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Speakers
Abdurrahman Khalidi
Chief Technology Officer, GE Gas Power EMEA
Kara Mangone
Managing Director, Global Head of Climate Strategy, Goldman Sachs
André Pienaar
Founder and Chief Executive, C5 Capital
Leo Simonovich
Vice President and Global Head, Industrial Cyber & Digital Security, Siemens Energy
Moderator
Dan Murphy
Correspondent, CNBC
DAN MURPHY: The focus for this next panel is “Securing the Energy Transition: Resilience and Reliability in the Face of Evolving Threats,” and I think as you all know this is a very critical topic as we continue to assess Russia’s ongoing invasion of Ukraine and, of course, the ongoing ramifications that this is having within geopolitics, the global energy markets, the energy transition, and how all of this is ultimately going to impact how the world addresses climate change.
So, to begin our conversation, I wanted to ask each of our panelists just to get an idea of how you see the situation evolving from here. What would you say is the single biggest threat to global energy security today as it stands right now?
Dr. Khalidi, would you like to start?
ABDURRAHMAN KHALIDI: So, thank you for sticking around here. I know we’re a little bit late. Thank you for coming, appreciate it.
I just want to start by saying two things. The energy transition or the decarbonization is a problem at scale. In this room you’re sitting in right now, you’re breathing the air that is 400 ppm of CO2, all right? That’s the average—400 parts per million of CO2. If you sat in this same room 200 years ago, it would be around 250. That’s what the industrial age has done. This is a problem massive and at scale.
In the past 22 years alone, we added in terms of CO2 tonnage, in millions per ton, more than the past 100 years. So, as a result, I think that with this security situation—what I’m afraid of with the security situation in Europe right now with Ukraine—where people are thinking more about reliability, secure gas and secure power—that the decarbonization and the energy transition will take a back seat, in front of the security threats happening in the world.
DAN MURPHY: André, your view.
ANDRÉ PIENAAR: Aba, I agree with you.
I think that, as you point out, this is a problem at scale, which poses its own problems, and in the near-term we have some real geopolitical problems and challenges coming out of Russia’s invasion of the Ukraine, and that being a distraction to the broader agenda.
From an operational point of view, I think cybersecurity is really important—the cybersecurity of our critical infrastructure, our ability to protect our critical infrastructure, and building effective collective defense in a public-private partnership realm.
DAN MURPHY: Kara, welcome into the conversation. What’s your view?
KARA MANGONE: Thank you, and great to be here. Thank you to the Atlantic Council.
I think one of the areas that I worry about the most, spending a lot of time in decarbonization and sustainability, is that we’ve approached this challenge in a very narrow and not integrated way. And in my mind, one of the biggest challenges we have within ESG and sustainability is that we have approached it through a win or lose scenario, if you will. So, certain industries are good and favored, and certain industries are bad. And that is a challenge.
What we should be optimizing for is clean, reliable, affordable energy, and I think that’s most acute right now given what we’re seeing.
And you know, one datapoint that I will give you is the metals and mining sector, which is very under owned—if you look at lot of ESG and sustainability indices, steel, a core part of that sector, is absolutely crucial to many of the technologies that we need to scale decarbonization and to deliver on net-zero objectives. So, if you look at hydrogen, if you look at wind turbines, steel is needed for many of those production processes.
And that’s just one example of, I think, how we are at risk of not looking at this challenge in a very integrated, holistic way, and as a result, we’re probably underfunding sectors and technologies today that are critical to transition.
DAN MURPHY: Absolutely. I think the funding element to it is really, really critical, and we can unpack that in just a moment.
But, Kara, thank you.
Let’s bring Leo in as well.
Leo, I’m sure you’re looking at this through a cybersecurity lens, too.
LEO SIMONOVICH: Yeah, how did you guess? But hi, everyone.
So, I would agree with Kara and my fellow panelists that in a system that is accelerating, that is strained by geopolitical conflict, by supply-chain issues, there’s a tipping point, and that tipping point can come from multiple places.
And one obvious one is cybersecurity. At the heart of the energy transition is digitalization. In our sector, in the energy sector, 2 billion devices are going to be added over the next couple of years. Every one of those devices could be a potential source of vulnerability that could be exploited by bad actors. In a system that is increasingly connected and digitized, that includes legacy assets in need of digital assets, this could have cascading effects.
And what we’re talking about is not just loss of data, what we’re really talking about is a safety issue—one that—one that could bring down major parts of the grid, or, as we saw with the colonial pipeline attack in the United States, parts of gas networks. So, cybersecurity is important, as both an opportunity to accelerate the energy transition if we can get it right because it builds trust, but also a major source of risk that we need to address pretty urgently.
DAN MURPHY: Leo, just to expand on that point, what would you say is the single biggest risk to energy security today?
LEO SIMONOVICH: Well, you know, what it boils down to is one attack that could have kinetic impacts to the energy system of a country. The thing about cybersecurity, it’s very hard to attribute the source of the attack—where it’s coming from, who is doing it, what are the methods—and yet, once that attribution is made, the level of intensity increases. And simple exploits that could be bought on the Internet for 15.99 because cyber—because malware is being commoditized now, right—in the hands of a malicious actor—and it doesn’t have to be a nation state, it could be a criminal group, right—could be exploited, could cause damage, shut down safety. And because of lack of attribution, because of anonymity, it could have cascading effects.
DAN MURPHY: Before we talk about some of the solutions, would anyone else on the panel just like to add to what you’ve heard regarding risks when it comes to global energy security, and are there key elements that you see there?
ANDRÉ PIENAAR: Both Leo and Kara touched on the importance of the supply chain, and I think supply-chain issues are of growing importance. It’s one of the critical factors behind global inflation today, which is one of the most destructive elements in the global economy when it comes to value and to wealth and a major driver behind poverty. Within the nuclear industry we’ve seen the importance of having a strong supply chain.
And as you highlighted, Dan, the current invasion by Russia of the Ukraine has caused havoc on the nuclear industry supply chain—both in terms of the supply of uranium, with more than 50 percent of the US’s uranium being provided by Russia, its close allies, but also in the provision of enriched uranium, which is a critical fuel factor for the nuclear industry.
ABDURRAHMAN KHALIDI: I just want to add one thing which is—it could be a little bit political. It took the world several decades, until 2015, to arrive at almost a consensus in Paris that global warming is happening and it’s due to greenhouse gases and the commitments start flowing. It took us a lot of debate.
For decarbonization to happen as we saw in COP-26, you need a cooperative and collaborative world government. The risk I see right now, the world is sharply polarized, and the world is being divided along with and against. And as a result, these collaborative—think about the slush fund that was put aside for the developing—or underdeveloped countries to get out of coal, like South Africa or Indonesia. That required a cooperation. That required somebody saying I’m going to spend $100 billion on decarbonization and not on javelins and other, because we were in a mood of really fighting this. I’m afraid that the world has shifted a little bit, and that’s—to me, it’s a big risk.
DAN MURPHY: Kara, do you agree, disagree?
KARA MANGONE: No, I agree.
And one area that it’s prompting for me that I’ll just expand upon a little bit is—so, many of the assumptions that have made—and you know, it could be a controversial document—but the IAEA net-zero, you know, 1.5 degrees scenario—one of the really crucial elements that are included in that discussion is actually around consumer behavior. And I think a lot of what is often talked about on decarbonization and climate goals and energy is: how do we balance 1.5-degree ambitions, and how do we think about that through the supply side. But there are assumptions in that report that look at, you know, how quickly we’re driving our cars, can we—are we able to cool our houses in a different way, are we able to tolerate slightly warmer temperatures. Those are actually pretty significant impacts.
And so, in my mind, one of the big areas from a risk perspective that we do need to be thinking about—I mentioned there’s access, affordability—how does this look in emerging markets, developing markets? And in developed markets, how can we do our fair share to make some of these consumer changes? And at the policy level, how can we incent some of those changes?
DAN MURPHY: And the incentives are really important as well.
Sorry, Leo, did you want to say something?
LEO SIMONOVICH: Yeah, I was just going to pick up on that point around incentives, and say, you know, when we talk about security in general and risks, those that are in the profession tend to be a bit gloomy. And if you combine all the risks and you worry about cyber, supply chain, you’re not going to sleep well at night. And I think we need to take a step back and think about this more holistically. Think about climate change, decarbonization, digitalization and security going hand in hand, and prioritize those in the blueprints that we’re putting together.
Very often, security seems an afterthought. It’s not built in. It’s oftentimes bolted on. And so, the approach should be, through partnership that includes OEMs like us that have put a lot of large equipment out there in the physical world, with some of our digital domain expertise to begin to understand the risk. Because once you understand the risk and you can get insights into it, then you can put your arms around it and then do something about it, and for that visibility is really key.
DAN MURPHY: I wanted to pivot the conversation over to some of the solutions that we see out there.
One of the most fascinating things that I’ve heard over the course of the past couple of days was a comment that was made by the ADNOC Group CEO, Dr. Sultan Al Jaber. He said, we cannot unplug from current energy system before we have built the new one, and I thought that was just a perfect way to summarize what we’ve seen over the past couple of years.
So, in order to expand on that point, what would you say are some of the solutions we need to accelerate the decarbonization of the power sector? Dr. Khalidi?
ABDURRAHMAN KHALIDI: Thank you. That’s a very important question, and if you allow me a little bit of time to address that.
The world right now—not only China and India, including the United States—in the energy sector is heavily dependent on coal—this is a fact—more than 30 percent. In the region here and elsewhere, when we have gas, we still have simple cycle gas power plants. We still are running at power plants that are 30 percent efficient, while the latest technology is 64 percent efficient.
Now, the world—according to all statistics—you look at many, many scenarios—up to 2050, there will be no one solution that fits all. We’re heavily going to be investing in renewables. This is definitely going to happen. The fastest growing energy market will be renewables, mainly solar and wind. But you cannot depend on them alone because of all the issues related to intermittency, security, et cetera. In addition to that, there is a physics-based reason. You need to have in your system, in your grid, you need to have a firm, synchronous energy that depends on large rotors. We’re not going to go into details there.
But think about that—to have a stable grid, you need to have synchronous assets running in addition to the solar and wind. We believe that the world has to look at many options. We have to fund and we have to incentivize. Otherwise, can I ask somebody here who signed a twenty-year agreement with an off-taker—twenty years with a certain tariff—and you tell them, you know, what, you’re using gas or you’re using diesel or using coal—you need to decarbonize. But you know, what? I’m not going to look at this twenty-year-old contract. I’m not going to—how can he work? If there is no carbon credit, if there is no incentives from government, it’s not going to work.
It’s a massive problem. Here’s why. The countries we’re living in—UAE, Saudi, Kuwait, Qatar—have invested hundreds of billions of dollars on the assets, so you’re not going to unplug it like Dr. Sultan said. You have to build up an alternative, and we think that renewables plus gas power could be a good combination. Why gas power? Because—maybe I’ll talk about it in the next one. Because if you invest in gas technology, you’re not locked in CO2. Don’t think of gas power that it is natural gas, no. Gas power can be completely zero carbon, all right? Zero carbon gas technology, it gives you the firmness on the grid and allows you to decarbonize.
But guess what? You need to start from now. As we said we heard certain commitments by 2030, eight years is not a long period to decarbonize. You need a lot of time, investment, incentives and more importantly, which we’ll talk about, hopefully, policies.
DAN MURPHY: So, let’s talk about the level of investment that we’re going to need because, Kara, there’s an enormous capital gap out there. We continually hear about the need for investment into hydrocarbons, the need for investment into renewables as well, in order to ensure that we have a stable and secure energy transition.
Where is that money actually going to come from?
KARA MANGONE: Yeah, it’s a great question.
And the two words I would, sort of start, with—and then let me quantify it—are—how do we do this in a way that is integrated and commercially viable, where we can really leverage as much as we can the private sector to get this done? Our research estimates that it’s going to take anywhere from 100 to 150 trillion [dollars] in capital, about 3 to 5 trillion [dollars] a year—which is an astronomical amount, we’re nowhere near that today—to deliver on the goals that were set forth in the Paris Agreement. And about half of that capital will need to go into renewables and technologies that are at commercial scale today.
But the other half, very importantly, will need to go into carbon capture, into hydrogen, into direct air capture, into sustainable aviation fuel, e-fuels—technologies that are not yet being adopted at commercial scale because they have not hit the price point where that can happen for a lot of companies. It’s not meeting their thresholds when they look at energy capex decisions.
And so, I think what that tells you is we’re going to need a little bit of both. We’re going to need to continue to scale up investment in decarbonization. We’re investing—we’re at about a third of the renewables capacity that we should—where we should be to align with what was set out in the IAEA net zero report—so a lot more investment in decarbonization, renewables.
But back to the point that I mentioned at the beginning, how do we do this in a way that is commercially viable? Which means that we cannot pull out financing from the exact sectors—the oil and gas sector, metals and mining, real estate, agriculture—these sectors that are really crucial to transition, that actually need the capital, that need the support to be able to execute on that.
And then the last piece I would add on that is, public-private partnership can be very powerful when you’re looking at ways to actually make technologies and/or investments in regions commercial when they may not be there, you know, at the moment today. And blended finance is a great way to do that. We are piloting this, actually. Goldman Sachs has created an innovation facility focused on South and Southeast Asia and ways that we can actually look at low-carbon solutions.
And we’re working with the Asian Development Bank to be able to do that—and Bloomberg Philanthropies—and I think that’s a great example of—there’s a lot you can do within the private sector to—you know, to support these industries and to support these technologies. But then when it’s not really an opportunity, it may not hit a, you know, internal rate of return or cost of capital decision within a company—how do you actually come together with others, with partners, with development banks, with nonprofits to be able to really accelerate the transition?
DAN MURPHY: And not just that, but bring the cost down –
KARA MANGONE: Yes.
DAN MURPHY:—to a point where it’s going to be accessible.
André, did you want to speak to that as well?
ANDRÉ PIENAAR: Dan, I think innovation has a really important role to play here, and so, as a venture capital firm, at C5 we’re very focused on investing in innovation in the advanced nuclear sector. And we’ve seen a complete sea change in the safety and security of nuclear reactors with an onset of small modular nuclear reactors as a major form of innovation, and in this regard, the US is leading this market, the development of this market globally. And alongside renewables and this bridge which we need to build from existing industries, I think advanced nuclear is a very important contribution to make, to provide a secure and always a source of fossil-free energy for the future to enable us to reach these goals.
DAN MURPHY: As I understand it, the company just made an investment into a business called X-energy. Is that correct?
ANDRÉ PIENAAR: That’s right, we’ve invested in X-energy, one of the leading advanced nuclear companies in the US. X-energy is building the first small modular nuclear reactor for Washington State and is really—alongside TerraPower—leading the innovation in this sector.
DAN MURPHY: So, if nuclear can be part of the solution, why is Germany turning the lights off on its nuclear reactors?
ANDRÉ PIENAAR: Well, Elon Musk was in Berlin last week, and he made a point of emphasizing the importance of Germany not switching off its legacy nuclear reactors, and I think the legacy nuclear industry has a very important role today. Today, it produces up to 50 percent of the US’ carbon-free energy. In the U.K. it’s about 30 percent. Sweden derives 40 percent of its carbon-free energy from the nuclear sector.
So, I think the legacy nuclear industry has a very important role to play. And then we have the promise of small modular nuclear reactors and, beyond that, the promise of nuclear fusion, which will be the cleanest form of energy that civilization has produced.
DAN MURPHY: Dr. Khalidi, agree?
ABDURRAHMAN KHALIDI: Yes.
DAN MURPHY: I know it’s not in your wheelhouse, but –
ABDURRAHMAN KHALIDI: By the way, in GE—I just want to clarify—we are in SMRs, and we are already developing that. We believe in it. I believe in renewables because we’re funding and doing investments in hydro, in solar, and wind—offshore, onshore. I am in fossil-free, including the hydrogen. We have capabilities of running 100 percent on hydrogen, but as Kara said, we need investment in carbon capture. People don’t know that right now the state of the art of carbon capture is very expensive, and unless serious funding happens it’s not going to be easily deployable so there will be many investments.
We are very bullish, by the way, about the nuclear, and we believe the SMRs—the 300 to 350 megawatt has a big future. And we are going to invest in it. And you’re going to hear, actually, announcements from GE on this.
DAN MURPHY: What type of announcements?
ABDURRAHMAN KHALIDI: Well, there will be announcements.
DAN MURPHY: OK.
Nuclear is still so controversial, though. So, how do you get around that?
ANDRÉ PIENAAR: I think the innovation in the nuclear sector has really changed the safety and security debate around nuclear power. Small Modular Nuclear Reactors—the Generation III, the Generation IV reactors—can’t melt down under any circumstances, and this has really changed the whole debate around nuclear.
I also think the amount of capex for the deployment of SMRs is much more limited and modest than in the case of the legacy nuclear industry, which required very significant amounts of capex deployment. SMRs are also aesthetically much more attractive, much easier to blend into an urban landscape than the legacy reactors, which were very striking and required a massive safety perimeter.
So, I think the more people learn about nuclear power and understand that nuclear power is really assimilation of the way in which the sun creates energy. It’s really a form of star power. I think the debate is changing and shifting and there’s much more support for nuclear energy as being part of the solution.
ABDURRAHMAN KHALIDI: I believe in energy mix throughout.
And one more thing, let’s not think of the world at one speed. There is not a singular. We have Africa—you know, until now we have 800 million people without power, zero power. This is what the world is. It’s not moving at the same speed. Not everybody has the ability to spend capex. Hopefully, I mean, the OECD might help like in certain countries like South Africa or Indonesia or Malaysia. The world is complex and will continue to be so. And I’m afraid the latest developments in Europe have made it even more complex.
LEO SIMONOVICH: Yeah, I’ll tell you what’s not helpful though, when nuclear power plants get hacked, as we saw most recently in the news in the US—and in other parts of the world, and that tends to set us back. It becomes a great showstopper. Because to operate these plants efficiently, safety, you need digitalization.
And so, I’m—you know—just to pick up on some of the themes around unlocking innovation, it does require public partnerships, it does require collective defense, and the way to do that is to bring folks—traditional companies that have been around for a long time, like ours, with some of the leading innovators in the space and also the asset owners. Because unlocking the innovation cycle requires capital, but it also requires an industry that’s very safety-focused. It requires proven-use cases.
So, we, for example, at Siemens Energy, we partnered with New York Power Authority—the utility that supplies power to the city of New York—to develop a center of excellence on cybersecurity—on industrial cybersecurity—first of its kind in the world. And the idea behind it is very simple—to create a school, a monitoring center in a lab, where you get to test new and emerging technologies that are coming out of the start-ups, get them proven out, and then put some capital behind it to get it to scale.
This is the kind of innovation cycle that we need to bring to small and medium-size players that are increasingly being hacked because we’re only as good as our weakest link.
DAN MURPHY: Leo, you had a great quote in one of your recent research reports. You said, without cybersecurity the digital foundation of the energy sector’s new business models remain at risk, which speaks to the core of exactly what you’re saying there. I just thought it was interesting. I wanted to share that.
LEO SIMONOVICH: Yeah, and it’s something that we at Siemens Energy really believe because what we see—and we were early to this problem because of Stuxnet—what we see is that in order to accelerate the energy transition, asset owners have to become digital companies. But in order to become digital companies, they have to become cybersecurity companies, and for that to happen, it needs—cybersecurity needs to be put at the core of the business model, which means that it needs to be priced in. And we need to be able to differentiate on security to build trust with the ecosystem up and down the supply chain.
KARA MANGONE: I’ll just add, I do think there are models that we can and should be leveraging and the way that we start to frame cybersecurity in the context of, as Leo was saying—how do we actually make sure that this is not just a potential risk, as we think about different technologies, but also, we look at companies who are—have built infrastructure to be able to proactively manage it and that being part of the solution.
And one—I think one great frame that we have for this is what we’ve seen within the ESG and sustainability space on climate disclosure. And we now have in the US as of last week a proposed mandatory climate disclosure rule—it’s 500 pages, it’s quite comprehensive—but I think what that tries to do is it tries to create a disclosure regime, if you will, for how to actually evaluate companies and how effectively they’re looking at something like cybersecurity.
And so much of this conversation in my mind is pivoting from just a really narrow focus on how do we invest in green at all costs to a very integrated solution, a new era, if you will, of how we’re thinking about energy broadly that weighs things like access, that weighs things like security, and for that I think we do need to have more established models and frameworks to be able to evaluate something like the potential impact of cybersecurity on a given business.
DAN MURPHY: And just speaking about some of those frameworks, I also wanted to ask you, Kara, when look at sustainable finance and where this is going, do you think that the current ESG models are fit for purpose? Are they working, are they not working? What would you like to see evolving in that space?
KARA MANGONE: I think there are elements of ESG which has really been powerful. I think ESG at its best is really a way to evaluate certain factors or considerations in the investment process that are—may not look financially material today but may be financially material in the future, and a lot of the topics we talked about—supply chain, things like human capital, climate, potential climate risk on your business—I think that at its best it allows you to do that.
There are frameworks for that. It’s obviously contributed significantly to a lot of the investment and awareness around decarbonization, which has been really helpful and constructive. But I think there are elements that have been challenging, and a lot of that gets at this conversation we’re having around supply side. If part of what we’re doing is just creating bright lines around sectors are good and sectors that are bad, that is not going to help us optimize for a very integrated solution that, again, looks at reliability, access, clean.
And so, I think the more that we can look at these things from a very holistic perspective, supply chain is really crucial. I think that’s where we need to really beef up capabilities so that this isn’t about good versus bad, but it’s about optimizing for a more holistic, inclusive transition.
DAN MURPHY: Dr. Khalidi, did you want to speak to that as well? What principles do you think policymakers should build climate action and regulations around?
ABDURRAHMAN KHALIDI: Three things I want to talk about in terms of policy, and I’ll be brief this time.
Number one, policymakers should think about overall goals for decarbonization, and they set the timeline for it—like this country is talking about 2030 goals, 2050—but they should not dictate how to reach that level of decarbonization. Let the market evolve. Let the technology evolve. Because, trust me, there are a lot of questions unanswered. Nobody knows the truth, and nobody can control that. Let me the market dynamics, including the banking sector and others, decide how to approach because I don’t think there is one size that fits all.
Number two—and this is very important—how can you start with NDCs—so great, published with certain criteria—how can you bring this down to Earth with carbon economy incentives? How would you deal with locked in, as I said, PPAs or Power Purchase Agreements and others? You need to take those NDCs and put a framework that makes sense within a market economy which is evolving.
So, it’s very important that policymakers when they do these very, very—in my mind, very aggressive goals for—whether 2030, I’m going to name a country here without naming it—where it said by 2030 we’re going to reduce—half of our power will be on renewables. And every expert who looks at that, he’ll say this is not possible, all right?
So, it has to be practical. They have to help with the incentives. The carbon credit or the carbon economy, how would people be paid for that? Because doing—if you’re going to switch to hydrogen, say—suppose you have the capability right now to switch to green hydrogen right now in a power plant. Who’s willing to pay three times more for the fuel which is hydrogen? Who is? Who’s willing to pay three times of his electric bill?
The last thing in policy, it has to be much faster. We don’t have as much time as people think. 2030 and 2050 is not far away.
DAN MURPHY: André, do you have any thoughts on that? What incentives, structures, solutions, regulatory action would you like to see from policymakers in order to get this moving in the right direction?
ANDRÉ PIENAAR: I think when it comes securing the energy transition and cybersecurity, in particular, the US government recently stepped up its requirement for reporting from industry on cybersecurity incidents. The SEC for some time have required material incidents to be reported, but critical infrastructure providers now have to report every incident back to the government. And I think data sharing between the private sector and the public sector and inside the private sector is really, really important. And a practical example, which Leo has given, of the New York Power Authority, which is supported by data from Siemens and is collated in the cloud through one of our portfolio companies, IronNet, to share threat intelligence, I think will become much more important.
And Kara last night at dinner made the point that ESG and the energy transition will require not only a major asset reallocation but also one of the biggest data shifts. And I think the way in which we apply data, the way in which we manage that data, secure it, also use it to accelerate, as Aba said, for purposes of impact through both machine learning and artificial intelligence will become much more important in the future.
DAN MURPHY: Leo?
Sorry, Kara?
KARA MANGONE: No, go ahead, go.
LEO SIMONOVICH: No, please.
KARA MANGONE: No, go.
LEO SIMONOVICH: All right.
I just think that a lot of the technology—we have an incredible innovation engine. A lot of the technology to tackle some of the challenges is available today. Artificial intelligence offers enormous promise to be able to detect and stop attacks, and yet, that technology is not being scaled. It’s not yet affordable for a lot of small and medium-size players.
So, if we think about a policy framework, we need to unlock capital. We need to convene public and private sector in adoption of that technology, and we also need to align stakeholder interests between national security, the regulatory frameworks, and the private sector.
And as importantly, we need to recognize that the energy system is changing and that we can’t just look at bulk electric assets, that we have to look at the whole value chain, and provide solutions that expand into renewables, distribute it, because—and frankly, I mean, the other thing I’d say is, we need to solve some really boring problems in this space—things like patching—because they tend to be the source and are easily exploited by the bad guys. And hopefully, we can do that between some of the new shiny things and some of the older boring things.
DAN MURPHY: Kara?
KARA MANGONE: Yeah, I’ll just add two points.
One is on data. I couldn’t agree more. I think data is absolutely crucial. You cannot manage if you don’t have the right tools to measure, and some of it is actually—there is a lot of data that’s out there. It’s not always in the most accessible way. And when I say data, I’m talking about things like emissions but also things like weather pattern and government information that you need. I’m also talking about supply chain-related information. That is really crucial. Investors need that information to be able to, again, evaluate how they’re able to deliver on the objectives that they’ve set out.
Just as a data point, 90 percent of GDP is now represented by private sector net zero commitments, so it’s a very significant amount. And so, what needs to happen in the market is we need not only the tools and the data but also the right metrics. So, we spent a lot of time talking about looking at, for example, intensity of carbon instead of just absolute carbon emissions because that’s going to drive the right behavior that we’ve talked about today in terms of not just walking away from certain sectors over the next few years. So, I think that’s really important.
And then, a second point more broadly on solutions and what to see from policy, I think signals and incentives are very powerful. I mean, we saw in the US a tremendous amount of uptick in solar that’s through the solar tax credit. That was part of what has happened and allowed that to really develop into much more commercial scale. There’re things that have been proposed in the US in Build Back Better like 45Q for carbon capture and sequestration.
But I think many more incentives and tools—and also, signals—we talked about this a lot yesterday, but having the right signals are also really important when you think about as an energy company how you’re going to make the appropriate capital allocation decisions.
DAN MURPHY: It’s been a fascinating conversation so far. Unfortunately, we are rapidly running out of time.
But I did want to thank my panel for joining us today, and we do have another exciting panel coming up for you right after this.
So, please give them a round of applause that is, Dr. Aba Khalidi, chief technology officer at GE; Kara Mangone, managing director, global head of climate strategy at Goldman Sachs; André Pienaar, the founder and chief executive of C5 Capital; and Leo Simonovich, VP and global head, industrial cyber and digital security at Siemens Energy.
Thank you, again. We appreciate it.
ABDURRAHMAN KHALIDI: Thank you.
Watch the full event
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Image: Unsplash/American Public Power Association (@publicpowerorg)