Most people think of “oil” in terms of motor fuel and lubrication, but oil and its byproducts are major components used in the production of plastics and chemicals, as well as many lubricants, waxes, tars, and asphalts. In the wake of the COVID-19 pandemic, oil prices collapsed, and we are living in an increasingly challenged economy. Companies with a moderate to strong plan for transitioning from oil to renewable energy sources are finding their progress delayed.
Consulting firm Deloitte surveyed company executives to see how these factors have changed the pace of energy transition from fossil fuels to renewables and whether energy and industrial companies will remain committed to their decarbonization goals. Deloitte’s report, Navigating the energy transition from disruption to growth, examines progress to date in the energy transition, the decisions management teams in the energy and industrial sectors are facing, and how the current economic environment could affect the transition’s future direction. As part of this study, Deloitte surveyed 600 C-suite executives and other senior corporate leaders globally for their perspectives around low-carbon trends and strategies.
- Despite current economic challenges, energy and industrial leaders are expected to remain committed to their long-term plans to reduce fossil fuel reliance.
- 80% of executives surveyed across energy and industrial sectors reported already having or developing a strategy to reduce reliance on fossil fuels.
- While a temporary pause in spending on some priorities and technologies is expected, as companies await a recovery, they are unlikely to be canceled completely.
- Momentum for action on decarbonization, reinforced by growing consumer and stakeholder pressures, will likely not be compromised by present circumstances.
The energy transition is having a mixed impact on the oil and gas sector, as decarbonization is expected to slow long-term oil demand. Most leaders in this sector however appear to recognize this reality and are rethinking where and how they do business in a decarbonizing world. Many are making the energy transition a strategic priority, as evidenced from the survey results detailing the scale of plans and commitments in place.
Survey respondents overwhelmingly cited technology as a key enabler of progress in the energy transition. While a near-term pause in spending on new technologies is expected, they are unlikely to be canceled completely as these investments help increase operational efficiency, reduce carbon emissions, and benefit companies in the long run.
Indeed, digital technologies that improve energy efficiency were ranked as the top priority for oil and gas (59%); and construction (53%) executives surveyed. Nearly 70% of executives who reported that they have a sustainability strategy in place, cited digital technologies supporting sustainability and energy efficiency as the key driver.
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