Middle Stage of U.S. Energy Transition Poses Challenges, Opportunities for Companies

Amy Myers Jaffe, one of the leading experts on global energy policy and sustainability, says we’re in a particularly challenging period in the energy transition in the U.S., a period where we still rely on old energy systems - like gas stations - while at the same time are trying to integrate all the newer renewable energy systems – like EV charging stations - that are necessary to combat climate change.

This “Mid-Transition” stage poses unique challenges and opportunities for energy companies, according to Myers Jaffe, Director of NYU’s Energy, Climate Justice and Sustainability Lab, who spoke during the U.S. segment of Societe Generale’s global Positive Impact Week conference.

Among the challenges, knowing what kind of future facility to greenlight has never been more complicated, she told the audience of energy company executives and investors. 

“Companies don’t necessarily have the perfect tool yet to make these decisions or how to calculate the financial risks.  It’s a very complicated time to be doing these transactions.”

For example, she pointed out how electric car charging stations are expensive right now to operate and gas stations are not because they’re fully depreciated in many locations in the U.S.  However, if you own a gas station in California, in a region that’s already substantially converted to electric vehicles, the volume flow for that station could potentially go way down over time and, therefore, become expensive to run.

So, the concept of what is expensive to operate is going to change over the course of the ‘Mid-Transition,” she said.

“When you think about the next 20 years, companies need to move away from what is expensive today and toward the costs and expenses for the future, 10 to 20 years from now, and decide what to greenlight or not and how to finance it and try and calculate all the far-off risks,” she said.

According to Myers Jaffe, successful companies are going to be those that will be able to tap the opportunities of the energy transition and still manage the associated volatility.

“We are in the mid-transition and as a business the question is, how am I going to make money in this period of high risk, high volatility and great opportunity?”

To watch the Positive Impact Week sessions, you can access the REPLAYS here: https://positive-impact-week.societegenerale.com/login