Opportune LLP Partner Dean Price recognizes that the energy transition is a polarizing topic of conversation. But, what does all this talk mean in reality? How are alternative energy solutions impacting the oil and gas industries? Are new strategies needed to keep pace with competing energy markets, or do alternative solutions need to play catchup? Price, an expert on energy transition, provided his take.
“We’re hearing more in the media today than we’ve ever heard before on the energy transition,” Price says. “But, when we look at the U.S., energy transition, I contend, started 20 years ago.”
Citing the power industry's deregulation in the 1990s, Price says independent power players began to create new power plants based on natural gas instead of the old coal-driven power plants. And, with alternative energy initiatives, such as wind power added into the mix, the transition talked about today began a while ago.
"I don't think energy transition is going to go away. But one of the things that people can't overlook, especially with natural gas, is that hydrocarbons have to be part of that equation.”
“I don’t think energy transition is going to go away,” Price says. “But one of the things that people can’t overlook, especially with natural gas, is that hydrocarbons have to be part of that equation. If you think of how prevalent it [natural gas] is in our everyday lives, it would be hard just to turn that off and go totally renewable. The decarbonization process will take time, and hydrocarbons will have to be part of this process,” Price says.
He added, "I don't think there's any question that natural gas has a major role play. And I think it has a major role to play for an extended period of time. It's a clean-burning fuel."
With Environmental, Social and Governance (ESG) investing becoming more prevalent among energy companies and private equity firms, it's inevitable that ESG won't just be a "flash in the pan" trend, but rather it will be a permanent fixture in the energy industry going forward.
"Investors are requiring companies to now report on their ESG initiatives and they're now expecting to see tangible results. I think for those companies that are not providing that to their investors, ultimately they will see a move to companies that are meeting or exceeding those ESG goals," Price says.
For all of the things people come to rely on, from everyday household uses and appliances and transportation from automobiles to airplanes, the fact remains that they all primarily run on hydrocarbon-based and fossil-fuel energy solutions. “So, until we find alternatives for that, we're going to continue to have to use hydrocarbons as part of the mix,” Price says.