The trilemma facing the energy industry and how it’s dealing with it 

• The energy industry is facing three challenges: the war in Ukraine has put energy security in the spotlight; coal output is rising; and, energy prices have increased.This global survey of the energy industry highlights the impact of this trilemma and how the industry is dealing with it.Investment in clean energy continues, however.

The energy industry is facing a trilemma. Russia’s invasion of Ukraine has exposed the energy industry and the world to the fragility of energy security. Coal plants are being fired up and renewables projects are coming under pressure. And, energy consumers are being pressed on the cost of energy. This trilemma is also in transition. In a complex and difficult year for the energy industry, we see the trilemma leading to competing priorities. But, in a decarbonised energy system, energy sustainability, affordability and security all pull in the same direction and the public and private sectors can resolve this threefold problem with a new approach to scaling and implementation.DNV has just conducted its thirteenth global survey of more than 1,300 senior energy professionals, plus in-depth interviews with industry leaders from across power, renewables, oil and gas and energy-consuming industries. This research explores the confidence, sentiment and priorities for the energy industry across the world in the year ahead. It includes participation across the value chain, from oil and gas producers and renewables generators to the power sector and end users.

Key energy industry findings for 2023

In a complex and difficult year for the energy industry, the trilemma is leading to competing priorities. Few in the industry believe the transition will deliver secure, clean and affordable energy in the next decade to all parts of the energy system in their operating countries. Perhaps the most concerning finding of this research is that only 39% feel optimistic about reaching their organization’s decarbonisation targets, with as much as 29% feeling pessimistic about this goal.

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What’s the World Economic Forum doing about the transition to clean energy?

Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated. Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010. Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system. Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.

To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission. Is your organisation interested in working with the World Economic Forum? Find out more here.

Markets are striving to keep up with the transition

Optimism remains strong across the energy industry, but only the oil and gas sector shows improved sentiment.

The oil and gas industry has increased expectations for oil and gas investment in the year ahead, as a record year refines what acceptable profits look like for the sector. Oil and gas companies are slowing their shift into areas outside of core hydrocarbon businesses and holding back their focus on decarbonisation compared to 2022.

The renewables sector is expanding at speed, despite the challenges of power grid capacity, energy price volatility, inflation, supply chain failures, regulatory red tape and delays in supporting infrastructure projects.

There has been a sharp drop in the proportion of electrical power respondents optimistic about industry growth for the year ahead. Half now say they are more focussed on short-term than long-term strategies, up from 34% a year ago.The energy industry has strong expectations to increase investment in clean energy sources, carriers and enablers, however. Half of the energy professionals involved in the research expect their organizations to invest in low-carbon hydrogen/ammonia (52%) in the year ahead. There are similar proportions when it comes to wind (49%) and solar (46%). Over a third (37%) expect their organizations to increase investment in carbon capture and storage (CCS), while 57% say CCS will scale up rapidly in