What happens when transitioning towards sustainability is against business interests?

If you look at today’s energy economy, and let’s say the last 20 years, and one of the things we have learned is that there are immense vested interests in maintaining a status quo. Not all of this is illegitimate or irrational. Companies, investors, technology developers have invested billions in a particular business model, in particular technologies, and in particular long-term investment strategies. So because of, let’s say, the need to move towards a low carbon economy, many of the assumptions that guided and drove these investments, technological developments, corporate strategies 30 years ago have suddenly been put into question. And the reaction from the established energy sector is to some extent a rational reflex.

What we also have learned is that that is not a reason not to change paradigms and not to change pathways. And clearly, what we have seen just in the last 20 years is through the– well, one could almost call it revolution in the energy markets of the world and the emergence of renewable energy technology– as having demonstrated that at the end of the day, both the regulators, public policy and governments need to factor into these transitions an understanding of, how do we help those who are the backbone of today’s energy economy make these transitions perhaps less threatening?

At the same time, those who are making good returns on today’s energy economy cannot define society’s choices in terms of imperatives such as moving towards a low carbon energy system, managing to reduce pollution and emissions, which are killing millions of people every year across the world. And subsidies and also taxes and price signals are how through governments, societies can express their preferences. And I think from here comes a very interesting set of opportunities. If you can correct the signals that society sets for the actors in the market, they have often proven that they can adjust very quickly.

And the cost of transition has most of the time, when it comes to environmentally-driven change factors, been much lower than people predicted and the benefits arose much more quickly than people were led to believe. That is the story of 30 years of environmentally-driven regulation, public policy, and ultimately actually allowing and catalysing technological innovation, new jobs, and new markets.