Opinions Differ on How to Accelerate Transition

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Six months after the US passed a massive spending package meant to underpin the energy transition, policymakers and companies alike are looking for more.

What “more” means, however, depends on who is speaking.

For government officials, it means more action from the fossil fuel industry to curb its own emissions, more spending from rich countries on poorer ones, and more cooperation between governments.

“The oil and gas industry knows how to organize itself, knows how to make a hierarchy of business work for it in a way that gets things done,” John Kerry, the US' top climate envoy, said Monday at the CERAWeek by S&P Global conference in Houston. “If we can get people moving in the same direction, the same sense of purpose, with the same sense of urgency. I absolutely guarantee folks, we can win this battle. But we can also lose it if we just continue business as usual.”

The United Arab Emirates' Sultan al-Jaber — who is both the president-designate of the upcoming UN climate conference in Dubai and the CEO of Abu Dhabi National Oil Co. (Adnoc) — sounded a similar note. "Alongside all industries, the oil and gas sector needs to up its game, do more and do it faster,” he said.

When it comes to government action, US officials argue that policies at home will go some way in making it easier for developing countries to deploy low-carbon technologies. “If we're going to deploy these technologies at scale, including in developing economies, we have to keep pushing the price down and making them more attractive and more affordable,” said John Podesta, senior advisor for clean energy innovation to US President Joe Biden.

Kerry also said the US and other rich countries need to do more to push funding into low-carbon energy spending in the developing world. One idea is to use money raised through a nascent offset framework Kerry has been advocating — called the Energy Transition Accelerator — and using it to underpin concessionary financing.

Kerry and other US officials have vocally advocated for increased climate spending from the World Bank and other multilateral development banks, with a proposed reconsideration of default guarantees that could facilitate more lending. The new nominee to be the head of the World Bank, Ajay Banga, is expected to push harder in terms of getting more cash to climate-related projects.

What Industry Wants

For industry, though, a more favorable regulatory environment is needed.

In the US, that translates specifically to permitting reform.

When it comes to investing in low-carbon energy underpinned by the [Inflation Reduction Act], “it is still procedurally impossible for us to do this because our permitting doesn't allow us to do this,” ConocoPhillips CEO Ryan Lance said Tuesday.

There is a similar dynamic in Europe, Siemens Energy CEO Christian Bruch said Tuesday. “We need a complexity reduction act” to streamline permitting for major renewables projects, he cracked.

For others it’s a tax issue. Exxon CEO Darren Woods on Tuesday argued that Europe’s efforts to tax oil company profits could curb investment in the transition.

On permitting, Biden administration officials know they have a problem. Energy Advisor Amos Hochstein on Monday referenced Germany’s rapid permitting of new LNG import facilities. “I’m very jealous,” he said.

Podesta on Monday called for Congress to move on permitting reform, and the White House released guidance designed to address some permitting issues in the electricity sector.

Oil company officials on the sidelines of the conference were tepidly welcoming of the idea that the administration is focused on permitting. But the move on transmission doesn’t address the major issues with siting new renewable, carbon capture or hydrogen projects the industry is concerned with. There remain trust issues between oil and gas players and governments focused on climate change, particularly in the US.

To that end, Podesta offered something of an open hand. “If they want to play clean, we’ll welcome them to the party,” he said Monday.

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