COP27 as a Reckoning Point for the Energy Trilemma: Hard Truths Remain

I spent a few days at COP27 - the U.N. Framework Convention on Climate Change - with a strategic team from Baker Hughes. We attended to better understand global progress toward meeting Paris Agreement goals and explore new ways we can partner with customers, governments, and other organizations to address the balance of energy sustainability, affordability, and security – the energy trilemma. We also saw and supported customers including  Aramco, TotalEnergies, and AMEA.

Our team took away many insights, some of which have already been shared by Allyson Anderson Book, Zaher Ibrahim, Tameer Nasser, and Tom Millas, to name a few. They are definitely worth reading.

For me, COP27 proved a reckoning point for the energy trilemma. Are we making progress? Not nearly enough. Is there hope we can take action and fix it? I believe so, partly because the alternative is just not tenable.

Two years ago I began speaking about “three hard truths” related to the energy transition. These are not commitments to change – we have net-zero pledges for that! – but instead they are realizations that must lead to action. For Baker Hughes, these truths light a path that continues to guide us.

COP27 made it clear that these three truths are just as hard, and just as true, as they were two years ago, and they are now critical to solve for the immediate energy trilemma, not just the longer-term energy transition.

1.    Without major acceleration, industry cannot meet its net-zero targets – so we must accelerate the adoption of current technologies AND develop more at the same time. A dual approach to implement efficiency measures today and invest in new energy solutions for the future is unavoidable. Every organization must have such a strategy in place to balance the three pillars of the trilemma.

What action is being taken? There are signs of progress. At COP27, I witnessed the signing of an agreement between AMEA Power, one of the fastest growing renewable energy companies in the Middle East, and Baker Hughes to develop AMEA’s first green hydrogen project in Egypt.  This is the perfect example of leveraging today’s technology – we have nearly 60 years of hydrogen solutions experience using our compression technology – while investing in new energy solutions.

2. There is no one climate savior: reliance on hydrocarbons will not disappear, so efficiency matters. For at least the next few decades, oil and gas will continue to play an important part of meeting global energy demand – even in the most aggressive of energy transition scenarios. Efficiency is the unsung hero of net zero, representing upwards of 40% of total emissions reductions needed to meet Paris Agreement goals according to the IEA.

What action is being taken? More and more energy companies are recognizing the role efficiency can play in reducing greenhouse gas emissions. Just before COP27, Abu Dhabi National Oil Company (ADNOC) and Baker Hughes signed an agreement to explore R&D opportunities for technologies to reduce emissions and raise efficiencies across ADNOC’s projects.  These are oilfield services and equipment projects – the core of hydrocarbon production – where we will aim to make production more efficient, reducing both emissions and costs. This is the action we want to see more of as we approach COP28.

3. There’s no path to net zero without partnership, integrated thinking, and common sustainability standards. Our business was built on partnership and service. Today, we know strong collaboration matters more than ever. COP27 presented a rare opportunity for energy producers, technology and service providers, buyers, policymakers, and the community to connect directly and drive integrated thinking for the greater good. These are the moments where progress is begun, and in many cases, advanced.

What action is being taken? Already, coalitions are accelerating deployment of technologies. Egyptian LNG awarded a feasibility study contract at COP27 to the Bechtel-led Coalition for Decarbonization. This significant coalition involves 7+ parties: Enppi, Petroject, GE Digital, HSBC, NBVE, and Baker Hughes. Together, we will assess implementation of a zero-flaring system at the Egyptian LNG export terminal. Partnerships like this are 100% necessary to achieving a net-zero emissions future, and it is exciting to be part of this progress.

If the three hard truths still apply after COP27, is our trajectory towards net zero any different than it was two years ago?

No. We are on track, but there is clearly more to do. Seeing what we are beginning to accomplish, I believe our direction  has not changed, but some elements are moving faster than others:

1. The three hard truths are playing out differently in each country and each region.
2. We must not just accept regional differences, but embrace them. Let us not apply broad goals across the globe for the short term at the expense of long-term success.
3. The focus on partnerships and collaboration has grown even more in importance.
4. We must keep working towards integrated thinking, especially as we get closer to common sustainability standards and a growing acceptance that the energy trilemma must be balanced.

As the world turns towards a post-COP27 environment, these elements come together to drive focus on balance and momentum within the energy trilemma. A balanced and sustainable energy ecosystem will ensure quality of life remains paramount for all, without veering off the path towards net zero.