Energy transition: Building the framework for the future of energy

The future of energy transition

How prepared is your organization for a transition to lower-carbon energy?

As more industries begin to transition away from fossil fuels and develop decarbonization energy strategies, the world seems to be headed toward a new future of energy—one that considers sustainability a top priority. Deloitte’s latest survey reveals that, together, executives, customers and policy makers are creating a new framework for energy transition.

The role of business leaders

Even in the wake of COVID-19, business leaders have an important role to play in determining the trajectory and pace of the next decade of energy transitions, namely across these six areas:

• Decarbonization of energy sources
• Increasing operational energy efficiency
  
• Commercialization of new technologies
• Investment in new business models
• Adapting to new policy and regulation
• Managing customer and stakeholder expectations

As companies find their footing post-crisis, progress in several of these channels could slow as capital discipline, employee health and safety, and operational reliability take top priority. However, significant progress has already been made in three of these areas, which are considered high-impact macro trends that will be fully integrated by 2035: decarbonization, energy efficiency, and the commercialization of new technologies:

• Decarbonization of energy sources: Deloitte energy transitions research identifies decarbonization as the primary trend across energy and industrial sectors, one that is expected to become a global imperative. Even as the COVID crisis was already unfolding, the longer-term focus on decarbonization—and sustainability in general—has remained a strategic priority among leaders due to its perceived benefits like enhancing a company’s competitive edge and reducing compliance and other costs.
• Increasing operational energy efficiency: Our survey found that energy efficiency remains a top investment priority on the path to a lower carbon future. The increased focus on energy efficiency, which has been allowing economic growth to “decouple” from electric power demand, is another important trend driven by cost-saving and the emergence of new technologies.
• Commercialization of new technologies: Finally, the commercialization of these new technologies, enabled by the fact that they are declining in cost, is helping speed up the transition to a lower carbon future. And as COVID-19 continues to disrupt the workforce structure, executives across the energy sector are embracing digital technologies faster than ever before.

Though substantial progress has already been made in the transition to a new future of energy, it is still too soon to tell how the disruption of the pandemic and the economic downturn will impact it. Whether a company is developing short- or medium- term strategies to keep up with energy transition while dealing with impacts of COVID-19, or imagining its role in the longer-term energy future, it could be useful to keep an eye on these trends as they continue to shape the energy of the future. Read our survey findings detailed in Navigating the energy transition from disruption to growth to learn more.