Column: Energy companies can’t all make a U-turn at once

By Hans van Cleef, Senior Energy Economist at ABN AMRO

If there’s one sportsman in the world who won virtually everything there is to be won, it’s Lionel Messi. The Argentinian footballer won the biggest prizes with his club FC Barcelona and was crowned the world’s best player an impressive five times. Every week hundreds of thousands supporters flock to the Camp Nou, the massive FC Barcelona stadium. Football-consumers who are there to watch the best professional in his discipline.

But what if sponsors started grumbling? What if these sponsors, for whatever reason, would stop investing in football and would choose to spend it on tennis instead? You might think this wouldn’t be a problem, as clubs switch sponsors all the time. And whether Messi wears a blue-white jersey or a blue-red one, doesn’t affect the beauty of the game.

It’s a different story when this sponsor doesn’t invest his money in the Andy Murrays of the world, but instead demands that Messi stops playing football and instead becomes a professional tennis player. And not just on a ‘fun-to-play’-level, but as a world class player. One that can win Wimbledon. And what if that sponsor would ask all the Barcelona season ticket holders to buy tickets to Wimbledon? This example is ludicrous of course. We know many footballers can play tennis at a decent level, but it’s a fundamentally different ball game.

Increasing sustainability on economic grounds

Something similar I think is happening in the energy sector. We see a societal wish to increase the amount of green energy. That’s the direction we should be heading, at high speed. Energy companies can contribute, but they can’t all turn around at once. They need to keep meeting energy needs to prevent an economic mess. The ideal way would mean them turning slowly, based on business-economically responsible decisions.

Instead, we’re asking companies, that are currently producing indispensable conventional fuels, to change on a whim. That these companies will change as soon as it’s economically viable, or as soon as consumers (so not the shareholders) force them –simply because their product demand diminishes- seems less relevant in this transition. Instead of investing in companies that are experts in their profession, these companies are requested to be top players in a different ball game.

Support the new energy champions

So how can we nudge the energy transition further in the right direction? In my view, we should do this by investing in the new energy champions. And that’s exactly what’s happening at the moment. Wind and solar energy are becoming increasingly cheaper –and more appealing- causing less subsidies to be needed to make these alternatives economically viable. But we shouldn’t forget that the energy mix in the next few decades will be more diverse than just solar and wind.

That requires professionals that can keep producing conventional fuels in a responsible manner. If you think the energy transition is not moving fast enough, you should probably think about investing in innovation and/or scaling of sustainable energy sources. That’s done by supporting the new energy champions, and not by asking Messi to become Murray. That way you’ll constructively contribute to making the energy mix more sustainable, lowering the price and accelerating the energy transition.

We all know the expression ‘stick to what you know’. And what if it turns out you can be a great tennis player as well? Then nothing will hold you back from making a career switch. And who knows, you might win Wimbledon!

Offshore Energy Today has shared the article above with permission from the author. This column was produced for and previously published on Energiepodium (in Dutch).

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Offshore Energy Today.