With the COP26 presidency still sat with us, the UK Government is keen to maintain its leadership position, Madano’s Energy team provides advice to some of the most exciting energy projects from Carbon Capture and Storage (CCS) and nuclear through to solar and wind. Our team is focused on connecting projects to the most influential stakeholders supporting the UK’s net zero and levelling up agendas. Looking ahead to 2022, here are some of our predictions about trends and opportunities within the energy sector:
1) Will SMRs start to happen, or will fusion make the grade?
With Hinkley Point C, Sizewell C and even Bradwell B securing sizeable column inches in recent years, Small Modular Reactors (SMRs) have always been seen as exciting, but something for tomorrow. However, will Qatari investment to the tune of £80m coming into the Rolls Royce consortium be enough to progress to the next phase of supply chain readiness and site selection? They had better get a move on with a number of exciting fusion companies that are hoping 2022 will be the year to recreate the sun and limitless clean energy.
2) Do people really understand what Carbon Capture and Storage (CCS) is?
Our Energy practice has witnessed varying levels of understanding of CCS in 2021 – from being compared to nuclear geological storage and explained using chocolate biscuits and mugs of tea. There is a need for companies to communicate what CCS means for net zero more clearly. Part of this will be to look past transporting CO2 relatively short distances to geological storage sites and understanding how emitters that aren’t close to storage sites can harness this technology, maybe by boat or truck.
3) Will we have the honest debate about the need for oil and gas?
We saw in recent weeks that the Cambo oil field has been vaunted as a massive win for environmental campaigners, but equally we have seen the Faroe Islands double down on new exploration. With the wrangles around Nord Stream 2 and Russian exports from Yamal, we are still going to be using considerable volumes of oil and gas in our daily lives through to 2050. With the electrification of platforms starting to come forward, there does need to be an honest debate around our longer-term dependency on hydrocarbons and where Direct Air Capture or nature-based solutions can offset our needs.
4) Low Carbon Hydrogen
Ever increasing hype around the potential for hydrogen was seen in 2021 with major investments and dedicated funds launched to promote innovation and investment. More will be unveiled in 2022, as the UK Government looks to publish its draft Heads of Terms for the forthcoming Hydrogen Business Models in Q1-2, and it has already begun the process engaging with end-users to support the development and scaling up of hydrogen technologies. Industry will continue to match and even exceed the Government’s ambitions in this sector, with trade associations like Hydrogen UK, supported by Madano, serving to support key departments to move from strategic thinking to deeper work with the sector to deliver a fully-fledged value chain.
5) Will we see a moratorium on new energy from waste facilities?
Energy from waste assets is seen as highly valuable. With money flowing in from private equity and pension funds, the sector is now mobilising around carbon capture and storage technologies. However, there is ever increasing pressure on the thermal treatment of waste, and its perceived impact on recycling rates. Wales has come out with their own moratorium on large, new scale EfWs to curb development appetite. Further parliamentary debates have asked the same question and now an open letter has been signed with cross-party support. Future proposals will need to be equipped with a clear narrative and be compatible with net zero ambitions.
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Shifting our way of life and economy away from a dependence on fossil fuels and towards a sustainable path that will enable us to achieve net zero by 2050 is currently the most important challenge we face. We’re all aware of that, but sometimes we need a communications masterclass to make us appreciate the true nature of the problem.
Luckily, Sir David Attenborough has provided a shining example with his latest one-off special, A Life on our Planet, which makes for uncomfortable viewing. Available to stream on Netflix, it has a distinct feel of the final encore to his lifetime of works – indeed, he calls this programme his “witness statement” to the world.
It’s a statement that notes the rapid, sickening exploitation and destruction of our planet during his life, and feels almost like an obituary for planet Earth. Attenborough highlights the speed at which the planet’s ecosystems have changed, and the catastrophic consequences of these changes: rising atmospheric carbon dioxide and a fall in the truly ‘wild’ nature left on earth.
Some of the programme’s statistics are stark. Forty per cent of the world’s sea ice has melted in the last 40 years as our systematic overuse of fossil fuels quickens the rate of global warming. Thankfully, the show does not end with an apocalyptic vision for earth’s future, but one of hope and opportunity.
Transitioning to net zero – an investment opportunity
A recent Financial Times article began with the same sentiment: “Saving the planet from catastrophic climate change is humanity’s biggest challenge. It may also represent the most spectacular investment opportunity of our lifetimes.”
The article states that the transition to a green economy has presented a number of opportunities for venture capital investors to become involved in climate tech. A report from PwC confirms this, noting that funding for climate tech companies has outstripped other sectors, including artificial intelligence, increasing from $418 million in 2013 to $16.1 billion in 2019. The opportunity for venture capital investors to make money while also saving the planet has an undeniable pull, but despite this dramatic increase in investment, the FT states that “climate tech still only accounts for about 6 per cent of VC’s investment portfolios today,” a figure that needs to increase sooner rather than later.
In an effort to accelerate sustainable investment, the world’s largest fund manager, BlackRock, announced last year that it would remove from its actively managed portfolios any company receiving more than a quarter of its revenue from thermal coal. Larry Fink, the firm’s CEO, stated in a letter to clients: “The commitments we are making today reflect our conviction that all investors – and particularly the millions of our clients who are saving for long-term goals like retirement – must seriously consider sustainability in their investments.”
A few months later, the FT reported that shareholder support for climate change resolutions at annual meetings had increased from 16 per cent in 2019 to 23 per cent. The companies who “suffered big shareholder revolts over climate change” in 2020 included US bank JPMorgan, Australian energy companies Woodside Petroleum and Santos, mining group Rio Tinto, shipping company JB Hunt Transport Services and energy group Ovintiv.
Transitioning to net zero – a communications challenge
So, what does this all mean for communications? Well, in the same way that the transition to a low-carbon economy represents the biggest investment opportunity of our lifetime, it is also, arguably, the greatest communications opportunity for a generation. As a post on Attenborough’s Instagram page explains: “Saving our planet is now a communications challenge.”
The UK Government has legislated to transition to net zero by 2050, and a number of other countries have echoed this decision with similar signals of intent. Added to that, major corporations across the globe, including oil and gas producer BP and US tech giant Microsoft, have also made net-zero pledges.
But these examples are still in the minority. What’s needed now is for every organisation to take meaningful action to reduce and eliminate its carbon footprint on the road to net zero, while ensuring its communications highlight that action to key stakeholders in a transparent and targeted way.
By Lewis Popplewell, Account Executive in Madano’s Energy practice.
This blog post is the first in a three-part series discussing the communications challenges and opportunities provided by the net-zero transition. Forthcoming posts will examine the importance of communications in the context of reputation management, as well as potential ways to engage with government, the media and other stakeholders to positively influence the transition.