Investors and financial institutions active in Europe should step up their involvement in and support for the energy transition, a senior executive at consultancy Bain and Company told a conference in London.
Pro-energy transition sentiment in Europe has been building up for a longer time than in other parts of the world and has prepared countries and societies in the region to support the transition effort, Bain chairman Peter Parry told an audience at the Reuters Energy Transition Europe 2022 event.
“The customer base in Europe has been ready for longer here,” he said.
However, capital deployment has not kept pace, he said.
“Investors have not been bold enough yet,” Parry said, adding that “for all those involved in infrastructure and financing”, commitment in engaging the transition sector and deploying capital to make the transition possible has to increase significantly.
“The next generation will look back and ask: Were they bold enough?”
Fellow panelist Ana Paula Marques, executive board member at Portugal-headquartered utility EDP, stressed that the execution side of Europe’s transition, which involves the pace of deployment of infrastructure and the framework for projects, is hindered by the complexity of legislation.
Europe is “sending different signals in terms of regulations”, she said, adding that the complexity of the European Union regulation directly impacts “the framework for execution”.
Speakers contrasted European legislation and financial instruments with the recently passed US Inflation Reduction Act (IRA) which, in their view, clearly spells out the degree of financial support available for projects while defining the legislative boundaries for operator compliance.
In Europe, meanwhile, financing is expected to be covered by a number of different funds and the parameters for allocations are perceived as less defined.
Marques said the IRA baseline gives investors “significant stability” over the long term and enables financiers to take positions on new projects.
A delegate told Upstream on the sidelines of the event that a functional and understandable regulatory backdrop is necessary to enable a faster pace of capital deployment.
“Investing in a highly volatile environment, where boundaries shift from year to year, is extremely hard,” said the delegate, an energy consultant who asked not to be identified.
In a swipe at the UK, he said: “If your prime minister, say, is changing every few months and you don’t know what the next government is going to do, investors can’t plan ahead and will be cautious.”
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