Patrick, Paddy, hi. Let's start with you, Paddy...
decarbonization is all over the place at this COP.
What are your impressions thus far?
Lots of positives, in that decarbonization opportunity, options,
all understood. Private sector wants to get on with it,
is very impatient.
Lots of dialogue on funding continues to be a big theme.
How we continue to fund that transition in the emerging world.
Also a big doubt as to whether the energy crisis
and rampant inflation is now going to leave renewable energy behind again.
But the fact of the matter is,
I think there is also the understanding that that's not entirely true,
because fossil fuel prices are going up and the cost of
generating with fossil fuels is also way higher than through renewables.
So lots of will, commitment, and focus on action.
Patrick, as Paddy mentioned there, the energy crisis,
markets in turmoil over recent months.
What impact is that having on decarbonization now and into the future?
It's a fossil energy crisis, right?
Where we see scarcity and increasing prices on the fossil side... gas...
oil, and then as a result, power from that. But to me,
this significantly has improved the business case of any green technology.
Literally any climate and decarbonization lever is now more economic than it was
a year ago. We talk efficiency, we talk renewable energy, we talk hydrogen,
even CCS, Carbon Capture and Storage.
The challenging aspect is that the CEOs' agendas are busy now with short term
crisis fighting, it's literally a fight for management attention,
but it's much less a fight for business cases and fundamentals.
So we need to survive the short term and need to make sure we have sufficient
power of decision making and reorientation to capitalize on the much
more attractive business case for a green transition that luckily was triggered
by the fossil energy crisis.
I absolutely agree with you.
I think the energy crisis is actually been a helpful thing in that it has
really triggered the focus. There's a lot more concern around security,
but now we are starting to understand that decarbonization and security
actually... they don't need to compromise.
They are actually one and the same in that the decarbonized energy solutions
are very,
very local and they require more interconnection for resilience
and for efficiency. So security,
social responsibility,
climate are all integrated in the solution.
So the energy trilemma is no more, right? Historically,
we would've said there's a trade-off of sustainability,
affordability and security of supply.
It's now all aligned... in most parts...
So Paddy,
what do companies and governments need to watch out for in this 'new normal'
context?
Look,
governments need to continue to make sure that the enabling environment is there
for the private sector to invest, the ambitions are clearly set out,
and to follow through with regulation and policy actions. The private sector,
on the other hand, now is very efficient at starting to deliver...
needs to recognize that the risk paradigm has changed.
When energy was being supplied at a high price,
using the fossil fuel energy era,
the risks in a developing country - expensive
energy is a very different risk to when we are able to deliver now renewable
energy at much lower prices.
So we need to be reevaluating the risk model, how we price money.
I think for companies and for financiers,
that is where the real opportunity is, and that is, I think,
our responsibility now.
So we also need to take that responsibility on our shoulders as private sector.
The only addition I would say - for a company, for a private sector player,
figure out 'what's your business model in the net zero world' and then work
backwards and take bold decisions. And the bolder you are,
the more you take risk out of this because technology will evolve faster.
Downstream commitments have been made.
The pull for green technologies we see on the steel side, on the ammonia side,
et cetera, is already kicking in.
So there's really a risk of missing out and not being fast enough in this
transition, recognizing it's for almost all sectors, not for every single one.
Patrick Paddy, thank you so much. Thank you.