Almost 60 years ago, in 1966, I arrived at St John’s College, Cambridge, on a scholarship from BP to study physics. This would turn out to be a golden period for the oil and gas industry. Two new frontiers – the North Sea and Alaska – were on the cusp of opening up, and the industry’s reputation as a source of innovation, diplomacy and prosperity was strong.
How times change – both in obvious and less obvious ways. The North Sea peaked long ago, with Britain sadly ever more reliant on energy imports. A fuller understanding of climate change has laid bare the duality of hydrocarbons, with most energy companies far too late in taking action. The focus in most developed countries is now on how to produce more and more energy from zero-carbon sources. This is all part of what is commonly meant by the “energy transition”, which is essential if we are to save humanity from the uncontrollable and destructive impact of climate change on health, food supplies and migration.
But a less obvious energy transition has been taking place, right in front of our eyes. In 1966, the UK consumed more energy than it does today, despite decades during which both the economy and the population have grown. And the UK now no longer consumes any coal to speak of. If someone had told me this as an undergraduate, I would have scarcely believed them. Some of this change is down to deindustrialisation, but much of it can be attributed to steady gains in energy efficiency. The direction of travel is the same in the US, Canada and the EU.
This should give cause for great optimism. The energy transition is a serious challenge, which will take years to complete, but it is underway, and it is inextricably linked to energy security. The idea that energy security can be based solely on oil and gas is wrong and dangerous. So too is the view that we can achieve an overnight transition simply by setting net zero targets.
Countries need a diversity of sources of energy so that when one source is attacked or interrupted, the supply can be made up by another. UK supplies are much more secure when they are domestic and do not rely on long-distance supply chains. Those such as renewable sources and nuclear fission also happen to be carbon-free.
To make progress in the energy transition, we need serious and realistic plans, driven forward by a sense of common purpose and supported by the necessary resources. Plans will vary from country to country, but if they are to succeed, they should have four things in common.
The first is to start by working out what will be needed in 25 years. It is clear to me that we will need carbon-free flexible electricity from renewables and nuclear power, both fission and perhaps fusion. At present, electricity accounts for about 20 per cent of global total energy demand; by 2050, it could be closer to 50 per cent. We will continue to need liquid fuels to power heavy transportation such as ships, trucks and long-haul flights, but may be able to create them – and other materials – by transforming waste, wood and crops using enzymes created by AI. And we could use the inevitable super-intelligence of AI to become more efficient everywhere. This future of low-carbon and mostly domestic secure energy is very possible if we commit now to the right level of consistent R&D investment in areas of highest potential.
But, of course, we cannot afford to wait, so we must deploy the technologies already available and capable of continuous improvement. This is the second pillar of any successful approach. Electricity from wind and solar is already competitive with the lowest-cost hydrocarbon alternative. What is needed is better long-duration storage and the infrastructure to bring supplies to market. The efficiency of energy use can be dramatically improved by deploying more advanced software and strengthening economic incentives. New nuclear power, including the exciting potential of small modular reactors, can be deployed. Greater deployment of EVs reduced oil demand, but because we are still using oil and gas as 70 per cent of the UK’s energy and will continue to do so long into the future, we must use them cleanly. Eliminating methane emissions is feasible and commercially viable. Capturing carbon and storing it is possible, but it needs further deployment and improvement before it is economically feasible to do so.
Third, it is important to remember that no one country can achieve all these goals on their own. Competition is a good thing, but in a time of tight budgets, it is better to work in collaboration with other willing partners. The Earth’s climate does not recognise national boundaries. We cannot wait for everyone to join in or allow ourselves to be forced to work at the pace of the slowest. Those who are able must act.
For governments, that means putting in place internationally coordinated regulations and incentives, and directing funds to the necessary research. There is a strong case in the UK for creating a central national direction of the science and engineering required for the necessary breakthroughs, because efforts are currently too fragmented. It is also essential that we get a grip on a malfunctioning electricity market in which prices are too high, for which green energy is wrongly blamed, undermining efforts to secure public support for the energy transition.
But it should be obvious that governments cannot do everything. That is why the contribution of the private sector is so important, and is the fourth pillar of any successful approach. Companies can bring the organisational capacity and international reach to take discoveries from the laboratory to the market. They cannot run away from the issue because they are part of society, serving its needs. But their success must also be nurtured, supported and celebrated. History shows that the private sector is the engine of human progress. We forget this at our peril.
There is much that can be done, and no reason to despair. A major transformation of the way we live and work will take time. Industrial revolutions are complex processes replacing established embedded systems with something new and better. But in this case, the necessary changes will only come if we have a clear plan and a visible path to a world which is truly Beyond Petroleum.
Lord Browne was the chief executive of BP between 1995 and 2007
