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Energy and sustainability: How companies will have to change

June 2nd, 2021
Energy

Energy and sustainability: How companies will have to change

June 2nd, 2021
Energy

Moving towards sustainable source powers will shift the oil and gas industry. The energy industry has changed in the past 20 years when everybody was concerned about decreasing the operational risk and the operational cost of the industry but now all those concerns have progressed. In the past trying to move forward to renewable energies was considered a negligible thing and the oil and gas industries wouldn’t care so much about them. But according to the UN, we have to act as fast as we can because we have like 12 years to stop global warming, otherwise, the situation will become almost out of control.

Fortunately, nowadays oil and gas companies have understood their place in the world and are transforming towards renewable energies and helping to control climate change by decreasing carbon emission. We have to realize that our world is in the interconnecting and matrix of production and utilizing energy. In the past, the source of our energies was somehow secured and we knew how to produce energy but right now there can be found many resources so they can become more complicated and it is difficult to measure them and also, more difficult to secure them. A big change must happen in dispersion, resourcing, and energy substructures.  

Changing the effects of energy consumption

The World Energy Trilemma Index researched 120 economies and tried to understand their capabilities to balance the energy performances corresponding with safety, justice, and stability. This research indicates the procedure of these economies and gives managers and legislators the instruments and data for cooperation. Generally talking, it helps the managers and leaders and companies to enhance rival profits.

Some main subjects need to be under consideration to secure the economies, communities, and occasions while trying to maintain the Energy Trilemma in equipoise. Giant enterprises and organizations must try to shift from fossil fuels into some renewable energy resources by investing and improving their infrastructures and policymakers should guide the companies and lead them towards the facilities that they must use for advancing their substructure necessities for creating and finding sustainable source powers. In anyways, companies must haste for adapting themselves to new tools because technology is advancing quickly so organizations must hurry not to be left behind while comparing to their rivals. Technology plays a significant role in increasing efficiency and decreasing the cost of utilizing renewable energies.

Also, some other environmental problems such as climate change are making the investments shift into other sectors. For example, companies are forgetting about fossil fuel procedures and are trying to invest more and more in renewable energies. They are moving forward to cleans energies so their role can be considered important. In recent years, investments in this matter have grown 14 percent. We estimate that all OECD countries will consume 90 percent of their whole energies from renewable resources by the end of 2050. The more the cost of renewable energies decreases, the more the investment in nuclear and fossil fuel fades. Although many developing nations have no choice rather than using fossil and coal fuels, the future will change everything. For instance, China was able to reduce coal consumption by 56 percent until 2007. Some changes in electricity manufacture and transportation fuel will assist the sustainability purposes. It can change the whole economy and different industries. Recently about 400 multi-national organizations have turned to use renewable energy sources. Companies must assort their tactics as soon as possible for reaching their goals.

 

Economy development and community transformation

When we measure the economic energy procedures in the globe via Energy Trilemma Index in safety, justice, and environmental cycles, we can both aid economies and alter national communities. The worldwide problems that countries are confronting cannot be solved in seclusion because they are difficult to be solved therefore, some regulative frameworks must be provided to guide the nations. In the meantime, using innovations for finding new ways to produce power must not be forgotten.

The trilemma of the global energy

Among the continents, Europe is the pioneer for using sustainable source powers in the world because we daresay that 20 European countries were among the top ones for operating the new energy producer technologies. From the statistics, we understand that three countries are doing their bests for using the maximum performance in securing, affordability, and producing nature-friendly energies (these three features can be considered as an efficient framework and each country must attempt to respect them if they want to improve and reach the sustainable energy goals) and these countries are UK, Switzerland, and Denmark. The best rank out of Europe has dedicated to New Zealand which its rate is 7 in the world.

Climate change risks must be under investigation by banks, insurers, and finance administrators. Fiscal establishments will surely put pressure on energy producer companies by managing the climate change risks and make them change their ways of generating power. There are some keys to have implications and attain the goals as soon as possible. First, companies must switch to data-ready. It means that whenever the banks, managers, and leaders demand them, they should deliver the data and collaborate with them for evaluating the transition index and potential risks. About 50 percent of the specified banks claimed that they are gathering extra climate-related datum from the borrowers. Through different conferences such as Greenbiz19, it is understood that governance, associable and environmental reportage has become so important.

Enterprises must adapt themselves more and more to climate-related disclosures. The second one is used for planning scenarios. In both short and long ranges, corporal and evolution risks can menace some companies. Thus, the datum which corporations gather must show the risk arrangements and the planning instructions in which the main key would be scenario rehearsals. These instruments can assist in prospecting the effects of several climate change scenarios for the benefits and the commerce patterns. The third one is that climate change risks can ascertain the accessibility to the main fund. When all the sections, leaders, insurers, and investors cooperate, such consequences can be evident. Nowadays, we can see specifically that coal sections are confronting big changes like this in their industries. For instance, many banks are receding their assets and investments from the old-fashioned power producer companies and instead of that, financing in advanced pieces of machinery for producing renewable energies.  

Will this procedure be fast?

It will consume some time for collecting all the required datum, creating new patterns, improving the management sets alongside infrastructures, and provide all necessities. A lot of banks are willing to execute TCFD (Task Force on Climate-Related Financial Disclosure) and based on some researches it is assumed that it will be accomplished in less than 3 years. Therefore, we can say that the timing will be quick.

Still, we have to notice that climate change will proceed. Some companies such as PG&E might have been bankrupted due to the climate change issue but we can ensure you that if the organizations do not change their methods into new ones for producing renewable energies, more bankruptcies will happen in the future.

Article by Amir Masoud Navidi

Adapted by: Oliverwyman.

Reference: https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2019/jun/energy-journal-vol-4/Energy-Journal-Volume-4.pdf

 

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