Energy Transition Series – The Past, Present, and Future of the Energy Transition: Part I

01.21.2021 | Opinion Piece | By: Aidan Joy, Director and Energy Transition Lead

In many ways, the Energy Transition has been the defining influence on the energy industry since the 1980s.

Within this broad overview article we:

  • summarise the origin, status, and pace of the Energy Transition (the past)
  • consider the parts which different stakeholder groups are playing in the Energy Transition (the present)
  • assess how matters might evolve from here (the future), particularly as it relates to our clients.

Carnrite, from our offices in Houston and in London, advises companies in all segments of the energy value chain and in other industrial sectors on key issues such as strategy, cash flow optimization, digitalization, and the Energy Transition.




How Did We Get Here?

Many commentators regard June 1988 as the month when the world commenced assessing the concept that humans could be influencing the climate on a global scale. A key event was the testimony of NASA’s James Hansen to a US Senate panel that anthropogenic factors – meaning human-caused emissions of carbon dioxide from industrial activities, transportation, and heating – risk causing a rapid increase in global temperatures, threatening to endanger both ecosystems and human civilization itself. The Intergovernmental Panel on Climate Change (IPCC), an agency of the United Nations, was set up in that year with the mandate to understand the impacts and risks of human-induced climate change and possible response options.

In 2015 the United Nations Framework Convention on Climate Change (UNFCCC), an assembly of nations set up in 1995, adopted the Paris Agreement, establishing a long-term goal of limiting the increase in global average temperature to below 2°C (3.6°F) above pre-industrial levels by reducing greenhouse gas emissions. In 2019 the UK became the first nation to make a legislative commitment to Net Zero GHG emissions with a target date of 2050 or earlier.

Relevant Stakeholders

In order to evaluate the present and to attempt to see into the future, we may usefully look at the Energy Transition from the standpoints of different stakeholder groups:

  • The majority of the world’s Scientists and Scientific Institutions profess the view that human-caused or Anthropogenic Global Warming (AGW) is a proven and predictable process which poses an existential threat to ecosystems and to human civilization; and that the Energy Transition is a means of preventing AGW. However key datasets are incomplete or conflicting; almost none of the published scientific climate models accurately hindcast global temperatures or climate over the last 40 years; and there is a significant minority of scientists who do not agree with the models on which the IPCC bases its advice to governments.
  • Going by electoral outcomes and by their policy positions, the Politicians in power in the majority of G7 countries – which may now include the USA given the outcomes of the 2020 elections – also profess to believe that AGW is an existential threat.  Based on this belief, these politicians are planning and legislating for far-reaching changes in their nations’ economies aimed at “decarbonizing” them, such as the UK’s Net Zero 2050 Energy Transition programme.  However the true economic and legislative implications of such programmes have not played out, nor have they been subjected to challenge either in the courts or by the electoral process.
  • The Media, while reporting and commenting on the Energy Transition, is motivated by commercial factors (crudely, the need to sell copy) which naturally influence its published viewpoints.
  • The Public, according to numerous opinion surveys, rates AGW as a relatively low priority.  In addition, as alluded to above, the willingness of the electorates in G7 nations to accept reductions in their standards of living in order to achieve national GHG reductions in pursuit of global AGW objectives – in other words, the Energy Transition – has not yet been seriously tested.
  • In the context of the Energy Transition, the Energy Industry currently appears to be split. Integrated IOCs – particularly in Europe – are strongly motivated for a number of reasons to reduce the “carbon footprint” of their activities, but while their CEOs and boards are communicating strategies and commitments for investor reasons, their teams are left with the often-difficult task of trying to operationalize those strategies.  Smaller E&P companies and large parts of the oilfield services sector have minimal human or financial capital to apply to GHG-related activities whilst they struggle to survive during a prolonged period of low oil prices and reduced oil and gas industry activity levels.  NOCs are largely sitting back and taking a “watching brief”.  This division of focus is taking place in the context of the ongoing “Great Crew Change”, with the most experienced workforce retiring and taking much of the industry’s knowledge base and skill set with it.

Important to Note

The above refers largely to the developed world; the effects of the decarbonization commitments being entered into by G7 nations in the context of those nations’ ability to interact and compete with developing nations – in particular with China – have yet to play out.  It’s also worth noting that even if the developed nations reduce their emissions to zero by 2050, projected global emissions will barely fall below today’s level because future emissions growth is so strongly dominated by emissions from developing economies, which must continue to manage a variety of conflicting economic and societal priorities.

Looking Forward

In the situation of unprecedented uncertainty and stakeholder diversity described above, which applies in the UK, NW Europe, and increasingly in the USA and other nations, the way forward for oil and gas companies, and for service companies in the oil and gas sector, is unclear.  To the appropriate extent, those companies should have regard to investor, government, and public opinion.  But they must not lose sight of their core function: to provide products essential in numerous ways to the functioning of modern, advanced societies.

Carnrite has been advising energy industry participants worldwide on key strategic, operational, and organizational issues since 1991.  We follow Energy Transition issues and developments closely from our London and Houston offices in order to support our energy industry clients with relevant, up-to-date, actionable advice.

Our clients trust us to solve problems, such as:

  • Balancing investor sentiment with profitability;
  • Incorporating carbon intensity metrics into portfolio assessment and rebalancing; and
  • Reutilization options for mature, high liability assets (e.g. feasibility studies, repurposing).



We will look at Energy Transition issues in greater detail in future posts.  Be sure to follow us on LinkedIn so you don’t miss them.


About the Author

Aidan Joy joined The Carnrite Group’s UK business in September 2020 after over 30 years of experience in the international oil industry.  He worked as a geologist during the growth years of the North Sea, mainly in the UK sector, progressing to the role of Subsurface Manager for Kerr-McGee, at the time a very active E&P company. In 2000 he moved onto the commercial and finance side of the business, and between 2004 and 2019 he was based first in Perth, Australia, then in Calgary, Canada.

During this time, Aidan worked for several operating oil and gas companies on a very wide variety of upstream and midstream ventures and deals, with a particular focus on managing ventures under Joint Operating Agreements. In 2006-07 he was Commercial and Finance Manager for Woodside in Perth, in charge of an accounting team of 25 professionals managing financial and accounting aspects of Woodside’s exploration assets worldwide and its production assets in a number of countries outside Australia. In addition, he represented Apache on the Board of Directors of APPEA, the Australian Petroleum Production & Exploration Association.

Since 2016 Aidan has worked as a business consultant for the international energy industry in the USA, Canada, and the UK. In recent years he has increasingly specialized in projects related to organization structure and the Energy Transition. Aidan graduated from Imperial College, London with a B.Sc. In Geology. He lives in SE England with his wife and three sons.

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