With net-zero pathways calling for a dramatic decrease in the production and use of fossil fuels by 2050 — including from within many energy organisations — the industry needs to prepare for impacts on jobs and develop new investment strategies, an industry panel was told.

“Of course some jobs will be lost,” said Connie Hedegaard, a Danish former European Commissioner for Climate Action. “And honestly, throughout history, we have been sort of exchanging positions and some jobs for [others that] were created.”

At Norway-based DNV’s launch of its Energy Transition Outlook, Hedegaard stressed that the industry needs to prepare for this downscaling.

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With downscaling comes stranded assets, posing the risk of lost capital to companies, but the first step, Hedegaard said, is to stop adding more such assets through investments.

“A lot of money is being invested in the oil economy. If we stopped that, if we had clear criteria and transparency to ensure that, in the future we would have less strength in assets,” Hedegaard said.

DNV’s outlook reported on the industry’s progress in moving towards green energy by 2050, and its conclusions were not very encouraging.

In particular, the report forecast that fossil fuels will make up half of the energy mix by 2050, but observed that the application of carbon capture and storage (CCS) technology will not accelerate fast enough to decarbonise the industry, and looks on course to capture only 3.6% of carbon dioxide emissions from fossil fuels by the Paris deadline.

DNV chief executive officer Remi Eriksen said he expected an acceleration in energy efficiency to become a major factor in restraining demand in the next few decades.

But he warned that many governments have missed an opportunity to include transformative policy in their Covid-19 recovery packages that could have been used to improve infrastructure to make it cleaner and more decarbonised.

Geopolitical risk

Norwegian Minister of Foreign Affairs Ine Marie Eriksen Soreide emphasised that throughout the transition, the world will have to pay attention to the geopolitical repercussions of our actions, or lack of action.

“How major international players cope with the transition away from fossil fuel over the next decades will have fundamental implications for the stability of geopolitical regions' power distribution, and also for global security,” Soreide said.

As effects of climate change worsen, countries already at risk of violent conflict bear the brunt of the environmental burden, which could lead to further displacement and resource conflicts.

Soreide said climate change is a threat multiplier, and Norway and other developed countries should not leave others behind.

“Global warming is by default a global problem,” she said. “And that is why there is absolutely no alternative to multilateral cooperation … and there is a very short window for decisive action.”