Insights from CERAWeek – the world’s biggest energy conference

Just heading home from a jam-packed CERAWeek in Houston.  With sessions running from 7 am to 10 pm it’s quite a marathon, but equally, there is no better place to connect, debate and learn – this year about the multi-dimensional energy transition.

It’s hard to summarise a conference of 8,500 people but here’s my take on the big themes and insights in 9 big themes:

1 Solving climate change is simultaneously very simple and very complex

Everyone agrees we need more energy whilst addressing the trilemma (sustainability, affordability, security). But quite mixed views on what and how – beyond the basics of decarbonising power, electrifying as much as possible (or using H2), doing CCS / nature-based solutions … and being “private sector led, government enabled”.  But apparently, US citizens spend more each year on Christmas presents (3% of GDP) and coffee (1% of GDP) than we need to get to net zero – so it ought to be fixable, right?

John Kerry’s relentless optimism shone through (except about the demise of intelligent debate in political arenas – the “infinite wisdom of congress”), he reminds us that progress is a process, not a switch.  He praised the UAE-led #cop28 deal (“transitioning away”, “as, or more important than Paris”), but blasted Saudi Aramco’s CEO for “creating a false narrative that we have [already] failed” (and if so, then “why not instead help fix it?”).  Climate change is simple – based on “maths and physics, with a bit of chemistry and biology”, and “it’s not complex, the bottom line is that we are choosing to fill up the atmosphere with pollution and kill 7 million per year”.

Bill Gates’ equally inspirational speech – in contrast – talked about solving climate change is by far the most complex and enormous challenge we’ve faced (“ours is hydrocarbon economy, after all the billions in low-carbon, it hardly made a dent”).  Bill doesn’t seem to like “non-numeric views” (perhaps the wishful thinkers) and outlined his diverse set of investments in 100+ companies and praised the intellectual horsepower behind them.  I’m personally taking home a bit of Kerry and a bit of Gates.  But not so sure that I need or want the AI-based “agent” that will give me “intelligence-as-a-service 500 times a day” that Bill thinks we will all soon have.

2 Oil and gas are (probably) here to stay for longer than we might think

We should abandon the fantasy of phasing out oil and gas, and instead invest in them adequately”, so said Nasser, the CEO of Saudi Aramco, to much applause.

We heard similar sentiments from oil and gas CEOs e.g. a perceived need for “less emotion” more “pragmatism”, more “balanced views” etc., etc, with the CEO of a US supermajor saying “we added 1 million barrels day in the US – we should get a huge thank you from this administration” prompting a “say that again” – “no” exchange with chair Daniel Yergin.

While there was much talk about decarbonisation and net zero (although, let’s be real, for many, this “net zero” excludes the all-important scope 3), there was also much talk about dramatic growth (especially in gas). Asked if we needed LNG (expected to grow from 400 million tonnes today to 600 by 2030), we heard, “You don’t need it until you need it, and when you need it, you really really need it”.

CERA’s historically an oil and gas conference – led by the world’s best energy analyst, Dan Yergin, so perhaps it’s inevitable that the mood felt a bit more hydrocarbon-focused than other leading energy conferences.  But, perhaps it’s an opportunity for a little more challenge and ?

3 Low carbon power is surging, exponentially, but we need to unlock many blockers to make the transition work

500 GW of low wind and solar in 2023 – wow.  Electrification of “everything”, EVs, heat pumps, and AI data centres is driving huge growth in power and changing demand profiles – perhaps soon from peaking on a summer day (cooling) to a winter night (EV charging and heat pumps).  We seriously need to think through grids and make them more resilient, and find ways to increase their capacity.  And take note that manufacturing will inevitably shift to where electricity is cheap (good news for sunny and windy places like Namibia, Algeria and Scotland!).

But/and the relentless surge in demand for power is driving new gas power plants to be built (for base load and speakers, in UK, Germany and beyond) in many OECD countries (and lots of coal in India and China), partly because long-duration storage has few solutions (other than gas or hydro – batteries are not yet there).  I popped into the coal hawks session (which was rather thinly-attended, and led by 40+ year veterans), but … they do have a point of view that’s also important to understand.

But there are major challenges around “crazy permitting gridlocks” (Kerry), inflation rates, interest rates and supply chains (“minerals-in-the-ground to electrons-in-the-home”). The serious indecision is painful.

4 CCS is still in the game, although with mixed convictions

But it feels like it has a high aspiration-to-reality quotient (something John Browne echoed on stage – preferring to talk about trees than rocks, and he should know having pioneered the first CCS – In Salah in Algeria), although some impressive projects in Canada, with even the oil sands being decarbonises with long-term storage, with Direct Air Capture and more.  Solving CCS is complex, but proven and solvable, especially if backed by creative structures (like the UK’s Contracts For Difference), which corrects the market by paying the difference between the carbon price and the actual cost.

5 Solving flaring, venting and leaking is a top challenge, which is getting both commitment and more (but not enough) action.

We hear a lot about flaring, venting and leaking – from John Kerry to most of the Oil and Gas CEOs, plus the leading NGOs and more.  Interesting to hear from Williams (a US pipeline operator) how much methane comes from the exhaust stack from their hundreds of compressor stations (and, by implication, how costly this can be).  On a similar note, we heard from several how simple front-line blue-collar practices and operational excellence (better planning, more equipment redundancy, better maintenance), is critical.

It was great to hear from the World Bank on their methane fund for NOCs and from EDF’s Matt Watson and Mark S. Brownstein on their ground-breaking MethaneSat methane-tracking satellite. Plus too, the tremendous achievements of the OGCI, led by Bjørn Otto Sverdrup and Julien Perez to get 50+ companies to sign up to aggressive commitments on flaring and methane.

All recognised that many opportunities are low hanging / negative marginal abatement cost, but whilst we are “gaining emotional momentum … it’s not real momentum” (says Ahmed Hashmi), “asset by asset” (music to my ears), as is being done by ConocoPhillips in the US Mark Hutchinson).  So we seriously need to accelerate project development work (to identify projects) and unlock financing (especially since many banks/funds are walking away from fossils).  But success also requires intellectual honesty about the scale and location of the challenge – and the limited real progress to date (plus some “good diplomacy … if emissions go up when measurements find even more emissions”.  This is where FlareIntel can bring some realism and focus.

Of course, regulation can help, but it needs to be “fair, robust and pragmatic” (UK’s regulator Stuart Payne) and flexible, technology agnostic, supported by MRV, independent data, certification, etc.  Governments should stimulate markets, set the tone, provide certainty, avoid picking winners and set the stage for the market.  Thanks, Dr. Faye Gerard, for your insights here.

6 Still lots of muddled thinking on H2 – gravity is taking over from the hype.

Since there is an insane amount of demand in Michael Liebreich’s H2 ladder level 1 (refineries and fertiliser), perhaps even modest blending into gas grids (with little impact on the Wobbe Index), we should probably stop wasting time and money on crazy solutions that cannibalise sensible ones and add cost and delay the transition.  Like green H2 shipped half the way around the world, e.g. from Canada to Germany).   I know it’s sexy to dream up lots of H2 use cases, but more people should read (and preach) Liebreich, please.

7 Leadership and women in leadership are key. Today’s leadership need curiosity, resilience, adaptability and connectivity.  But also a strong sense of passion and fun – as so adeptly demonstrated at the women in leadership dinner by Eveline Wang and Kathleen Ash, and others.  What a brilliant session!

8 AI is changing the game with “a new data centre around the world every 3 days” in so many ways – from surging energy demand to 40% increases in the productivity of Microsoft’s coders, to better grid management, better subsurface modelling, improved operational efficiencies and pretty much everything else including “more nicely-written emails”.  “It’s the X-factor” says SLB’s CEO

9 Maybe we need more straight-talking academics?

I was left pondering this one.  The most impressive speakers were often academics – for their sheer mastery of topics and breadth of insights (e.g. the incredible Angela Stent on Russia, Evan A. Feigenbaum and Amb. David M. Satterfield).  Corporate leaders seem to say less, in more complicated ways.  What should I say to my eight and ten year old boys?  Perhaps what Professor Myles Allen said: “we either have to stop using oil, gas, coal and cement, or capture and store all of the CO2 they produce – it’s simple”. But then again, Bill Gates said otherwise (in that it’s far from “simple”).

So … in conclusion, CERA Week really is an incredible event.  But it’s also the convening power of getting so many in one place.  Thanks to many for truly inspirational conversations or contributions from so many – to mention a few Daniel Yergin, Kevin Birn, Demetrios Papathanasiou, Chris Midgley, Molly Laegeler, Carlos Pascual, Raoul LeBlanc, Horacio Cuenca, Ben West, Emmanuel Corral