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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
Energy is the golden thread
16/3/2022
6 min read
Feature
Rachel Kyte CMG, Dean of the Fletcher School at Tufts University in Boston, former UN Sustainable Energy Envoy and inaugural winner of the EI President’s Award, talks to long-time BBC World TV news anchor and international moderator Keshini Navaratnam. The interview took place during International Energy Week on 24 February, the day Russia invaded Ukraine.
KN: Do you think we are experiencing the most fraught moment for energy history?
RK: It’s an extremely important time and a real moment for the West to appraise how we go about our business and what we stand for. That means agreements of international law, of prosperity, of leaving no one behind, of moving the ball forward. And embedded in that are the Sustainable Development Goals.
We have to be good enough to deal with the short-term crisis and bear some pain, because of the overdependence on Russian gas. At the same time, we have to think about the ongoing challenge, which is the climate crisis and deep inequality in the world. Energy is the little golden thread that runs all through that.
KN: Countries like Germany are really faced with an incredibly difficult position. How are they going to manage the situation they find themselves in?
RK: There have been some truths that we have chosen to ignore. We need to be hyper-efficient in our use of energy. We're not. We need to diversify. We haven't. There is a social set of norms around people’s comfort with nuclear energy, which changes depending on decades or disasters. Then the consideration of investment and storage. Every year we under invest in infrastructure, we pay the price. All of these things have to be factored in.
Certain industry associations might think that you can abandon net zero in a moment of particular short-term pain. There’s no turning away from net zero. The long-term direction of travel is clear, but there's going to be pain getting there, but credit to the traffic light coalition for doing something people didn’t think they would do.
KN: But is it realistic to completely rethink that energy infrastructure?
RK: It's realistic to imagine that the energy infrastructure over the next decade is going to be profoundly different than the one it is today. The question is, do you hurry up and move through that transition or do you risk of putting your legs on either side of the river? You have to move your weight towards the future. This industry knows more than anybody what transitions involve. We've just got to keep motoring through this transition.
KN: Do you think the current tensions could accelerate the process of decarbonisation to a richer energy mix?
RK: Over dependence on one source and one origin of energy has proven to be a strategic vulnerability. Energy security, environmental impacts of energy and social impacts of not having access to affordable, reliable, clean energy have to be dealt with at the same time. It's the trilemma. It’s complicated and difficult, and requires innovation and government funding in innovation and the best of the best in industry. But there's no reason to believe that we can't do it. I would have thought that all of the people that you're hiring are invested in that future. I think that the industry has a responsibility to actually say ‘We can do this’.
KN: Is there a case for accelerating the calls for responsible and conditional investment linked to environmental progress?
RK: Over the last seven years the financial sector has internalised quite rapidly the concept of risk in holding carbon. Does it mean that everything is moving in the same direction? No. Does it mean that the regulators and the supervisors of the financial sector are moving quickly enough? No.
What is not currently internalised in the financial sector is the degree of transition risk that companies are running as we see an exponential increase in climate disasters and extreme heat.
The financial sector is beginning to vote with its dollars. That doesn't mean to say that there is coherence, because things are still being invested in that are, perhaps, going to be problematic in the long run. But the financial sector is going in one direction only.
KN: Is there an opportunity now for ‘global Britain’ to take the lead?
RK: There is a very clear global Britain, and it’s not one of white picket fences, pink all over the map and national anthems on the radio. Global Britain, for me, is technologically innovative, financially sophisticated, culturally important, has dexterity, is a mid-sized soft power comfortable moving large blocks – whether that be the European Union, the US or China.
That's a global Britain which is extremely exciting. It's competing on its culture, education, financial centres, innovation, private sector and its academy.
KN: The energy industry strikes me as perfectly placed to project that image of a caring, global Britain.
RK: It’s the digitalisation, the decarbonisation, the decentralisation of energy systems that have new and old companies, either domiciled or doing business in the UK, playing a role in the global transition.
What was absurd about the government cutting overseas aid budget last year, was that this cut aid to bringing decentralised, clean power to the Sahel. It's much cheaper for you to do that than to pay to put troops there to keep people from moving north.
Again, this highlights the strategic advantage of bringing people to the point where they can access clean energy. It's a strategic advantage for the UK.
KN: Do we need to do more in the energy industry to address issues further afield, in those areas of the world where people are living without access to a reliable energy supply?
RK: There is a dystopian story around why everybody should get access to clean, affordable, reliable energy. If people, young people in particular, don't have any opportunity for hope, then they can fall prey to extreme violence, extreme views and to the kinds of social disruptions that we've seen again and again.
It's much more powerful to talk about the positive, which is what it's like for a community to have access to clean, affordable, reliable energy. They could have health services, can grow, store and process crops, and increase community income. They can create jobs, stay cool under extreme heat and be more resilient. That's the story.
If you have just under 800mn people without access to any energy and about 2.3bn people without access to reliable energy, that's an enormous market. That's an extraordinary opportunity. That's the future.
KN: Is there a case for pushing for a rich mix of energies involving things like hydrogen in developed nations so that you free up capacity for the parts of the world that can’t face those high costs?
RK: Hydrogen is a really good example of what is a very difficult diplomatic moment, which is that many in developed countries have spent a lot of time telling countries what they can't do, with financiers moving away from coal and fossil fuels.
We have got to put a better and more commensurate offer on the table in support of clean energy, and that includes green hydrogen and blue hydrogen. You can't turn to Asia, Africa, parts of Latin America or to small island developing states to say, ‘You can't do this’, and then not offer them support to leapfrog. Clearly the hydrogen economy is exciting, and it could be just as exciting on the West Coast of Africa.
KN: How important do you think personal leadership and commitment is to making energy sustainable for all?
RK: Energy leaders should not forget the impact that they can have on a young person within your firm, a client, a community that they're serving. When talking to Ban Ki-moon [Former Secretary-General of the UN], he will tell you what it felt like studying by candlelight, but also, what it felt like the first time that he was able to switch on a light. That's a very big reason why energy within the Sustainable Development Goals was never argued over. Industry often highlights the complexity, when really it's very simple. Energy transforms lives. And it has to be clean.
KN: What can energy leaders do in the next five to 10 years to make a real difference?
RK: COVID and the pandemic has revealed the kind of leadership that we need at moments of extraordinary transitions. If you look at which parts of the world have done well and which leaders have managed to connect with people – it's this concept of reciprocal vulnerability. The leadership we need right now is the person who is prepared to stand up and say, ‘I don't have every single detail of this worked out, but I know that this is the direction we're heading in, and I know that together we will reach it.’
It's the kind of leadership that builds trust within a firm, with your stakeholders, your shareholders and within society.
*Click here to find out more about the Fletcher School at Tufts University, Boston.
**Click here for more about the EI President’s Award.