acquisitions are the connectors that will enable the organisation to meet the evolving shifts within the overall energy transition. As time windows shift and strategy becomes tactical and then operational, the entire process must evolve as technology disruptors, government mandates and incentives, consumer preferences, social and governance compliance, and innovation breakthroughs become apparent and take shape. Defining a way forward The energy industry has faced many economic, social, environmental, and safety tests over the last 100+ years, and the energy transition presents a trial like no other. As each entity works to address the multiple technical challenges, and aligns their strategic, tactical, and operational elements, these five critical questions provide a starting point to begin that journey: • Does your business have a Point of View (POV) to manage the transition? • Does your business have operational, tactical, and strategic plans that align to that POV? • What will your business do to maintain environmental, social, and economic ‘license to operate’? • What steps will your organisation take to attract capital and talent to maintain a viable enterprise? • What contingencies are being considered to identify and agilely respond to the known ‘unknowns’? By answering these questions and, as importantly, realising that the responses may not be fully formed, one can become an active part in stewarding our industry through this transition and continue to supply the vital energy sources that are so critical to modern society.
Innovation
Social Environmental
Diversi cation Growth Expansion ? Status Quo Divestment
Operational
Governance Capital
Tactical
Technology
Strategic
2025 2035
2050
2021
How can the energy industry meet the challenge? The examples in this two-part series provide just a few instances of the technical, economic, and social challenges the energy industry must address to meet global energy needs, remain viable, and attain the construct of reducing GHG emissions. To face these issues, energy suppliers must define and align their strategic, tactical, and operational activities into an overall vision. First, the organisation should clarify what their overall vision is for their entity – ‘stay in business’, grow, expand, diversify, or divest. This long-term point of view provides the ‘north star’ to guide the organisation. From there, a strategy can be developed to achieve that vision. Long gone are the days of just focusing on the next five to 10 years for strategic planning and project portfolio management. The energy transition will drive an inflection point in the 2030 to 2035 time frame for energy sources and production rates that requires a flexibility and dynamic responsiveness. Planning will no longer be ‘up and to the right’ – one must account for the eventual shift in the market and associated infrastructure (see figure above). Yet with this focus on long term strategy, the need for effective near-term operational performance becomes more critical than ever. The existing assets must generate cash flow to fund future investments and demonstrate to corporate boards, ‘green’ investment firms, and other influencers that the entity is viable and sustainable. The linkage between strategy and operational elements are the tactical changes that an entity will undertake. The tactical decisions and execution on capital projects, investments, divestment, and
VIEW REFERENCES
Robert Ohmes rohmes@becht.com Darren York dyork@becht.com Mel Larson mlarson@becht.com Jean-Gaël Le Floc’h jglefloch@becht.com
www.decarbonisationtechnology.com
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