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Post-COP28, key industry conferences shed light on the energy transition

Two flagship energy sector conferences – CERAWeek in Houston and the Berlin Energy Transition Dialogue – recently offered a snapshot of how the outcomes of COP28 are being embedded in the narratives of policymakers and major industry players.  

A few months have passed since COP28 marked “the beginning of the end of the fossil fuel era,” and we’re starting to see how the main stakeholders in the global energy transition are thinking about the next steps to implement what was agreed in Dubai. On two different continents and at two different conferences last month – CERAWeek in the “energy capital of the world,” Houston, and the Berlin Energy Transition Dialogue (BETD), which has strong links with the German renewables industry – we saw early bellwethers for how deeply the outcomes of COP28 have and have not rooted themselves into the narratives of policymakers and industrial players.  

The theme at CERAWeek was “multidimensional energy transition,’’ while the focus at BETD was on “accelerating the global energy transition,” with an emphasis on strategies for tripling renewable capacity. Both conferences centered around the energy transition, but nuances in the wording, speed and composition of the pathways for transition shaped the conversations that followed.  

A few key themes emerged:

1. Oil and gas is pushing back.
Several oil and gas executives at CERAWeek made clear that they are moving full steam ahead with fossil fuel production, especially investments in fossil gas, citing continued strong demand for their products and energy security risks. One went so far as to call fossil fuel phase-out a fantasy, stating that the energy transition is “visibly failing on most fronts.’’ 

Our take: The clear signals about climate change from the UN, COP28 and climate scientists and recent investment trends in clean energy don’t appear to be resonating across the fossil fuel industry, or spurring the necessary action. This is not surprising and shows that, for now, despite governments’ agreement at COP28 on the need to transition away from fossil fuels this decade, collective agreement on the who, when and how for the transition remains elusive – with some CERAWeek attendees cautioning against a speedy transition and touting fossil gas as a transition fuel. 

It is true that demand for the fossil fuel industry’s products remains strong. Oil demand continues to rise, even with the slow-down in growth in China, and the IEA forecasts a strong rebound in global fossil-gas demand this year. But momentum behind clean energy continues to pick up pace, spurred by cost declines and policy support, and we are starting to see dents in fossil fuel demand. The IEA found that, between 2019-2023, the deployment of solar PV, wind, electric cars, heat pumps and nuclear avoided the equivalent of 5% of total global fossil fuel demand in all sectors in 2023. This is roughly equivalent to the total energy demand of Japan and Korea.

We are also seeing growing corporate demand for clean solutions, with increasing indicators from companies that they are going fossil to clean. Volvo Cars recently produced its last diesel vehicle, an XC90 at its Torslanda production plant in Gothenberg, Sweden, after announcing the company’s intention to end diesel car production just months ago at Climate Week NYC in September 2023. “The production of Volvo Cars’ last diesel vehicle is a key milestone in our transition away from the internal combustion engine,” said Anders Kärrberg, Head of Global Sustainability at Volvo Cars. 

As evident from conversations at CERAWeek, there is a vital need to accelerate and align action to get on track to reduce emissions in line with science and, importantly, to send the necessary signals to the market that fossil fuel demand will peak and decline. To this end, further business action and advocacy is needed to keep building the demand signal and inspiring governments to lead now. 

The UAE Consensus called for accelerated action in this decade to transition away from fossil fuels. Therefore, one clear next step for policymakers is to transform the agreement at COP28 into concrete targets and timelines in their Nationally Determined Contributions (NDCs), or national climate plans as required by the Paris Agreement for each country. This will give confidence to businesses on their investments and start to narrow down the what, how and when of a transition from fossil to clean. In turn, businesses can help by providing concrete evidence to policymakers that they are taking actions to scale up clean energy, and to displace and phase down the use of fossil fuels.

The oil and gas industry can play a key role in the transition beyond just reducing production and reallocating capital. Its experience with large, complex projects makes it well-placed to help scale technologies that are needed to reach net-zero and displace fossil fuels, such as CCUS, geothermal and hydrogen. The IEA estimates that “some 30% of the energy consumed in a net-zero energy system in 2050 will come from low-emissions fuels and technologies that could benefit from the skills and resources of the oil and gas industry.” The Fossil to Clean Principles for Global Fossil Fuel Phase-out give businesses, governments, fossil fuel producers and investors a clear roadmap and timeline for the transition. 

2. Tripling renewables is going mainstream.
The agreement from COP28 to triple renewable energy capacity by 2030, and how to achieve this ambition, was front and center at the Berlin Energy Transition Dialogue (BETD) and also discussed on panels at CERAWeek. BETD was also the launching ground for a global campaign from the Global Renewables Alliance (GRA) to mobilize action and investment for the tripling of renewable energy by 2030.

Our take: Perhaps more than with any other outcome from COP28, the conversation on how we can triple renewable capacity quickly pivoted from setting targets, which are now agreed at a global policy level, to the collective action and investment that is required. To reach the 2030 target, IRENA notes that 1,000 GW per year needs to be deployed, up from a record-breaking 473 GW that was installed in 2023. IRENA advises that “tripling renewable power capacity by 2030 is technically feasible and economically viable but requires commitment, policy support and investment at scale.” 

At the Berlin Energy Transition Dialogue, the Global Renewables Alliance (GRA), which was established by renewable industry players, launched the Time 4 Action campaign to encourage the mobilization of $10 trillion USD in public and private investment and establish policy frameworks to enable the tripling of renewables by 2030. GRA has identified key barriers that may impede this 2030 goal: lengthy permitting processes, insecure supply chains, lack of grid infrastructure and lack of finance. Our capacity to overcome these barriers will have direct implications on our ability to meet rising electricity demand from EVs, heat pumps, industry and more with renewable sources.

It is crystal clear that now is the right time to focus on tripling renewables AND doubling energy efficiency, which was also agreed at COP28 but has since been less at the forefront of industry dialogues. Each of these must go hand-in-hand with a phase-out of fossil fuels if we are to impact global emissions reductions. This ambition was supported by more than 200 businesses that urged national governments attending COP28 to phase out fossil fuels and scale clean solutions. To build on COP28’s UAE Consensus, it is essential for national governments to reflect this global goal in their NDCs and build out enabling infrastructure and supporting technologies such as storage to support it, while reducing the red tape that is currently slowing progress.  

3. Electricity demand growth is top of mind.
At CERAWeek, the rise in U.S. electricity demand, after being stagnant for decades, invigorated conversation on emerging electricity demand trends – like EVs, data centers and AI, and industrial facilities – and how to meet these needs.

Our take: Depending on who you asked at CERAWeek, the implications of this, and the solutions and approach, varied widely. Some fossil fuel executives jumped on this as clear evidence of the need for increased investment in fossil fuels to meet this demand, implicitly indicating that other sources are not yet scalable, affordable, available. Other stakeholders doubled down on the need to remove barriers to faster renewable capacity growth, the importance of lowering the cost of nascent clean technologies, and ensuring that more make it to commercialization. U.S. Secretary of Energy Jennifer Granholm, while acknowledging that fossil fuels are needed in the near-term, indicated that the future is clean energy and offered a long list of clean energy projects and policies in the U.S. that are building this future. For the U.S. to reach its national climate goals, which 400+ companies supported through robust policy advocacy, the nation must reduce both the consumption and production of fossil fuels. 

In some ways, rising electricity demand could be framed as a success, with the policies and technologies that we are putting in place to achieve the energy transition taking hold. After all, the IEA’s Net Zero by 2050 scenario indicates electrification as essential for emissions reductions, with electricity’s share of final energy consumption growing from 20% today to around 28% by 2030, to over 50% by 2050. Key to this, however, is to ensure that clean power supply keeps pace with rising demand and replaces existing coal and gas-fired power plants. The grid must be ready to support higher shares of renewables and manage peaks, which will require improvements in permitting, planning, management and grid infrastructure (both new infrastructure and using existing technologies and solutions like dynamic line rating [DLR] and reconductoring to make better use of the existing grid).

But perhaps the most important lever of all to managing rising demand and reducing emissions is maximizing energy efficiency, as this slows the rate of demand growth and by extension plays a key role in driving down fossil fuel consumption. 

Looking ahead:
To tackle these challenges, deliver on the global ambition agreed at COP28 and ensure a just and well-managed transition from fossil fuels to clean solutions, collaboration will be needed across society – including governments, fossil fuel producers, businesses, investors and more. This need for widespread collaboration was echoed throughout both CERAWeek and the Berlin Energy Transition Dialogues and will remain a theme in the lead-up to COP29 and COP30. 

One of the next major moments to accelerate the global trajectory of the clean energy transition is the G7 Summit, June 13-15, and the preparatory meeting of G7 Climate, Energy and Environment Ministries, April 28-30. On the industry side, the World Energy Congress, April 22-25, under the theme of “redesigning energy for people and planet” will provide the next big chance to assess progress and narratives on COP28 outcomes. With bold business and political leadership, we can scale clean energy and end our reliance on fossil fuels. 

The We Mean Business Coalition, through its Fossil to Clean Campaign, will highlight the many ways that businesses are scaling up clean solutions, phasing down the use of fossil fuels and supporting policies to realize this vision economy-wide. To learn more about how your company can support the campaign’s communication and advocacy efforts, contact us at  [email protected].