I attended only one day of CERAWeek. However, I left with many observations. Among them, the most prominent was how differently CERAWeek participants and policymakers in Washington talk about energy.
This is to be expected of course. Simply put, policymakers talk about energy laws, regulations, and subsidies as well as climate change and geopolitical issues like energy security. Meanwhile, corporate leaders talk about global energy resources (all fuel types and technology) and demand (both existing and future demand driven by population and economic growth). They acknowledge—with pride derived from great success—that their businesses exist to transform resources to meet demand.
When they are in Washington, corporate leaders adopt the town’s lingo to engage in relevant conversations about tax incentives, loan guarantees, permitting challenges, and the traits of various resources. But among their colleagues, they focus on resources and demand because those drive their business decisions more than government policies do.
And right now, and for the foreseeable future, the most abundant and transformable energy resources are fossil fuels, which is why 83 percent of the world’s energy needs are fulfilled by some type of fossil fuel.
Some governments have implemented policies to change resource production and energy consumption, neither of which changes the resources or the demand—the true drivers of the energy economy.
My impression is that corporate leaders wonder how much and for how long government policies can influence humanity’s need for energy. And this manifests across the different conversations they participate in. Internally, they wonder, How large is the marginal impact of government on the energy economy? In Washington, they ask, Will IRA subsidies continue? And at CERAWeek, they say, We can produce hydrogen, but it is expensive. and In the long run, we prefer markets to subsidies.
I left Houston reminded that the energy industry considers government policies to be one of a myriad of factors influencing business, but certainly not the most important factor. Much more important are the longstanding issues of finding resources and turning them into the energy people demand. I was also remined that, despite the current, seemingly unproductive conversation in Washington, policymakers share the same fundamental desire that people’s energy demands be met.
That then reinforced my discomforting conclusion that climate change well beyond 1.5° Celsius is coming. We certainly should continue to try to mitigate that change. But we also need to plan for what humanity wants: a world with more energy.