How Engineered Solutions Can Accelerate the Transition

As pressure mounts, energy leaders must build a more-resilient, lower-carbon energy system. Technical, digital, and engineered solutions will play a critical role in this transition, but which options are most viable?

Driving the Transition Through Diversification: The Role of Hydrogen

According to SHOCKED, one of the largest global studies conducted among the energy sector C-suite, three-quarters of energy leaders say the security of supply is the number one concern for their organisation. Although natural gas has been an important transitional fuel from coal-powered energy production, respondents cited the strong economic rebound from COVID-19 and geopolitical tensions as having contributed to the recent unpredictability of supply and price.

In fact, SHOCKED found that seven in 10 energy sector leaders say the volatility of natural gas prices over the past 12 months has accelerated their adoption of renewable energy generation assets—increasing to more than three-quarters of leaders in high-growth businesses (77%). Further indicating a strong trend toward cleaner and more diversified energy sources, 44% state that this same volatility has slowed down their adoption of coal assets and nearly all have a strategy in place to increase their renewable-energy mix.

As we hasten the shift toward low-carbon energy resources, these findings highlight the growing sense of urgency to find viable alternatives to natural gas. This raises the question of what that logical replacement for natural gas will be, while the adoption of renewables continues to scale-up. Here, the potential of hydrogen and other biofuels come to the fore as a viable transition pathway. Indeed, three-fifths of energy leaders interviewed for SHOCKED say the global energy crisis has accelerated their organisation’s investment in hydrogen over the past 12 months.

Green hydrogen is a promising contender for overcoming the energy-security issues tied to the volatility of natural gas, particularly in the context of heavy transportation, heating, and power generation. However, the transition to green hydrogen is not without its challenges. The infrastructure and supply chains for hydrogen must be developed and scaled to bring unit costs down, and the production of green hydrogen also requires large quantities of high-purity, fresh water, which may be in short supply in certain regions. Similarly, blue hydrogen, while possible at larger scale, requires the availability of sequestration locations for captured carbon dioxide.

Tapping the Latent Potential of Carbon Capture and Storage

According to SHOCKED, 76% of energy leaders believe their industry is under more pressure than any other to decarbonise. Further, SHOCKED found that three-fifths of leaders say their company is deploying carbon capture, utilization, and storage (CCUS) solutions to achieve decarbonisation targets.

CCUS refers to a variety of technologies that can play an important role in achieving global energy and climate objectives. The process involves capturing CO₂ from significant production sources, such as industrial facilities or power-generation plants that use fossil fuels or biomass as fuel. Alternatively, CO₂ can also be extracted directly from the atmosphere through a process called direct air capture (DAC). Once captured, the CO₂ is compressed and transported through pipelines, ships, rail, or trucks to be used for various purposes, or injected into deep geological formations, such as depleted oil and gas reservoirs or saline formations, for permanent storage. DAC has the ability to be a true “removals” technology and can be deployed above storage units.

While SHOCKED found that CCUS is one of the most-deployed technological decarbonisation solutions globally, it also found that it is currently considered one of the least-effective approaches. This underscores the need to develop more full-scale CCUS projects—and to establish a track record across the world where geological or undersea storage is available and proven—to unlock the latent potential of a game-changing technology that has been available for years, but that is now increasing in relevance.

Grid-Scale and Residential Digital Solutions Addressing Energy Security

SHOCKED found that 80% of high-growth companies have identified digitalisation as an effective strategy to support the decarbonisation of energy supplies. The research also found that the energy industry’s top four areas of investment to respond to the energy crisis have been cybersecurity, digitisation, smart grids, and artificial intelligence. Taken together, not only do these digital solutions make energy systems more reliable and efficient, but they also make them more secure.

And investment in these areas is…