact, it's also you see it everywhere. So when you cross the halls, you can easily see the whole event has been more digitalized than all the previous years. And I mean, I learned a lot about AI, how it's being implemented in organization, the energy sector. And the only question that I kept on coming to my mind is maybe about the workforce, because I know the energy industry, especially oil and gas, you will always seek improvements, improvements in efficiencies, optimizing cost. And this is where AI is helping a lot. But I have to say that I did not leave with a convincing answer about the outlook when it comes to the workforce, because nobody really knows. So you have some organizations they don't mention letting people go. They said it's against their culture, what they are doing. They are upgrading the skills. So they are having this kind of nice flow between humans and the machines and the software. But other people warn of job losses, but not quite convincingly. And the interesting thing, nobody knows how far I can go with its impact on the industry. We also talked about AI and the increase in demand for electricity, but I did not hear about improvements in efficiency when it comes to the demand. So there are lots of unknowns with AI. And I don't think I is going to leave ADIPEC anytime soon.
- [04:43]
D
On because I was wondering how real you think a lot of this is. I mean, I've been speaking to some people here who said, yes, there's all this talk about AI, but it's kind of it's fashion, it's the current trend. It happens to be what everyone wants to talk about at the moment. But a lot of it is cosmetic, a lot of it is kind of showy stuff and things that could be done in principle and might be interesting, but are not actually really changing the way people do business and the way the energy industry operates. Do you think there's something in that or do you think there is a real change here?
- [05:14]
C
Look, that's how I'm going to put it so far. And I'm not, you know, an engineer or a specialist in IT or AI, but I don't think, and I'm not convinced that AI is as disruptive as a technology as, for example, what we saw was a shared revolution. Even if you take horizontal drilling alone back in the 60s and before that, you know, they made deep water drilling possible, they opened up Alaska, they opened up the North Sea, they opened up offshore Brazil, for example. Then we had the hydraulic fracking added to horizontal drilling and that's when we saw a serious disruption. I mean, look at market dynamics today. Largely dictated by what happened in the US was the share revolution. I don't see that happening with AI, at least not in the coming few years. So it is changing the way organizations are doing business, but. But still rewriting, reinventing the structure of oil and gas markets or energy markets in general.
- [06:11]
D
That's really very interesting. Yeah. And I mean, again, talking about sort of changing fashions feels like two years ago, if you'd been at this event or many other energy conferences, all the talk would have been about decarbonisation, emissions reduction, the energy transition to a low carbon energy system. We've heard much less about that here.
- [06:29]
C
Absolutely.
- [06:32]
D
Again, does that reflect a real change in the industry or is that just a kind of a change in the prevailing discourse?
- [06:39]
C
I don't think it's just a change in the industry. I think the industry is mirroring what is happening in the global environment. If you look at policy shifts, for example, the geopolitical changes that we are seeing, and not just in the US, but everywhere, all over. I mean, 2024 was the biggest election year in human history. So we had changes everywhere. And with those changes we also change fundamental changes in policies. We saw policy shifts moving away from the rapid push towards decarbonisation, achieving net zero to. I don't like the word abandonment or a U turn, not a U turn, but definitely a deceleration. Definitely. Like trying to rebalancing the argument was, for me it was a bit too polarized. But we're not ditching the net zero.
- [07:24]
D
So now when you think about the future of the energy industry, when you think about the future in the light of everything you've been hearing here this week, what are you expecting now?
- [07:34]
C
What I always believed in that the energy transition, for it to succeed, we, we need all the fuels on board not to continue producing in the same way we have been producing. Lots of, we mentioned earlier, lots of technologies out there to reduce the industry's impact on the environment. But really I think, and I'm a strong believer that the energy transition is about complementarity, not substitution. Substitution. It's too early for substitution. So when you look at the global energy industry, primarily oil and gas companies, private or national, nationally owned companies, I don't see them abandoning their net zero targets. Right. I see them recalibrating their portfolio, especially the private companies. But when you look at the Aramcos of this world and they did not abandon their efforts to reduce their carbon emissions because they are taking a much longer term perspective perspective than this immediate short term debate. They want to be the last to leave a shrinking market. Whether it would be maybe in 80 years or 50 years, I don't know. But there is not about just the one which has the lowest cost of production. It is also about the organization and the country that has the lowest carbon footprint, the lowest carbon intensity. Blend those two in addition to your resources and they have massive reserves here in this region. They will be the last to leave a shrinking market when that happens.
- [08:54]
D
Yeah, I think that's really interesting and I think that is a very compelling argument. So question, what might we be talking about a year from now then come back to 2026? What do you think the hot topic will be then?
- [09:06]
C
Well, it will definitely. Oil and gas will always remain key topic. One thing actually we should have mentioned is, for example, hydrogen was not a big thing this year. Although last year or the previous years it was almost like AI Today I don't think. Yeah, I don't think it's going to come back anytime soon. Hydrogen. Maybe we'll have to wait a bit longer.
- [09:24]
D
Well, we do have to wait and see. I actually chaired a panel on hydrogen talk about hydrogen and derivatives. I heard some pretty interesting things there from people operating in the industry saying that as you say, it's out of fashion now. But there is actually a lot of progress being made. Costs are being driven down. Perhaps some of the hopes for hydrogen being a huge part of the global energy system have faded. But low carbon hydrogen having a key role in some sectors in some countries that's definitely not gone away as an idea. I still think there could be much more progress.
- [09:57]
C
Yes, it is not. It has not been abandoned. But definitely the excitement. I mean last year, last few, few years, in almost every session you had everybody became hydrogen experts. You don't have that this year year. And I don't think it's going to come back anytime soon next year. But you will continue to see definitely technology playing an important role, including carbon capture and storage. And you know, this an area which was especially in this region because what's happening in this region also influenced ADIPEC agenda Gas, the push for gas in this region. Gas is going to be continue to be a big theme as well as renewable and maybe, maybe nuclear because I can see like a stronger interest across the region to think about in power security and increase in demand for electricity. We'll see.
- [10:40]
D
Yeah, I do think that's very interesting. The UAE where we are at the moment, they've had their nuclear program which has been a big success it seems. I've just come from the United States where there's talk about this massive push, $80 billion plus push into new nuclear construction being backed by the US government and smarts coming up. A lot of interesting technologies there.
- [11:02]
C
Is it the next hydrogen story? I don't know.
- [11:05]
D
I think it could be, but maybe some of those technologies. I think it's certainly not going to be room for all of those different ideas. There's a lot of different SMR designs have been proposed. They're definitely not all going to make it. But as you say, some of them may reach commerciality. We'll have to see about that. But that's a very interesting thought. As you say, maybe next year everything's going to be about nuclear and.
- [11:27]
C
Yeah, so I will see you here next year.
- [11:29]
D
And I'm just about to say it would be great to talk to you again next year and to see how things are going then. But thanks very much for joining us here.
- [11:36]
C
Thank you for having me with you.
- [11:37]
D
Thanks a lot. I next spoke to John Gilley, who's chief executive of the energy services company Kent, which is dealing with a lot of these issues in a very practical way. It works on projects in oil and gas and hydrogen and renewables. I asked him first to talk about what he thought were the most important messages for the industry coming out of Adipec.
- [11:55]
B
I've been coming to Adipec for 15 years, at least 15, 16 years. And the narrative changes as how, you know, people talk about it and how it's actually put across, you know, so it used to be a pure oil and gas conference where you're talking about technologies, how can we drill for oil, how can we extract gas more efficiently, so on, so forth to a point where you start talking then about energy transition, you know, certainly over the last couple of years, energy transition. How can we. How can we, you know, progress into energy transition? Especially on the back of the COP that was held in Dubai recently where Sultan got that fantastic agreement. That narrative does seem to have shifted or deprioritized slightly and is replaced with AI digital. How can we secure the data? How can we be more efficient? The fact of the matter is, energy transition is continuing.
- [12:45]
D
Yeah, that is really interesting. And I want to get into a lot of those issues later on in the interview. Just before we do that, though, I am interested in hearing a bit about your recent history. You became CEO in 2020, and then the following year, Kent became a much larger company with the acquisition of the SNC Lavalin oil and gas division. And you changed the name of the company from kentech, which had been back to Kent. What did that mean for you?
- [13:09]
B
To be honest, you know, frankly speaking, it was a crossroads for me because at the time, I'm a complete energy transition geek or freak or addict, whatever you want to call it, I can't get enough of it on the data side of it, on the engineering side of it. And I did think for a while that maybe I should leave this industry. Maybe I should go and do something purely in renewables or something completely, completely different. And it was at that time that we went from a company of 2,500 people to the new company of 10,000 people overnight. So we had a complete reset of culture. We couldn't have said to those seven and a half thousand people, come in and bow down in front of the Kente culture. We rebranded as Kent. I think that was 2021. And during that work, we asked everybody we interviewed or had workshops with over a third of the population of the company to ask them, what type of company do you want to work for? What should that company's purpose be? And so where I squared it away with my own kind of moral line was I prefer to be in the industry doing something about it than being outside of the industry. You know, driving my Range Rover and saying that these companies are destroying the planet. So that's what I chose. And funnily enough, from the 3,000 or three and a half thousand employees, that was the theme, you know, we want to be known As a company that are courageously tackling the greatest challenge of our time. And the greatest challenge of our time is climate change.
- [14:29]
D
So let's talk a little bit more then about the energy transition and climate change. You called climate change the greatest challenge of our times. There's a debate about that, right. Not everyone would agree with that. You'll find people who will say, yes, it's a challenge, but there's a lot of other challenges in the world in particular, I guess challenges around relieving poverty, global development, raising living standards and so on. And then on the other hand you also find people who will say, well, okay, if you think that if you believe that climate change is the greatest challenge of our time, that means we just have to get off hydrocarbons and as quickly as we possibly can. Even if as you say that like the hydrocarbons produced in the Gulf region that are relatively low emissions and low cost, you still need to move quickly away from those because of the urgency of the issue. Yeah. How do you sort of square that circle?
- [15:20]
E
Yeah.
- [15:21]
B
So funny enough, this getting off them as quickly as, as we can is probably not the right statement. Getting off them in a controlled manner over decades is the way to go because the problem is, is that what nobody needs is price spikes. So we have to continue to invest in producing hydrocarbons responsibly in the regions of the world where we, where we ought to. And then at the same time we're in parallel invest in these newer technologies to make sure that those can also come to bear, specifically sustainable, sustainable aviation, future fuel and the pure renewables type projects. It's something that if you rush into, will cause massive economic problems. And we've seen, we've seen that, you know, in past years with spikes in Europe and the gas costs almost crippled the UK at one point. So you can't have that. It has to be very well planned, very well you know, documented as to how we will actually do this. It's very, it becomes extremely difficult because of the. In countries where you have political systems that actually turn over every four years, it becomes almost impossible, you know, because every four years those political parties are looking for re election. So drives that they're trying to do in implementing policies can be reversed or can be dampened down. And we've seen that, we've seen that for decades. For decades, you know.
- [16:41]
D
And so your point is then that if you want public buy in to the energy transition, if you want public support for decarbonization over time, you have to do that in a way that people aren't acceptable. That's affordable, crucially.
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B
Exactly.
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D
And that doesn't. Yeah, I mean there's living standards.
- [16:59]
B
I kind of change my view on this as time goes by. You know, in the end of the day, the transition will happen when it's economically viable. No greater example of that is solar or even onshore and offshore wind. When they become viable. It just happens. It doesn't really matter about policy. You know, Trump canceling wind projects and you know, deprioritizing that. Okay, it has. He has cancelled certain projects that he was allowed to do, but wind will continue in the US because it's cheaper to provide electricity. You know, when you compare it to what the US utility customers are paying for electricity because of failed nuclear project to the actual cost of a kilowatt hour from solar or wind, it's a fraction. So there's no policy that will stop that because business people will just look to make their margin.
- [17:48]
D
And how do you see the outlook for some of those low carbon sectors then? Because as you say, there are cases where the case for low carbon energy is just economically very, very compelling without any subsidy or anything. And wind and solar would fall into that category. When you think about some of the things you've been talking about though, think about offshore wind, think about sustainable aviation fuel. Those are relatively higher cost, where the policy support isn't there. Those sectors are really challenged. So what's your expectation of how that's going to play out? Do you think the policy support will be there to enable those sectors to continue to grow or is that a risk? Do you think that will be withdrawn and they'll face severe problems?
- [18:26]
B
I really would see that sustainable aviation fuel is a future fuel for the future. It's just a no brainer. When you think about actually let's say the decarbonisation of transportation. I think the while the demand for oil at the moment is about 100 or 102 million barrels a day, depending on the week and what's happening around the world, 40 million barrels of that is in personal transportation, private transportation. That transportation, whether people like to admit it or not, is being electrified as we speak with certain countries. You know, I can't remember what China's at, but it's about 50 or 60% overall. EVs now proliferation is up around 8%. There's an inflection point on that curve that when you pass it, it could hit 25% within three years. You know, there's this adoption curve that you have, but nobody's really Tested it on such a. Something such as larger carry on an iPhone. And the inflection point on the iPhone I think was around 7%. So for a car, it might be bigger. Once that happens, that will take 10 to 15 million barrels of demand off, off the page, which is monumental, you know, and that will have, I think, the type of effects that nobody can understand just yet. You know, we saw the effects from Russia's invasion of Ukraine, what it had on gas, you know, and this type of effect is just unprecedented. And it will be a different world, you know, and so we will start to decarbonise massively. For the first time last year, oil was 30% of the world's energy supply, was renewables being roughly a third, largely the new capacity. The increased capacity on the renewables has been met by wind and solar. You know, so we're we. Energy transition is happening. Oil and gas will be around for decades to come, and we should continue to produce it as responsibly as we possibly can. Many of our projects with ADNOC is about actually reducing reduction of flaring, taking out of carbon within the process before it ever gets burnt, you know, so lots of the projects, actually, I would have said maybe seven or eight out of 10 of our projects, even though they're in conventional oil, have an element of energy transition in them, but nobody really understands or talks about it, you know.
- [20:24]
D
And what about then? That, as you say, has been another big theme of the conversation here at epic. That's something you do a lot of work in, but you have a data center business.
- [20:33]
B
Yeah.
- [20:34]
D
How has the AI revolution been changing what you do?
- [20:38]
B
Massively. And we've been investing millions in it for the. The last number of years. And we look at it in different ways, you know, so we've looked at the actual data center side of things, which is the company that we acquired, Sudlers Consulting. And so that's just purely figuring out how to design and build data centers globally. So so was a relatively regional company, and that's what we figured that we have at Kent. We've got this wonderful global reach platform that we can buy regional companies, plug them into our platform and then grow them from. From there. So that's one side of the. We're also interested in the power side to supply energy to the data centers. So where that can be, let's say gas turbines or where they're not really interested in the whole rhetoric about nuclear supplying power to data centers, I think is nonsense. But other things like wind are, you know, let's say Isolated energy supplies like offshore wind that we can bring ashore and power data center. So we're interested in making that connection somehow into data centers. On the AI side of things, we've got this as kind of two different sides. One is a sales side where we've launched our own product called Innova AI, which is a product we won the award last year for best AI solution. And that was launched last year at adipec. It's in the air hall as well. You can see AI is becoming a much bigger theme. And then outside of that, we've retained consultants to guide us on our roadmap towards how we integrate AI into our business, either to sell it to our clients or to make us more efficient so we can pass on the savings to our clients. And we have to hardwire the logic of that and theme it towards our purpose, which is tackling the great challenge of our time. We're continually looking, how can we, you know, how can we use this software, this gift, you know, from. From whomever, to actually accelerate us working more efficiently, producing hydrocarbons more efficiently and more responsibly, but also increasing the energy systems of the future, which the world, at some point, it's an existential threat for our company. That's why we're investing. That's why our purpose says we want to give the world the energy that it so badly needs. The world's addicted to energy. We're all addicted to energy, you know, so there's all sorts of different things that we can do in terms of helping the world to get the energy that it requires.
- [22:55]
D
Yeah, that's a really great point. And that's actually a theme that my colleague on this podcast, Amy Myers Jaffe, often picks up on, which is that people talk about AI and energy and people talk about data centers and rising electricity demand and all of that. In terms of problems that are being created by AI, There is also enormous potential for AI to help solve these challenges.
- [23:16]
B
Yes.
- [23:16]
D
And can have a range, really positive contribution as well.
- [23:18]
B
Huge. I mean, it's outside of our remit, so I'm not talking about Kent, but it's maybe something that we could look at in the future, especially since we've. We've kind of dipped our toes into data centers. And I think we'll be very large in data centers and we're building mega data centers in this region in Saudi and in Abu Dhabi, and we'll. We're looking at going into our regions then with. With the help of the companies that we've acquired. But if you Think about energy usage and efficiently using that. So behind the meter type energy generations in houses, you know, having AI systems figure out which houses are good energy batteries in terms of heat or cooling, that it can draw on that energy at different times and running more intelligent networks, you know, the actual need for or the demand will drop dramatically at the same time. We're electrifying vehicles, we get, you know, demand side generation. It will transform, it will transform and I'm sure there are companies doing that. I would love for us to actually get into that side of things, you know, you know, when you talk about passive houses, you know, reducing all of the demand in that, on that side of things as well as everything that Kent and our clients are doing on the other side and meeting somewhere in the middle. I'd love to do that, but we can't, we can't do everything. We can't do everything. Yeah, we're busy, we're busy with what we have.
- [24:36]
D
Yeah, but it certainly is a very exciting time, isn't it? The possibilities are amazing and it's going to be, as you say, fascinating to follow how it develops and how this industry changes in the years to come. For now though, thanks very much indeed. Great talking to you.
- [24:49]
B
My pleasure.
- [24:50]
D
Thanks for joining us.
- [24:51]
B
Cheers.
- [24:51]
D
Another executive we spoke to was Sasha Sisiu, who's the sales manager for the Middle east and Africa for Airsen, which is a German manufacturer of industrial equipment. I asked him what he'd learned at the conference. Do you think carbon reduction and addressing climate change has been de emphasized here this year?
- [25:09]
E
No, I would say the opposite actually. And to be honest, I think the most drive that actually comes from companies. So they have their own mandate, whether it's Oman, UAE or other GCC countries, or even African countries. So they have their own mandate to push that decarbonisation forward and which is good for us because we have innovative products that actually fit into this gap that's still on. Yes.
- [25:35]
D
Right. And so obviously there's been a lot of debate about the energy transition and what's happening to that and is there an energy transition and so on. But you're saying that as you see it, and certainly from your customers, that still, that interest in reducing emissions is still stronger than ever. As strong as ever?
- [25:53]
E
Yeah, definitely. I would say it's stronger than ever because companies, as I said, they have their own mandate and, and they're pushing really forward whether this is flare gas recovery, whether it's, let's say, tailgas, flare, gas boil off, gas recovery, all this kind of applications what the customer is looking for fits into our portfolio, whether it's with compression or whether it's with the blowers that we have. So definitely, I would say it's an uptrend, actually, it's a must now.
- [26:23]
D
So how do you think this is going to affect your strategy and your decision making as a company in terms of what you've learned here and what you're hearing from customers and potential future customers? What does it mean for you?
- [26:34]
E
Yeah, I mean, how it impacts us. It impacts us extremely because the request is there to have a product that actually provides that, so particularly on the compression side. So what we have done now in Arsen, in our factory in Germany, is we developed one of the biggest hydrogen compressors that is specifically tailored. It's a bespoke solution. So that will contribute definitely into the hydrogen market and green energy and also reduction of CO2. It will be released probably in a month's time and it's a real step forward. So you see, there's a direct impact, is there?
- [27:11]
D
Right. That is really fascinating and I do think it's. One of the things I've been really struck by while I've been here is that there is sort of the debate over energy and what happens in political circles and so on, and that kind of swings around very rapidly and, you know, what is sort of fashionable one year is not fashionable the next year and so on. But behind that, the industry is changing sort of at a much smaller, slower pace and there is, you know, a steady process of evolution.
- [27:39]
E
Yes.
- [27:40]
D
And that continues, whatever the sort of, you know, the noises in the debate around that.
- [27:44]
E
Yeah, yeah, absolutely. I mean, there's certain topics, they. They don't go away and there will be more emphasized on. It's. It's also about sustainability. So now, you know, if you look into the company profiles, it's a key factor about sustainability. How do you. So where do you source? What are the transportation ways? What is the cost of production? So it's a whole basket full of things that comes into play. Yes.
- [28:12]
D
Because in terms of your customer base, you're serving the oil and gas industry, certainly, and other industries as well.
- [28:17]
E
Yeah, I mean, the portfolio consists basically out of compression for air, for modified versions of this and for gas processing. And then to keep it simple, there's basically two products, which is compression and which are the blowers. And the application for this goes from, let's say, steel plants, di. Steel plants, cement factories. One of our biggest unit is basically wastewater technology. So I don't think there's Any wastewater site that doesn't have our product. And then recently more and more comes up with the oil and gas and petrochemical.
- [28:55]
D
Yeah, that's very interesting. And I wonder if there's also sort of a shift in views about the long term future of oil and gas that perhaps, you know, two or three years ago all the debate would have been about, oh, we have to get off fossil fuels very quickly, there's no long term future for oil and gas. And now people have moved away from that idea.
- [29:13]
E
You know, that is a debate. Practically speaking, what I see on the ground on the market is oil and gas is by far not that it's actually there's an uptrend and again see it by the RFQs that are received from oil and gas companies from Nigeria up to Qatar. So I would say it's on, it's, it's unbroken, actually, it's, it grows, you know, it's not sinking.
- [29:37]
D
Well, thanks very much indeed. Enjoy the rest of your conference. Thanks so much for joining us.
- [29:40]
E
Thank you.
- [29:41]
B
Thank you.
- [29:42]
D
Someone else I spoke to was Clay Siegel, who's a senior fellow at the center for Strategic and International Studies, which is a Washington based think tank. And I asked him about this concept of energy addition as opposed to transition.
- [29:56]
A
Well, I think that there's a lot of validity to that concept and that lens for looking at what's going on in the world today. You know, we really do need all of the above when it comes to meeting future demand. Oil demand is expected to remain high for at least a decade, maybe even longer. And although it's mostly focused in the developing world, it's still going to be formidable, especially given the relative hiatus that we've had in exploring for new resource and replace. I mean it's, at the end of the day, it's a depleting resource and so you constantly have to infill, backfill the resources that are being depleted. Likewise, we'll have strong demand for natural gas, not just as a bridge, which is kind of the, you know, the label du jour. But natural gas is here to stay and it's like a fundamental pillar of world energy supply. And likewise we also need the newer and cleaner technologies to be a part of the mix. So these things are in addition to, not instead of. And it's the same way I think about like anybody who's ever been part of a software migration at work. You know, naturally the powers that be don't turn off the old system and then evaluate whether or not the new one is going to be adequate. Those things are done in parallel and they're checked multiple times before eventually at the end of the process, deprecating something that has already been proven to have a reliable substitute. But in the meantime, I think that we need all the above. And that's all the more reason, Ed, why it's concerning right now, that in the United States we seem to have quite a bit of politicization of energy. You know, one side, one kind of tribe, has an affinity for these types of energy supplies, another one thinks that those are terrible and that it's only this way to go. But I'm telling you, we really need all of the above.
- [31:41]
D
Right, so what are the implications of that then for energy security? So that's your specialist area now. It's what you study, think about all the time. If you're right in saying that the world is going to remain dependent on oil and gas for decades to come, and oil and gas demand are probably going to keep growing even for years, maybe decades to come, what does that mean for energy security?
- [32:02]
A
I think that at the root, energy security is really just about the challenges involved in connecting supply with demand. And we can look at oil and gas together, but they also have quite a bit of differentiation. And so what's really interesting to me this week with all of the soundings taking place here at adepec is the focus on the United States having real geo economic leverage in negotiations with other countries in the formation and maintenance of alliances and in promoting its own economic and national security interests. So we have a huge pipeline that's lowercase P pipeline of liquefaction projects, which are export projects coming on stream in North America and the United States at a pretty robust clip. And a lot of the discussion this week has been around could we potentially even be facing a glut of too much gas export capacity relative to demand and market for US Gas? I think that in the short term there's definitely a role for United States gas to play in having backed out Russia from the European continent and cementing that new reality about having substitute supplies come to Europe from the United States and increasingly so. And that's going to magnify that geoeconomic leverage that any administration in Washington brings to the table.
- [33:30]
D
So what about climate change then? I mean, obviously one of the reasons people have been pushing for rapid movement away from hydrocarbons has been because the greenhouse gas emissions implications, rising temperatures posing a growing threat to communities all around the world. Are you saying that we're just going to have to accept increased global warming because we don't have any alternative to getting away from oil.
- [33:56]
A
I guess we were always going to have to accept that some processes are taking place regardless of what policies and similar measures are undertaken. But look, the requirement to abate greenhouse gas emissions and to be good stewards of the environment, I believe, and you know, I live in the oil patch in Texas, is embraced by industry. And we see, for example, even when you have what this is typically thought of as a more favorable or amenable group of people, politicians that come to power, you know, you still see specific issues like methane tracking and methane emissions controls strongly embraced by industry. You see things like carbon capture where big investments are still taking place, notwithstanding a little bit of a shifting of the regulatory environment and some, you know, added costs for those projects. So the industry is committed to reducing greenhouse gas emissions. I think in a material way. It might not be enough to placate every interest group and every perspective that's out there, but I still think that it can make a big difference and move the needle.
- [35:02]
D
And what about China then? When you look at what's happening in China, there's very rapid change in the car industry in particular. EVs now rising to about half of all the new cars sold in China. A lot of very successful companies there now starting to export to the world as well. Obviously huge production of solar panels, wind turbines and so on, batteries for battery storage. Again huge sales in China also being exported to the world. People talk about that as sort of an alternative model of energy. People talk about China as the electro state in comparison to the United States then, which is the world's largest petro state. And I wonder if you see a realistic prospect that that sort of alternative Chinese model, if you like, is going to become increasingly attractive to other countries around the world in order to decrease their reliance on oil and gas.
- [35:55]
A
Well, in my understanding it already has to an important extent. And China is providing another paradigm, another model about how to deploy and employ a similar kind of geo economic leverage. And the United States in a way has kind of walked away from the challenge and ceded that ground in my opinion to Beijing, but which is a leader on kind of the, the international stage in terms of exporting a lot of those newer technologies that can, that can benefit the so called addition that we were just talking about referencing the, what has been called the transition. So China has an important role to play there and a lot of its trading partners are embracing its kind of unique capability to contribute in that regard. Maybe I wouldn't necessarily look at the United States as a petro state per se, because I believe that generally that implies a little bit of national control over the industry. The attribute that makes the United States such an important contributor and its ability to have grown over the last decade in contributing to global oil supply and gas supply is the innovation of free markets. And so the private industry in the United States is what made the shale revolution possible. It's what provided the impetus to lift the long standing ban on exports that's enabled things like four and a half million barrels per day of oil exported to all corners of the world and increasingly flow of natural gas. So that's, it's a really important paradigm model that has benefited a lot of partners around the world.
- [37:24]
D
Right. And as you're saying about China, even though China is kind of an alternative model and it's proving highly successful in technologies that the US has been much less successful in, and in fact under the Trump administration has been withdrawing support from, despite that success that China is showing, that's still not going to be enough to make a difference in the sense of turning the world away from oil and gas and kind of accelerating that transition towards a completely low carbon energy system globally.
- [37:59]
A
I think the thing to keep an eye on right now in that context is, is how this short term kerfuffle is resolved. And we have the two largest economies in the world in kind of a trade stalemate right now. And there are really important energy implications therein. Just as an example, we've seen the struggle over the two sides with sort of warring or competing export license requirements. And that's affected everything from United States exports of ethane to China. And that's really important for the petrochemical industry and others as well. We've talked about rare earths quite a bit this week. So understanding how these two economic superpowers resolve this short term difference is going to pave the way to that medium term future where both of these guys are contributing to energy security and energy security challenges for the rest of the world.
- [38:52]
D
So that's really interesting then. So what do you think the implications, implications of that are for the future of energy policy in the U.S. i.
- [38:59]
A
Mean, there's still a lot of lingering debate here at ADEPEC about the state of the energy trilemma and rebalancing of those priorities between sustainability, affordability and security. From my perspective, talking to folks in the Trump administration, you know, in this White House, there is no trilemma, there is no dilemma, there is no lemma of any sort. I mean, these guys are laser focused on a affordability and energy security is a means to the end of affordability, and that's what these guys are focused on. The National Energy Dominance Council is quite involved in efforts in that regard, for example, to speed projects through to completion and delivering the goods. And I think you'll see more of that focus from these guys over the next three years.
- [39:45]
D
And do you think they're going to be able to show results for that, given at the same time they're trying to increase affordability, drive the cost of energy down? There are a lot of other pressures driving the cost of energy up, including increased demand for AI, including tariffs being one thing, increasing costs in the supply chain and so on. How likely do you think they are to succeed?
- [40:06]
A
I think that there's a good chance that measures like what the Dominance Council are working on can, at the, at the asset and the project level, lift some roadblocks, cut some red tape and bring some more energy to the marketplace. The one that I would keep an eye on for the coming year or so is on the topic of United States permitting reform. And I would not be surprised to see a real legislative initiative on Capitol Hill come together. Coalesce bipartisan support to bring energy projects onto market. That's what I'm watching for the new year.
- [40:42]
D
Yeah, 100%. I do think that, as you say, that's a really important issue and that's going to be a great subject to watch. And I certainly think, as you say, over the coming year, it's going to be something we're going to be following very closely on the energy Gang. And perhaps we should talk again then as things evolve there, because I think it'd be really pleasure to talk to you about that as it shapes up. But for now, though, Clay Siegel, thanks very much indeed. Great talking to you.
- [41:03]
A
Thanks, guys.
- [41:05]
D
Finally, I spoke with someone whose job it is to reconcile continuing demand for oil and gas with meeting climate objectives. He's Bjorn Otto Sverdrup, who's the chair of the Executive Committee of the Oil and Gas Climate Initiative and also head of the Secretariat for the Oil and Gas Decarbonization Charter. I asked him what he'd been working on.
- [41:23]
F
These are busy days, right? But I think the most important thing for us, at the start of the event, we brought together 35 out of the 55 companies who have joined the Oil and Gas Decarbonization Charter. These were the 35 CEOs, and we met. And the main point was basically to ensure that we're sustaining the momentum on particularly reducing methane emissions. And flaring towards 2030. And I was thrilled to see the commitment made and also this strong emphasis on further progress.
- [42:02]
D
So despite a lot of talk about the energy transition faltering, the momentum for decarbonisation faltering, you would say it's as strong as ever.
- [42:11]
F
No, True. I think the business environment for businesses where to survive and thrive in has changed quite a lot over the last years. So geopolitical uncertainty, the rule book is changing with tariffs, etc. There's a bit of a backlash both from the investors, esg, regulatory political backlash on sustainability. But despite that, I think the message from the CEOs and these are the biggest companies in this industry was very clear. We are staying the course on this. And the main thing is that I think particularly methane and flaring that we really need to achieve by the next couple of years is solidly rooted in the business case. It goes hand in glow with efficient operations. And also I think quite a lot of companies talk about this as seeing this as part of being a responsible operator. And then of course we also bring companies from both the global north and south, east and west. And it was interesting to see in some countries, energy starved countries, the recognition is that they have no energy to lose. And then methane emissions are flaring, is energy loss and we need to address that. So combined, I mean the Russian oil, the business case is as solid as avar and there is a green light. Get going.
- [43:43]
D
Right. And I know you're going from here very soon to cop 30 in Belemba, Brazil and we're going to be talking to you again then. What's going to be your focus in Brazil?
- [43:53]
F
No. So we feel, we are very grateful, we feel privileged because we have been selected by the COP presidency to be a partner to organize our Energy Day. And we will, at the opening of the Energy Day this next Friday in Belem in the Blue Zone, we will address the challenges related to how can we speed up the decarbonisation of oil and gas industry. And then we will also launch a progress report from the efforts done over the last month. So we're excited about that.
- [44:25]
D
Definitely look forward to hearing more. Thanks very much indeed.
- [44:27]
F
Thank you.
- [44:27]
D
Thank you. We're going to be talking to Bjorn Otto again next week about the COP30 climate talks that start on Monday. Obviously the movement for climate action is facing some challenging times at the moment, but as we've been hearing in this show, the pressure to address global warming and cut greenhouse gas emissions has not gone away, even if some of the responses to it are quite different from what they were a couple of years ago. So do come back and follow the Energy Gang next week when we'll be bringing you all the latest news and insights from COP30. That's all from us for now, though. Many thanks to Bjornoto Sverdrup, Clay Siegel, Sasha Sisiu, John Gilly and Carol Nakley. Thanks to our producers Dan Cottrell and Toby Wiggins Gilchrist. And above all, many thanks to all of you for listening. We really value your feedback, so please do keep it coming and we'll be back soon with all the latest news and insight on the future of Energy and COP30. Until then, goodbye.