2023EnergyTransitionOutlookSurveyReportNovember20222023ENERGYTRANSITIONOUTLOOKSURVEYREPORT2TableofContentsExecutiveSummary.....................................................................................3IndustryInsightsonEnergyTransition..........................................................................7PolicyandRegulation..................................................................................17Green(er)andCleanEnergySolutions.........................................................................26ThePathAhead.....................................................................................37Methodology.......................................................................................38EnergyandNaturalResourcesSector.........................................................................41WombleBondDickinsonataGlance..........................................................................422023ENERGYTRANSITIONOUTLOOKSURVEYREPORT3ExecutiveSummaryInayearofsuddengeopoliticalshiftsandassociatedmarketupheaval,energysectorexecutivesandinvestorsareadjustingtheirenergytransitionstrategiestorespondtotherisingpressuretoaccesssufficient–andideallylower-carbon–energyintheshortterm,whilemovingtocarbon-freerenewablesourcesinthelongterm.Accordingly,manyindustryleadersaredeepeningtheirfocusondecarbonization,“cleaner”technologiesandfullyrenewableresources.However,someinthesectorarealsodippingbackintolegacyfuelsourcesamidmorerecentsupplyanddemandimbalances.ThesefindingsfromtheWombleBondDickinson(WBD)2023EnergyTransitionOutlookSurveyextendourGlobalEnergyandNaturalResourcesTeam’songoingefforttoprovideinsightintointernationalprogresstowardanet-zeroeconomyandthefactorsinfluencingthepaceoftheenergytransition.Thisyear’sresultsprovideafreshperspectiveastohowexecutivesandinvestorsinthesectorarenavigatingthechallengesandseizingtheopportunitiesamidunprecedentedandchaotictimes.Amongthemajortakeaways:•Atleast70%ofbothenergyexecutivesandinvestorshavechangedtheirtransitionstrategiestosomedegreeoverthepastyear.•Energyexecutivesdeepenedtheirinterestinthreekeyareasthatarevitaltoenergytransition:1)energyefficiency,2)electrificationinareaslikesmartbuildings,efficiencytechnologies,andtransportation,and3)optionsforthedevelopmentandexpandeduseofbiofuels/biomass.•Whileinterestinhydrogenandgeothermalinvestmentsremainsstrong,mostinvestorsexpectitwilltakeatleastfiveormoreyearsforgreenhydrogenorgeothermaltohaveameaningfulimpact.•Nuclearpowerhasincreaseditsappealasaninvestmentorgrowthopportunity;however,manyinvestorsstillworryaboutpublicoppositiontothetechnology,aconcernsomeexecutivesshare.•WhenitcomestoESG,nearlythree-quartersofenergyexecutivesreporthavingimplementedESGpoliciesorareintheprocessofdoingso,thoughitappearstobelessofapriorityforinvestorsthisyear.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT4SkepticismaroundU.S.climategoalspersists.Eventhough42%ofrespondentssaidtheU.S.is“likely”or“verylikely”toreachPresidentBiden’stargetofdecarbonizingthepowersectorby2035–upfrom32%lastyear–nearlyaquartersaidthatgoalis“veryunlikely,”comparedto13%in2021.Atthesametime,whileexecutivesaremoreconfidentthantheywereayearagothatenergycompaniesarepreparedtoreduceGHGemissions,investorconfidenceonthatfronthasslipped.Societalexpectationscontinuetobeacriticaldriverforthisglobaltransformation.Butsoisincreasedawarenessoftheenergysecurityimperative.Atthisyear’sAsiaPacificPetroleumConference,energysecuritywasamongthehottesttopics,withenergyavailabilityakeyconcernforgovernmentstheworldover.ThewarinUkrainehasdisruptedenergysupplies–mostobviouslyinEurope–whiledrivingconsiderabledemandshiftsacrosstheglobe.Thesefactorshavedrivenheightenedinterestinrenewablesandothercleanpowersourcesasenergypricessurgeworldwide,withglobaloilandgassectorincomesettoriseto$4trillionthisyear,doublethe2021levelandmorethantwiceitsfive-yearaverage,accordingtotheInternationalEnergyAgency.Indeed,marketshiftsandnewpoliciestoaddresstheglobalenergycrisistriggeredbyRussia’sinvasionofUkrainecouldexpeditethecleanenergytransitionawayfromfossilfuels,assuminggovernmentsfollowthroughonthosepolicygoals,theIEAsaidinits2022WorldEnergyOutlook,releasedOctober27.Manyhopethetransitiontorenewableswillhelpeasethestrainonindustriesandconsumersfacingasharpriseinenergycosts.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT5Tothatend,oilandgascompaniesareinvestingprofitsinrenewablesprojectsaspartofalong-termstrategy.Inthemediumterm,theacceleratingdevelopmentofdecarbonizationtechnologiesdemonstratestherecognitionthatfossilfuelswillbepartofourenergysecurityequationforyearstocome.HereintheUnitedStates,sweepingdomesticlegislationsuchasthe2021InfrastructureInvestmentandJobsAct(IIJA)–whichcontainedtensofbillionsofdollarscommittedtocleanenergyinvestments,includingmorethan$62billionforDepartmentofEnergy(DOE)programs–gaveasignificantboosttorenewableenergydevelopment.Meanwhile,thisyear’sInflationReductionAct(IRA),themostsignificantU.S.climatelegislationeverpassed,providesconsiderablefollow-onincentivesfortheenergyindustry.Thebill’sapproximately$369billioninfundingprovidesconsiderableinvestmentforcleanenergyproductionandthedevelopmentofcleanenergytechnology,supportfortransitioningutilitiestocleanelectricityandincreasedtaxcreditsforabroadarrayofrenewableprojects,includingthosethatembracehydrogenandcarboncapturetechnology.Againstthisvolatilebackdrop,WBDagainsoughttocaptureattitudesandinsightsinthesectorbysurveyingacohortof130-plusenergyindustryleaders,frominvestorstoC-suiteexecutives,acrossarangeofenergysubsectors,includingoilandgas,renewables,utilities,miningandminerals,andnuclearenergy.Responsesfrom“executives”comprisethosewithC-suitetitles,businessoroperationsmanagersandin-houselegalroles.Oursecondannualsurveyresultsshowthat,despiterisingchallenges,theenergyindustryremainscommittedtoshiftingtomoresustainablepowersourceswhilelookingtonaturalgasasthetransitionfuelofchoicetohelpmanageenergysecurityconcernsasitmovestowardmoresustainablepowersources.KeyFindings•Energyleadershaverespondedtodifficultmarketandgeopoliticalconditionsbyacceleratingtheiradoptionofgenerallycleanerfuelsources.Bothexecutivesandinvestorsexpecttheindustrytoincreaseenergysupply,notablyregardlessoffuelsource,tocounteractcurrentpriceinflation.•AtleasthalfofallrespondentsthinktheIIJAwillmovetheneedleonareasincludingbatterystorage,hydrogenhubsandthetransmissiongrid.Considerablyfewerthinkthatnuclearpowerwillbenefitfromthelegislation.•Respondentsviewedvehiclepricing,lackofinfrastructureandbatterysupplyroughlyequallywhenaskedabouthurdlestoconsumerelectricvehicle(EV)adoption.Insufficientdrivingrangeandlackofcompellingincentiveswerelessofaconcern,likelybecauserespondentsfindthefoundationaltechnologiestobe,atleastinthenearterm,lacking.•Utilityexecutivesareinbroadagreementaboutthebiggestchallengesfacingtheindustry.Farandaway,theycitefuelavailability,supplychaindisruptionsandregulatorycomplianceastheirmostpressingchallenges.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT6CoreEnergyTeamInthechartsandanalysis,responsestosomequestionsdonotaddupto100%duetorounding,andsomeexceed100%becauserespondentswereinvitedtoselectmorethanoneanswer.Responsesfrom“executives”comprisethosewithC-suitetitles,businessoroperationsmanagers,andin-houselegalroles.Forthefullsurveymethodology,seepages38-40.JeffreyWhittleHeadofGlobalEnergyandNaturalResourcesSectorjeffrey.whittle@wbd-us.comLisaRushtonCo-Head,Energy&NaturalResourcesSectorHead,RenewableEnergySubsectorlisa.rushton@wbd-us.comBeltonZeiglerCo-Head,EnergyandNaturalResourcesSectorHead,UtilitiesSubsectorbelton.zeigler@wbd-us.comFranciscoBalduzziPartner,Energy&NaturalResourcesSectorfrancisco.balduzzi@wbd-us.comBradDeVoreHeadofMetals&MiningSubsectorbrad.devore@wbd-us.comDamianGeorginoHeadofWater&WaterInfrastructureSubsectordamian.georgino@wbd-us.comShawanGilliansOfCounsel,Energy&NaturalResourcesSectorshawan.gillians@wbd-us.comDaniellaLandersPartner,Energy&NaturalResourcesSectordaniella.landers@wbd-us.comJedNosalPartner,Energy&NaturalResourcesSectorjed.nosal@wbd-us.comPaulTurnerHeadofCommodities&TradingSubsectorpaul.turner@wbd-us.comJoséLuisVittorHeadofOil&GasSubsectorHeadofLatinAmericaPracticejoseluis.vittor@wbd-us.com72023ENERGYTRANSITIONOUTLOOKSURVEYREPORTIndustryInsightsonEnergyTransition2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT8LNG♦46%37%37%34%21%21%21%21%20%18%13%13%9%9%25%25%17%24%19%18%13%15%26%9%3%5%5%20222021ELECTRIFICATIONENERGYEFFICIENCYIMPROVEMENTSHYDROGENBATTERYSTORAGE(UTILITY-SCALE)CARBONCAPTUREBIOFUEL/BIOMASS<SOLARPVWINDOFF–SHOREHYDRO(E.G.,WAVE,TIDAL)GEOTHERMALNUCLEARTRANSMISSIONINFRASTRUCTURE^WINDOFF–SHOREIndustryInsightsonEnergyTransitionEnergytransitionstrategieshaveshiftedReflectingthestronggeopoliticalandmarketpressuresofthepast12months,79%ofenergyexecutivesand72%ofinvestorshavechangedtheirtransitionstrategiesatleastslightlysince2021,withbothgroupsplacingmorefocusonrenewables,naturalgasanddecarbonizationtechnologies.Thosepressures–alongwithsignificantregulatoryandlegislativeshifts–arepromptingmanyinthesectortoreassesstheirpriorities,needsandcapabilitiesinareasfrommeetingreductiontargetstoimplementingESGpolicies.Anincreasingnumberofenergyexecutivesalsosayenergyefficiencyimprovements,biofuel/biomass,andelectrificationofareaslikesmartbuildings,efficiencytechnologies,andtransportationarerelevantinvestmentorgrowthopportunitiesfortheirbusiness.(e.g.,smartbuildings,efficiencytechnologies,andtransportation/vehicles)<(e.g.,ethanol,methane,agriculturalwaste,wastetoenergy)^“Newtransmissioncorridors”in2021♦Thisanswerchoicewasnotprovidedinthe2021surveyThinkingspecificallyforyourbusiness,whichofthefollowingarethemostrelevantinvestmentorgrowthopportunitiesinenergytransitionatthistime?Pleasechooseuptofive:Thischartreflectsresponsesfromexecutives2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT9“Volatilemarketconditionsarepushingindustryleaderstoincreasetheirfocusonrenewables,withthehighpriceoffuelhelpingtopushthetransitionalong,”saidJeffreyWhittle,globalheadofWBD’sEnergyandNaturalResourcesSector.That’scertainlythecaseforutilityproviders,accordingtoWBDEnergyandNaturalResourcesSectorattorneyShawanGillians,whonoted,“Theelectricmarketismovingtowardrenewablesforfinancialreasons,regardlessofwhatthepoliticalheadwindsare.”Howhasyourcompany’senergytransitionstrategy(investmentoroperations)changedoverthepastyear?Ourplanhaschangedsignificantly10%Ourplanhaschangedsignificantly21%Ourplanhaschangedmoderately46%Ourplanhaschangedmoderately36%Ourplanhaschangedslightly16%Ourplanhaschangedslightly22%Ourplanhasnotchanged28%Ourplanhasnotchanged21%INVESTORSEXECUTIVES2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT1016%24%42%54%64%36%36%36%10%22%28%30%10%20%6%20%10%12%16%8%COALOILDECARBONIZATIONTECHNOLOGIESNATURALGAS(LNG)RENEWABLESMOREFOCUSSAMEFOCUSLESSFOCUSDOESNOTAPPLY/NOTRELEVANTWhichofthefollowingexplainshowyourplanshaveshiftedrelativetothefollowing?Thischartreflectsresponsesfrominvestorswhoindicatedthattheirorganizations’energytransitionstrategieshavechangedoverthepastyear.Whichofthefollowingexplainshowyourplanshaveshiftedrelativetothefollowing?Thischartreflectsresponsesfromexecutiveswhoindicatedthattheirorganizations’energytransitionstrategieshavechangedoverthepastyear.MOREFOCUSSAMEFOCUSLESSFOCUSDOESNOTAPPLY/NOTRELEVANT12%30%38%44%54%28%38%38%34%30%20%22%20%6%10%40%10%4%16%6%COALOILDECARBONIZATIONTECHNOLOGIESNATURALGAS(LNG)RENEWABLES2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT11MarketconditionsappeartohaveinfluencedthischangeMarketconditionsareacceleratingtherateoftransitionanddeterminingtheprioritizationofinvestmentsevenastheneedtomitigateclimatechangeisthefoundationaldriver.Ashighdemandfornaturalgasandfueloutstripssupply,thesectoristurningbacktotraditionalenergysourcessuchasoilandcoal,potentiallyasstopgapmeasurestoensurenear-termenergysecurity.And,withsoaringprofitsandincreasedpressuretomeetESGmetrics,energyexecutiveshaveincreasedcapitalbudgetstoinvestinthedevelopmentofrenewableresources,transmissionandstorage.“Giventheuncertaintyofthetimes,energyleadersseemtobetryingtoextendthelifeofcoalasmuchastheycan,asahedge,”Whittlesaid.“Buttheuseofrenewablesisclearlyontheriseacrosstheboard.”Ofcourse,executivesandinvestorsapproachtheissueofenergytransitiondifferently.Investorsplacemultiplebetsonavarietyoftechnologies,whileexecutivestendtofocusononeortwomostrelevanttotheircorebusinesses.Asyouwillseethroughoutthisreport,thecontrastbetweenstrategyandtacticsisapparentintheapproachesofthesetwogroups.Executivesaremoreoptimisticthaninvestorsthatthebuild-outofthegridandfurtherdevelopmentofrenewableswillcounterrisingpricesExecutivesarefarmorebullishthaninvestorsonthepotentialfornewdevelopmentsindecarbonizationtechnologiesandtheaccelerationofrenewabledevelopmenttocounteractrecentpricehikes.Morestriking,however,isthedisparityinwhatexecutivesandinvestorsviewastheroleenergystoragemustplayinaddressingrisingenergycosts.Thislikelyarisesfromarecognitionbyexecutivesthatstorageisvitalforgridstability–especiallywhenintegratingfluctuatingrenewableenergyresources–aswellasfortheoverallbalanceofsupplyanddemand.Thegreaterpessimismamonginvestors,ontheotherhand,maystemfromconcernaboutthesourceoffundingforbuildingoutandmodernizingthegridtosupportalarge-scalerenewabletransition.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT1245%42%64%42%47%62%50%15%38%38%38%46%46%54%MATERIALINCREASEDINSTORAGENEWDEVELOPMENTOFTERMINALSANDINFRASTRUCTUREFORLNGACCELERATIONINRENEWABLESDEVELOPMENT/INVESTMENTINCREASEDINVESTMENTINCOALANDOTHERFOSSILFUELSNEW/INCREASEEXPLORATIONANDDRILLINGFOROILANDGASACCELERATEDBUILDOUTOFTHEELECTRICGRIDINCREASEOUTPUTOFEXISTINGASSETS(TOTHEEXTENTPOSSIBLE)INVESTORSEXECUTIVESOneinfourenergyexecutiveshasalreadyimplementedESGinitiativesintheirorganizationsEnvironmental,socialandgovernance(ESG)metricsandvalueshavebecomepartofthecalculusforenergycompaniesasinvestorsprioritizebusinessesthatdevelopandimplementstrategiestoaddressthesefactors.WhilesomecompaniesareaddressingESGreactivelybasedonstakeholderorinvestordemands,othersareviewingESGasawaytodefinetheirlong-termvalue-creationstrategiesforinvestorsandotherstakeholders.Regardlessoftheunderlyingmotivation,morethanaquarterofenergyexecutivessurveyedreporthavingalreadyimplementedESGpolicies,whileanother44%saythey’reintheprocessofdoingso.DespitethisembraceofESG,asubgroupofexecutivesappeartohavereexaminedtheirprioritiesinthisareaorpausedimplementationofESGstrategies.Thiscouldbeduetotheinfluenceofcertaineventsduringthispastyear,includinggeopoliticalcircumstances,increasedenforcementagainstgreenwashingandthelackofclearHowistheenergyindustrymostlikelytoaddressrisingoiland/ornaturalgaspricesoverthenextyear?Pleaseselectuptothree:2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT1326%44%13%16%19%38%36%7%ALREADYIMPLEMENTEDIMPLEMENTATIONINPROCESSCONSIDERINGIMPLEMENTINGNOTCONSIDERINGATTHISTIME20222021regulatorystandards.ItwillbeinterestingtoseehowthenumbersshiftagainnextyearoncenewrulesandregulationsareimplementedintheU.S.,U.K.andEurope.Whichbestcategorizesyourorganization’sstatusintermsofadoptingESGpolicies?Thischartreflectsresponsesfromexecutives.ForthoseenergyexecutivesthatareimplementingorconsideringimplementingESGinitiatives,fewerreportthattheywereunderpressurefromboardsorregulatorstoimplementESGpolicies,andmoresaythattheadoptionofabroadercorporatesocialresponsibilitystrategyandindustrystandardsencouragedESGparticipation.Meanwhile,onlyhalfofenergyexecutivessayGHGreductiontargetsareakeyfocusoftheirESGefforts.Thiscouldbebecause“net-zero”targetshavealreadybeenestablished,orbecausetheresultsofenvironmentaleffortsmaytakelongertoberealized.Forinvestors,thetimehorizonmatters.Bothshiftssuggestthat,overall,energycompanieshavemadeprogressoverthepastyearandarenowembarkingonmoreadvancedESG-relatedinitiatives.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT14“WhilesomeconsiderESGapotentialhindrancetoprofits,energycompaniesthatimplementESGprogramsaren’tjustsettingthestagefortheenergytransition–they’realsoensuringtheirorganizations’long-termaccesstobothpublicandprivatecapital,”saidLisaRushton,co-headofWBD’sEnergyandNaturalResourcesSectorandheadofthefirm’sRenewableEnergySubsector.WhatarethechiefreasonsyourorganizationhasimplementedorisconsideringimplementingESGpolicies?Pleaseselectallthatapply:Thischartreflectsresponsesfromexecutives.32%40%44%30%19%33%32%48%48%44%35%28%28%24%BOARDMANDATEREGULATORYPRESSURESINVESTORPRESSUREBELIEVEITISTHERIGHTTHINGTODOPRESSUREFROMEMPLOYEESPARTOFALARGERCORPORATESOCIALRESPONSIBILITY(CSR)STRATEGYINDUSTRYSTANDARDS202220212023ENERGYTRANSITIONOUTLOOKSURVEYREPORT15Whichofthefollowingarefocusareasforyourorganization?Pleaseselectallthatapply:Thischartreflectsresponsesfromexecutiveswhohaveimplemented,areintheprocessofimplementingorareconsideringimplementationofESG.Theseanswerchoiceswerenotprovidedinthe2021survey44%40%44%60%19%26%28%28%35%42%47%51%NET-ZEROENERGYEQUALITYPOLLUTION-NEUTRALCONSUMPTIONCARBONNEUTRALITYIMPACT-NEUTRALDEVELOPMENTENVIRONMENTALDISCLOSUREENVIRONMENTALLYSENSITIVE(RE)DESIGNWASTEREDUCTIONANDMATERIALSMANAGEMENTESTABLISHMENTOFGHGREDUCTION/NET-ZEROEMISSIONTARGETS202220212023ENERGYTRANSITIONOUTLOOKSURVEYREPORT16InvestorsandexecutiveslargelyagreeonenergytransitionchallengesBothinvestorsandexecutivescitepoliticalgridlock,infrastructurerequirementsandsupplychainissuesascriticalhurdlesaffectingenergytransition.Investors,however,appearsignificantlymoreconcernedaboutthefinancialburdenofstrandedassets–suchascoal-firedpowerplants–thatarecreatedbyeffortstomeetdecarbonizationtargets.Inyouropinion,whatarethegreatestchallengescurrentlyimpactingenergytransition?Pleaseselectuptothree:68%54%52%50%46%42%40%34%34%24%20%10%32%49%42%50%52%35%28%36%41%18%32%34%FINANCIALBURDENOFSTRANDEDASSETSPOLITICALGRIDLOCKSUPPLYCHAININFRASTRUCTUREREQUIREMENTSGEOPOLITICALTENSIONSLACKOFREGULATORYCLARITYANDCONSISTENCYINADEQUATEFEDERALTAXANDINCENTIVESUPPORTAVAILABILITYOFCAPITAL/INVESTMENTFUNDSNEEDFORADDITIONALR&DGRIDFLEXIBILITYREQUIREMENTSENERGYSECURITYINTELLECTUALPROPERTYCHALLENGESINVESTORSEXECUTIVES172023ENERGYTRANSITIONOUTLOOKSURVEYREPORTPolicyandRegulation2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT18PolicyandRegulationSentimenthasshiftedoverthelastyearonpreparednesstomeetemissions-reductionbenchmarksPresidentBidenhassetanambitiousgoalfortheU.S.toreduce2030greenhousegas(GHG)emissionsbyatleast50%fromtoday’slevelwhilesigninganexecutiveordertodecarbonizetheentireU.S.electricitysectorby2035.In2021,PresidentBidensetagoalfortheU.S.toreducegreenhousegas(GHG)emissionsbyatleast50%by2030.Howprepareddoyouthinkenergycompaniesaretomeetthisgoal?Overthepastyear,therealizationofwhatitmeanstomeetthosegoalsappearstohavepolarizedopinionsonthematter,withthepercentageofenergyexecutivesandinvestorssayingthatenergycompaniesare“notprepared”andthosewhosaidtheyare“veryprepared”bothincreasing.Thissplitmayreflectgeneralupheavalinthesector,withgovernmentsupportforthecleanenergytransitionbolsteringapositiveoutlookforsomedespitethemanychallengesthatexisttoauniversalshifttorenewables.OptimistsfordecarbonizingthepowersectorseemtobefocusedonimprovementsintechnologyandgovernmentincentivesfromrecentlegislationandregulationsenactedundertheBidenadministration,whilepessimistsareconcernedaboutcompliancecosts,theabilitytomeetenergydemandandthepaceofchange.Aswecontinuetomonitorsentimentgoingforward,thesedifferencesofopinionandthedriversofthosedifferenceswillbeparticularlyimportanttowatch.Veryprepared29%Veryprepared25%Moderatelyprepared30%Moderatelyprepared30%Slightlyprepared22%Slightlyprepared33%Notprepared19%Notprepared12%202220212023ENERGYTRANSITIONOUTLOOKSURVEYREPORT19LEGISLATION/REGULATIONSENACTEDDURINGTHEBIDENADMINISTRATION35%39%CORPORATECOMMITMENTTONETZEROIMPROVEMENTSINTECHNOLOGY26%HowlikelyistheU.S.toreachPresidentBiden’stargetofdecarbonizingthepowersectorby2035?Whichbestdefineswhyyoufeelconfidentthatthisdecarbonizationgoalcanbeachieved?ThischartreflectsresponsesfromthosewhosayPresidentBiden’sgoalofdecarbonizingby2035islikelytobeachieved.Verylikely22%Verylikely14%Likely20%Likely18%Neitherlikelynorunlikely15%Neitherlikelynorunlikely19%Unlikely20%Unlikely36%Veryunlikely23%Veryunlikely13%202220212023ENERGYTRANSITIONOUTLOOKSURVEYREPORT203%10%10%10%13%13%17%23%23%23%27%30%30%37%LENGTHOFREGULATORYPROCESSINDUSTRYRESISTANCENEWRESTRICTIONSONAUTHORITYOFEPAGEOPOLITICALTENSIONSINSUFFICIENTAND/ORINCONSISTENTLEGISLATION/REGULATIONATFEDERALAND/ORSTATELEVELSSUPPLYCHAINDISRUPTIONCHALLENGESINSCALINGRENEWABLESENERGYSECURITYCAUSINGINCREASEDRELIANCEONCARBON-BASEDFUELSFOSSILFUELDEPENDENCEOFGENERALPOPULATIONGRIDCANNOTACCOMMODATEADDITIONALLOADTRANSITIONISTOOFASTFOREXISTINGPLAYERSLACKOFINFRASTRUCTUREGOALWASUNREALISTICINTHEFIRSTPLACECOST-PROHIBITIVENATUREOFCOMPLIANCEWhydoyoufeelitisunlikelythattheU.S.willreachPresidentBiden’stargetofdecarbonizingthepowersectorby2035?Pleaseselectuptothree:ThischartreflectsresponsesfromthosewhosayPresidentBiden’sgoalofdecarbonizingby2035isunlikelytobeachieved.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT21MoreenergyexecutivesbelievetheirorganizationsarepreparedtocutGHGemissionsthanlastyearDespiteevidenceofgrowingpessimismabouttheabilityofenergycompaniesingeneraltomeetBiden’s2030goalsforGHGreductions,moreexecutiveshavegrownconfidentintheirownorganization’sabilitytodoso.Thegapinsentimentmayreflectconcernsoversignificantglobalsupplychainandgeopoliticaldisruptions.Executivescouldwellbeunsureastohowtheirpeersarehandlingtheseissues,yettheyarecloseenoughtotheirownsituationsandsoaremoreconfidentintheirowncompanies’responsetogrowingpressures.Energyinvestors,however,arenotasconfidentinthereadinessoftheirportfoliocompaniestomeetacommitmenttoareductionofmorethan50%inGHGemissionsby2030.Grimheadlinesdoubtlesssparkinvestorconcernabouttheenergyindustry’sabilitytomeetitsreductionobligations.Asstatedabove,industryoperatorsaredeeplyentrenchedinthedailyoperationsoftheirbusinessandcouldhaveapositivebiasontheirabilitytomeettheirgoals.Investors,however,maybemoreskepticalbynatureandreceiveonlyperiodicreportsfromtheirportfoliocompanies.Towhatextentisyourorganizationpreparedtoaddressacommitmenttoareductionofmorethan50%inGHGemissionsby2030?Thischartreflectsresponsesfromexecutives.Veryprepared34%Veryprepared37%Moderatelyprepared37%Moderatelyprepared37%Slightlyprepared22%Slightlyprepared16%Notprepared7%Notprepared10%20222021Howprepareddoyoubelievethatthecompaniesinwhichyourfirmiscurrentlyinvestingaretomeetacommitmenttoareductionofmorethan50%inGHGemissionsby2030?Thischartreflectsresponsesfrominvestors.Veryprepared28%Veryprepared30%Moderatelyprepared20%Moderatelyprepared41%Slightlyprepared36%Slightlyprepared17%Notprepared16%Notprepared12%202220212023ENERGYTRANSITIONOUTLOOKSURVEYREPORT22TheInfrastructureInvestmentandJobsActiswidelyviewedasbolsteringkeyaspectsoftheenergytransitionOnNovember15,2021,PresidentBidensignedthe$1.2trillionIIJAintolaw.Thebillrepresentedahistoricinvestmentinourcountry’sinfrastructure,fromroadsandbridgestoports,airportsandwastewatermanagementandtreatment–and,ofcourse,toenergyproduction,researchanddevelopmentandstorage.Thelegislationencompassesinvestmentsincleanenergydemonstrations,existingemission-freeelectricityplants(likehydropowerfacilities),gridmodernization,thecleanenergysupplychainandenergyefficiency,amongotherthings.Thisinfluxofgovernmentcapitalispotentiallygame-changingasitreducesinvestmentrisk,and,unsurprisingly,ourrespondentsfeltthatthebillwillhaveapositiveimpactonawidevarietyofenergytransitiongoals,fromimprovingbatterystoragecapacitytohydrogenhubdevelopmenttoelectricvehicleinfrastructure.InwhichareasdoyouthinktheInfrastructureInvestmentandJobsActwillbethemosteffectiveinachievingitsstatedgoals?17%22%25%20%23%25%26%20%28%25%31%29%27%29%33%32%29%27%24%22%28%19%12%13%16%15%18%13%11%6%8%6%9%8%4%NUCLEARREACTORPROJECTSTRANSMISSIONGRIDINFRASTRUCTUREBUILD-OUTELECTRICVEHICLEINFRASTRUCTURECARBONCAPTUREDEMONSTRATIONPROJECTSHYDROGENHUBDEVELOPMENTDEVELOPMENTOFCLEANENERGYPROJECTSONMININGLANDSBATTERYSTORAGEVERYEFFECTIVEEFFECTIVENEUTRALINEFFECTIVEVERYINEFFECTIVE2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT23BatteryStorageOver50%ofrespondentsbelievetheIIJAwillbeeffectivewhenitcomestobatterystorage.Certainly,the$500millionallocatedtolong-durationenergystorage,withadditionalfundingpotentiallycomingfrompartofthe$15-plusbillionallocatedtogridresiliency,demonstratesanunderstandingoftheimportanceofstorageinrenderingeffectivewind,solarandotherintermittentcleanresources.Whileadditionalsupportwilllikelybeneeded,storagedeploymentwillmoveusthatmuchclosertoacarbon-neutralfuture.Fiftypercent(50%)ofrespondentsalsobelievetheIIJAwillhaveapositiveimpactonbothtransmissiongridandelectricvehicleinfrastructurebuild-out,perhapsbecausethebillattemptstoaddresssupply-sideissues.Butaidisnotenough.Asreferencedabove,themarketwillalsoneedclearandreliableguidancefromfederalandstateregulatorstoensurefutureinvestmentsarestableonceIIJAaidisexhausted.However,morebroadly,notallrespondentsareconvincedthattheIIJAwillhelptheenergytransition.Weaskedwhatwouldincreasetheconfidenceofthoseskepticalofthebill.Nearlyoneinthree(30%)foundthattheIIJAwouldbeineffectiveinachievingitsstatedgoals.Morethan70%oftheserespondentsexpressedconcernaboutalackoffollow-uplegislationorsimplysaidtheyhadlittlefaiththatthebillwouldbeeffectiveaswritten.Whichofthefollowing,ifany,wouldincreaseyourconfidenceinachievingtheoverallgoalsoftheInfrastructureInvestmentandJobsAct?Pleaseselectallthatapply:ThistablereflectsresponsesfromthosewhoindicatethatanysingleareaoftheInfrastructureInvestmentandJobsActwillnotbeeffectiveinachievingitsgoals.ReasonthatareasoftheIIJAwillnotbeeffectiveinachievingitsgoalsinanysingleareaThebillisunlikelytobeeffective(overall)32%Implementationoffollow-onlegislation39%Restructuringofregulatorypowerbetweenfederalandstatejurisdictions59%Increase/furtherdevelopmentofeconomicdevelopmentincentivesanddevelopmentofpublicprivatepartnerships64%Improvedalignmentbetweenenergypoliciesandenvironmentalpolicies(DOEandEPA)75%Moreconstructively,thoseunconvincedrespondentsofferedsubstantiveideasforimprovingtheIIJA’seffectiveness.Three-fourthssaidtheactwouldbenefitfromimprovedalignmentbetweenpoliciesattheDepartmentofEnergy(DOE)andtheEnvironmentalProtectionAgency(EPA).Bywayofexample,theIIJA2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT24AgencieswithabilitytoinfluencethedevelopmentofthehydrogenindustryandrelatedinfrastructureDepartmentofEnergyTheFederalEnergyRegulatoryCommissionThePipelineandHazardousMaterialsSafetyAdministrationEnvironmentalProtectionAgencyofferssignificantgrantsandincentivesforthedevelopmentofhydrogentechnologiesandtheestablishmentofhydrogenhubs.Butquestionsremainregardingwhichagencyhasorwillhavejurisdictionoversuchprojectsandwhichregulationswillapply.ThemainagencieswiththeabilitytoinfluencethedevelopmentofthehydrogenindustryandrelatedinfrastructureincludetheDOE,theFederalEnergyRegulatoryCommission(FERC),thePipelineandHazardousMaterialsSafetyAdministration(PHMSA)andtheEPA.Eachagencyhassomeformofauthorityoverhydrogendevelopment,deploymentanduse–butthereisnocomprehensiveregulatorybody,andexistingregulationstendtoaddresshydrogenissuesonlyincidentally.Additionally,64%saidanincreaseineconomicdevelopmentincentivesandthedevelopmentofpublic-privatepartnershipswouldhelp.And59%saidthebillwouldworkbetteriftherewasarestructuringoftheregulatorypowersbetweenfederalandstatejurisdictions.Askedmorebroadlyabouthoweconomicincentivessuchastaxcredits,loansandgrantswillaffectthecleanenergytransition,energyexecutivesandinvestorssaidbatterydevelopmentandhydrogeninfrastructurewillseethebiggestimpact.Ourresearchshowedanexpectationthatthisgovernmentsupportwouldhavelessofaneffectonotherelementsofthetransition(e.g.,creationofanationalgridgearedtowardrenewableenergy,windturbines,transmissionupgradesandelectricvehiclecharging).However,theIRA’spassageonAugust12thhaslikelyincreasedoptimismandbolsteredconfidenceintheoverallabilitytomeetemissionsreductionsgoalsasgovernmentinvestmentandincentiveprogramshelpcompaniesreduceandmanagerisksmovingforward.Inadditiontoprovidingsubstantialsupportforrenewableenergyprojects,theIRAincreasestheavailabilityoffundingandfederalincometaxcredits,commonlyknownas45Qcredits,fordecarbonizationtechnologiessuchascarboncapture,utilizationandsequestration(CCUS)byincreasingtheannualtax2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT25creditvaluepermetrictonwhileloweringthethresholdonqualifiedcarbondioxidethatCCUSprojectsmustreachtobeeligible.HadtheIRAsupportbeeninplacepriortooursurvey,sentimentonCCUSmayhavebeenevenmorepositivethanisreflectedhere.TheIRAalsoincludesalucrativetaxcreditforthehydrogenindustrythatcoulddramaticallyreshapethatenergysubsector.Hydrogenhasthepotentialtobeakeysolutiontothecarbonemissionsproblem,howevercurrenttechnologyandinfrastructurelimitationsmakegreenhydrogenproductionroughly10timesasexpensiveasnaturalgas.Thebiggestdriverofcostreductioninthesectorwilllikelybethroughscalinguptheproductionanddistributionofhydrogenandthemanufacturingofsystemcomponents,accordingtotheHydrogenCouncil,anindustrygroup.Theinvestmentrequiredtoachievethiskindofscalewillbeenormous,butinterventionbythefederalgovernmentthroughlegislationliketheIIJAandIRAhasmovedusfurtherdowntheroadtomakinghydrogenaviablecleanenergyresource.Whatinfluencedoyoubelieveeconomicincentives(taxcredits,loans,grants,etc.)haveonthedevelopmentofthefollowing:23%27%32%32%33%34%39%39%38%31%47%39%35%43%30%30%26%28%15%22%20%19%23%27%13%14%6%7%12%4%8%4%CARBONCAPTURESTORAGESMALLNUCLEARDEVELOPMENTSELECTRICVEHICLECHARGINGTRANSMISSIONUPGRADESWINDTURBINESCREATIONOFNATIONALGRIDGEAREDTOWARDRENEWABLESHYDROGENINFRASTRUCTUREBATTERYDEVELOPMENTSIGNIFICANTMODERATESLIGHTNOINFLUENCE262023ENERGYTRANSITIONOUTLOOKSURVEYREPORTGreen(er)andCleanEnergySolutions2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT2762%60%58%34%33%32%HIGHPRICEOFEVSCHARGINGSTATIONDEVELOPMENTVERSUSEVDEMANDBATTERYSHORTAGES(SCARCITYOFRAWMATERIALS)NEEDFORINCREASEDR&D/INNOVATIONRANGECONCERNSINCENTIVESARENOTCOMPELLINGENOUGHGreen(er)andCleanEnergySolutionsConcernslingeraboutelectricvehicleadoptionFollowinguponelectricvehicleinfrastructuretargets,whatdoyouviewasthegreatestchallengestothewidespreadadoptionofelectricvehicles?Pleaseselectallthatapply:WhilemostAmericanadultssupportincentivesforincreasingtheuseofelectricorhybridvehicles,theyaredividedoverwhethertheywouldconsiderbuyingonethemselves,accordingtoarecentPewResearchCentersurvey.Indeed,amajorityofU.S.adultsopposephasingoutgas-poweredvehiclesintheimmediatefuture,highlightingtheconsiderablepublicambivalenceintheU.S.aroundelectricvehicles.Hybridsalesgrew76%lastyear,suggestingthatconsumersdorecognizetheneedforfueleconomy,buttheydon’tyetwanttorelyonafullyelectricvehicle.Oursurveyrevealedsimilarconcernsamongindustryleaders,withenergyexecutivesandinvestorsmostworriedaboutthehighpriceofelectricvehicles,therelativelackofavailabilityofchargingstationsandthescarcityofrawmaterialsneededtobuildelectricvehiclebatteries.“Thisisn’tsurprising,”Gillianssaid.“Consumersareconcernedabouttheeffectivenessofelectricvehiclesaswell–particularlytheirrange–andthat’shamperingtheiradoptioninthemarketplace.”TheIRA,however,seekstolowerthecostandtherebyincreasetheadoptionofelectricvehicles.Thebillenactsorextendsseveralend-consumertaxcreditsforelectricvehicleswhilealsoallocatingbillionstoelectrifyingthefleetsoftheU.S.PostalServiceandthoseofnumerousstates,municipalities,schooldistrictsandIndiantribes–provisionsthatledoneelectricvehicleadoptionadvocacygrouptocalltheIRA“perhapsthemostsignificantlegislationtoacceleratetransportationelectrificationinU.S.history.”2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT2862%60%58%57%31%26%25%19%19%16%16%15%13%58%56%65%68%37%29%28%16%18%18%2%15%ELECTRIFICATIONENERGYEFFICIENCYIMPROVEMENTSHYDROGENBATTERYSTORAGE(UTILITY-SCALE)CARBONCAPTUREBIOFUEL/BIOMASS<SOLARPVWIND–oshoreHYDRO(E.G.,WAVE,TIDAL)GEOTHERMALNUCLEARTRANSMISSIONINFRASTRUCTURE^LNG♦20222021Hydrogenappealstoenergyexecutives,butit’snotyetapracticaloptionBothinvestorsandexecutivesareveryinterestedinhydrogen’spotential,but,asnotedabove,thetechnologyremainsinadevelopmentstageandisnotyetreadyformainstreamdeploymentbymostenergycompanies.Hydrogenproductionremainscostly,withzero-emissiongreenhydrogenbeingthemostdifficultandexpensivetoproduce.Reducingthosecostswillentailsignificantpublicandprivateinvestment,suchasthatincludedintheIIJAandIRA,toaddressthesetechnologicalandinfrastructurebarriers.Thinkingbeyondyourownbusiness,whichofthefollowingdoyouseeasthemostappealinginvestmentorgrowthopportunitiesinenergytransitionatthistime?Pleasechooseuptofive:Thischartreflectsresponsesfromexecutives.(e.g.,smartbuildings,efficiencytechnologies,andtransportation/vehicles)<(e.g.,ethanol,methane,agriculturalwaste,wastetoenergy)^“Newtransmissioncorridors”in2021♦Thisanswerchoicewasnotprovidedinthe2021survey2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT29Investors,unsurprisingly,arefocusedonhydrogenforindustrialuse.TheseareprovenapplicationswithamorepredictableROI.Whatissomewhatsurprisingistherelativelackofinterestamongexecutivesindistributionanddelivery.Whichtypesofhydrogenprojectsisyourfirminvolvedinorconsidering?Pleaseselectallthatapply:Thischartreflectsresponsesfromthosewhoareactiveinorconsideringhydrogen.20%18%3%10%13%3%20%33%24%FERTILIZERPRODUCTIONSTORAGEPRODUCTIONTECHNOLOGYADVANCEMENTMETHANOLPRODUCTIONTRANSPORTATION(FUELCELLS)DISTRIBUTIONANDDELIVERYINFRASTRUCTUREELECTRICITYGENERATION(OTHERTHANGREEN)GREENELECTRICITYGENERATIONINDUSTRIALAPPLICATION55%INVESTORSEXECUTIVES14%52%43%38%29%29%17%16%2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT3021%21%42%35%33%38%36%24%38%3%14%26%29%29%38%41%43%57%POWERREQUIREDTOGENERATEISMOREHARMFULTHANHELPFULTOENVIRONMENTRELIANCEONWATERAND/ORPOWERSOURCESCOMPLEXITYOFDISTRIBUTIONPUBLICFEAR/UNCERTAINTYREGARDINGTHESAFETYOFTHETECHNOLOGYINCONSISTENTSUPPLY/STORAGEISSUESPACEOFTECHNOLOGYDEVELOPMENTINFRASTRUCTUREISLACKINGORINCOMPATIBLELACKOFINCENTIVES,GRANTS,GOVERNMENTSUPPORTCOSTCURVE/DEMANDUNCERTAINTYINVESTORSEXECUTIVESInvestorsfindcostcurveandincentivescarcitygreaterchallengesthanexecutives,whoworrymostaboutdistribution,thepaceoftechnologydevelopmentandthelackofinfrastructureWhichofthefollowingrepresentchallengesyourfirmexpectstoencounterorhasencounteredwithhydrogentodate?Pleaseselectuptothree:Thischartreflectsresponsesfromthosewhoareactiveinorconsideringhydrogen.Thisdivergenceinperspectiveisattributabletothedifferencesbetweeninvestorgoalsandexecutivegoals.Itwouldseemthatenergyinvestorsareconcernedwiththedevelopmentofahydrogenmarketinwhichthefundamentaleconomicsmakesense,hencethatgroup’sinterestindistributionanddeliveryinfrastructureprojects.Energyexecutivesaremorefocusedontimehorizonandthepracticalitiesofgettingthefuelwhereitneedstobe,with42%viewingcomplexityofdistributionasachallenge,comparedto26%ofinvestors.ofenergyexecutivesaremorefocusedondistributionchallegescomparedto42%26%ofinvestors2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT31INVESTORSEXECUTIVES16%57%16%11%0%10%62%22%6%0%LESSTHANFIVEYEARSFIVETONINEYEARS10TO15YEARSLONGERTHAN15YEARSNEVERWhatistheapproximatetimelineforgreenhydrogentomakeameaningfulimpactonthecleanenergytransition?Thischartreflectsresponsesfromthosewhoareactiveinorconsideringhydrogen.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT32Geothermalisgainingtraction,buildingonrecentmomentumFueledby“thesunbeneathourfeet,”geothermalenergyistheheatproducedbythedecayofradioactiveelementsattheEarth’score.Itsworldwideabundancecouldplayacriticalroleinmakingcleanelectricityavailableglobally,andweareseeingthatgeothermalisgainingfavorasanalternativeresource.Thechallenge,however,isfiguringouthowtoharnessthislong-neglectedformofenergy.Energyexecutivesaremoreoptimisticaboutthepaceofadoptionforgeothermalpower,with56%seeingitashavingameaningfulimpactoncleanenergytransitioninfivetonineyears,comparedto43%ofinvestors.Farandaway,installers(powerplantsetups,optimizationand/orenergysystemplanning)andsystemproducers(powerplantpartmanufacturers)holdthegreatestappealforbothinvestorsandexecutives.Optimismaroundthe“picksandshovels”–theinfrastructureandequipmentneededtogeneratepower–versustheriskierbetonexplorationandproductionmightindicatethatexecutivesandinvestorsare1)somewhatskepticalabouttraditionalgeothermalenergygenerationintheneartermor2)morecertainthatdeveloperswillataminimumtrytomakeagoofit,butarelesssureofeventualwidespreaduse.Theymayalsoseeacontinuedneedtoimprovegeothermaltechnologyandlearnhowtouseitinnewways,suchasthecaptureofthermalheatfromotherlocationsaroundheat-generatingsources.Highestpercentageofgeothermalprojectsfornear-termconsiderationforbothinvestorsandenergyexecutives:•Installers(powerplantsetups,optimizationand/orenergysystemplanning)•Systemproducers(powerplantpartmanufacturers)2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT33Whichtypesofgeothermalprojectsisyourfirminvolvedinorconsidering?Pleaseselectallthatapply:Thischartreflectsresponsesfromthosewhoareactiveinorconsideringgeothermal.Whatistheapproximatetimelineforgeothermaltomakeameaningfulimpactonthecleanenergytransition?Thischartreflectsresponsesfromthosewhoareactiveinorconsideringgeothermal.34%22%69%61%41%55%62%67%GEOTHERMALEXPLORATIONCOMPANIESGEO-POWERPRODUCTIONCOMPANIESSYSTEMPRODUCERS(POWERPLANTPARTMANUFACTURERS)INSTALLERS(POWERPLANTSETUP,OPTIMIZATION,ENERGYSYSTEMPLANNING)INVESTORSEXECUTIVES22%43%27%8%0%25%56%6%13%0%LESSTHANFIVEYEARSFIVETONINEYEARS10TO15YEARSLONGERTHAN15YEARSNEVERINVESTORSEXECUTIVES2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT34Executivesandinvestorsrecognizethepromiseandperilofnuclearpower,albeitwithsomedifferencesNuclearenergyisacleanandpowerfulenergysource.Unlikerenewableassetsthatprovidefluctuatingpower,likesolarandwindinstallation,nuclearpowerplantstypicallyarebaseloadandproducemaximumpowerover90%ofthetime.Theplantsrequireconsiderablylessmaintenancethannaturalgasorcoal-generationfacilitiesandarenotassociatedwithanycarbonemissions.NuclearpoweristhelargestsourceofcleanenergyintheU.S.,accountingformorethanhalfthedomesticoutputofemissions-freeelectricityin2020,accordingtotheDOE.Recently,therehasbeenconsiderableinvestmentinsmallmodularreactors(SMRs),or“mini-nukes,”theoreticallyalesscapital-intensiveandscalabletechnologythathasgarneredtheattentionofseveralprominentinvestors.Questions,however,remain.Howwillthewastebemanaged?CanSMRsexacerbatewasteissues?Whataboutupdates,maintenanceandthepotentialoverhaulofexistingnuclearfacilities?Whichofthefollowingmostinfluencedyourfirm’sinvolvementinorconsiderationofnuclearpower?Thischartreflectsresponsesfromthosewhoareactiveinorconsideringnuclear.9%20%12%28%31%7%8%17%32%36%PASSIVESAFETYSYSTEMSSMALLMODULARREACTOR(SMR)TECHNOLOGYADVANCEMENTSSTRIDESMADEINNUCLEARWASTEMANAGEMENTCONSTANTSOURCE(NOTINTERMITTENTLIKESOLAR,WIND)CLEANENERGYSOURCEINVESTORSEXECUTIVESNuclearpoweristhelargestsourceofcleanenergyintheU.S.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT35Whetherjustifiedornot,nuclearpowerenergycarriesheavybaggageregardingpublicperception.Investorsareparticularlyconcernedaboutpublicopposition,likelybecauseofcapitalintensityandprotractedandunpredictabledevelopmenttimelines,thoughthatmaypaleincomparisontothepushbackfromapotentiallylargenumberofconstituencies(localgovernments,environmentalgroups,etc.).Executives,ontheotherhand,citedfinancialandeconomicissues/perceivedinvestmentriskasthebiggestbarriertothedevelopmentanddeploymentofSMRtechnology.WhatdoyouthinkisthebiggestbarriertodevelopmentanddeploymentofSMRtechnology?Thischartreflectsresponsesfromthosewhoareactiveinorconsideringnuclear.9%18%9%25%21%18%0%4%12%22%25%37%IDON’TSEEANYBARRIERSTODEPLOYMENTOFSMRSAVAILABILITYOFCHEAPERTECHNOLOGY/SOURCESTOGENERATEELECTRICITYSAFETYCONCERNSFINANCIALANDECONOMICISSUES/PERCEIVEDINVESTMENTRISKWASTEMANAGEMENTPUBLICOPPOSITIONTONUCLEARINGENERAL(REGARDLESSOFTECHNOLOGY)INVESTORSEXECUTIVES2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT36InvestorsandexecutivesaredividedonhowsoonnuclearpowerwillmakeanimpactExecutivesandinvestorsagreenuclearwillnotmakeanimpactinthenearterm.Butexecutivesareslightlymoreoptimisticthatwecouldseesomeadvanceswithinadecade.Onereasonforthenewfoundoptimisminthefive-to-nine-yearperiodlikelyrelatestotheU.S.NuclearRegulatoryCommission’s(NRC)Augustissuanceofitsfirst-everdesignapprovalforSMRs.Thefirstpowermoduleisexpectedtobeoperationalby2029,assuming–ofcourse–thattherearenodelaysinlicensingand/orconstruction.Whatistheapproximatetimelinefornucleartomakeameaningfulimpactonthecleanenergytransition?Thischartreflectsresponsesfromthosewhoareactiveinorconsideringnuclear.27%27%25%21%0%25%56%6%13%0%LESSTHANFIVEYEARSFIVETONINEYEARS10TO15YEARSLONGERTHAN15YEARSNEVERINVESTORSEXECUTIVESBarrierstonuclearadoptionseemtodrivethedivergenceofopinionsbetweenthesetwogroupsonthetimelineforthetechnologytomakeanimpact.Executivesjustifiablyviewfinancialconcernsasthemostchallenginghurdle–costoverrunsfortheconstructionofnuclearpowerplantsoverthelastfivedecadeshavecontinuedtosoar–butthoseproblemsmaybeeasiertoovercomethanthepublicoppositionissuesthatworryinvestors.WhileSMRdemonstrationprojectsorothereventsmayamelioratepublicconcernsregardingthedevelopmentandoperationofnuclearfacilities,oppositionofanysortcreatesariskwhenitcomestopermitting.Changingpublicopinionthrougheducationmayprovechallenging,givenrecentdiscussionsofnuclearriskstiedtoRussia’sinvasionofUkraine.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT37ThePathAheadWhenwepublishedlastyear’ssurvey,theenergyindustrywasalreadyfacinganunprecedentedmulti-decadechallengetotransitiontoanet-zeroworld.Sincethen,severalfactorshavecomplicatedthepicture,nottheleastofwhichwasRussia’sinvasionofUkraineandtheresultingdisruptions–potentiallypermanent–totheworld’senergysupply.ThethreatofenergysecurityhasbecomealltoorealforGermany,therestoftheEUandtheU.K.Ultimately,thatthreatexistsforusall.Thosepressurescanincreasetheperceptionthatenergysecurityandaworldfreeofhuman-generatedgreenhousegasemissionsisaneither-orproposition.Decisionsthat12monthsagowouldhavebeenunthinkablearenowbeingmade–oratleastweighed.WouldwehaveimaginedthatGermanywouldreactivateacoal-firedenergyplant?OrthattheU.K.mightliftthebanonfracking?Theworldisbeingforcedtomakenear-termchoicesthatseemantitheticaltolong-term,100%renewablegoals.Changeislikelytheonlyconstantintheenergyindustry,yetourresearchsupportstheconclusionthatenergyleadersandinvestorsremainfocusedonmovingtoacleaner,greenerworld.Afterayearofturmoilanduncertainty,thisongoingcommitment,coupledwithpracticalapproachestonear-termneeds,isindeedacauseforoptimism.2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT38MethodologyFromAugusttoSeptember2022,137decision-makersintheenergyindustrycompletedWombleBondDickinson’s2023EnergyTransitionOutlookSurveyviaanonlinesurveytool.RespondentsincludedC-suiteexecutives(29%),businessoroperationsmanagers(14%)andin-houselegalcounsel(19%)–agroupcombinedandreferredtoas“energyexecutives”throughoutthisreport–aswellasinvestors(36%).Inadditiontotherangeofprofessionalssurveyed,therewasamixofenergyindustrysubsectors.Nearlyhalfofthesurveyedcompanies(47%)employedmorethan5,000people,and93%oftheorganizationshadcorporateheadquartersintheU.S.Respondentsreportedtheirorganization’sestimated2021revenue,with48%ofthesamplereporting$499millionorless,29%reporting$500millionto$4.9billion,18%reporting$5billionormoreand5%electingnottodisclose.TypeofInvestmentFirmRoleorTitleC-SUITE29%LEGALROLE19%BUSINESSOROPERATIONSMANAGER14%INVESTOR36%OTHER2%INVESTMENTBANK28%VENTURECAPITAL28%24%HEDGEFUND8%PENSIONFUND6%6%OTHERPRIVATEEQUITY2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT39Executives:EstimatedRevenue,2021Employees10%11%15%17%14%15%11%7%1–499500–9991,000–1,4991,500–4,9995,000–9,99910,000–49,999950,000–99,999100,000+12%17%4%15%20%8%10%5%USD10MILLIONORLESSUSD10MILLIONTOUSD49MILLIONUSD50MILLIONTOUSD99MILLIONUSD100MILLIONTOUSD499MILLIONUSD500MILLIONTOUSD999MILLIONUSD1BILLIONTOUSD4.9BILLIONUSD5BILLIONTOUSD9.9BILLIONMORETHANUSD10BILLIONPREFERNOTTODISCLOSE9%2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT40OrganizationHQLocation(withinUS)RegionsofOperationsOrganizationHQLocationNORTHEAST32%MIDWEST23%WEST16%SOUTHEAST29%NORTHAMERICA72%EUROPE,MIDDLEEAST,AFRICA(EMEA)34%LATINAMERICA22%ASIA-PACIFIC(APAC)13%ARGENTINA1%FRANCE1%U.K.1%U.S.93%COLOMBIA2%GERMANY2%2023ENERGYTRANSITIONOUTLOOKSURVEYREPORT41EnergyandNaturalResourcesSectorWombleBondDickinson’sGlobalEnergyandNaturalResourcesSectorisamulti-disciplinarygroupofmorethan100attorneysskilledincounselingcompaniesandinvestorsastheynavigatethechallengesandcomplexitiesoftheenergytransition.Ourteamprovidespracticalandinnovativesolutionstosupportclientsintheirquesttoachievesustainablegrowth,strongreturnsontechnologyinvestments,andESG-focusedsuccessatthistimeofunprecedentedindustrytransformation.Ourworkcoversthebroadspectrumofenergyandnaturalresourcessubsectorsincludingallsegmentsoftheoilandgasindustry,renewables,alltypesofelectricitygenerationandtransmission,waterandwaterinfrastructure,andcommoditiesandtrading.Ourglobalpracticeaddressesthefullrangeofclients’transactional,intellectualproperty,regulatory,andlitigationneeds.WombleBondDickinson’sdiverseclientbaseincludesintegratedenergyentitiesandestablishedindustryplayers,aswellasthoseentrepreneursandearly-stagecompanieswhoareattheforefrontofchangeastheyinnovate,monetize,andcommercializethetechnologiesofourgreen(er)energyfuture.CommoditiesandTradingMetalsandMiningOilandGasRenewableEnergyUtilities&RegulatoryWaterandWaterInfrastructure42womblebonddickinson.com©2022WombleBondDickinson(US)LLP“WombleBondDickinson,”the“lawfirm”orthe“firm”referstothenetworkofmemberfirmsofWombleBondDickinson(International)Limited,consistingofWombleBondDickinson(UK)LLPandWombleBondDickinson(US)LLP.EachofWombleBondDickinson(UK)LLPandWombleBondDickinson(US)LLPisaseparatelegalentityoperatingasanindependentlawfirm.WombleBondDickinson(International)Limiteddoesnotpracticelaw.Pleaseseewww.womblebonddickinson.com/us/legal-noticesforfurtherdetails.WombleBondDickinsonataGlanceRepresentingmorethanintheUSandUKUKTopAmLaw2082GlobalTop100LawfirmbyrevenueChambersrankings+150600PubliclyTradedCompaniesLawfirmrankedfirmOursectorsEnergy&NaturalResourcesWealthManagementLifeSciences&PharmaceuticalsManufacturingFinancialServicesRetail&ConsumerHealthcareTransportRealEstateInsuranceTechnology30acrosstheUSandUKLocations4001,000PartnersLawyersMorethanUKBristolEdinburghLeedsLondonNewcastlePlymouthSouthamptonConsolidatingournationalreputationsandregionalheritageunderonepowerfultransatlanticbrandUSAtlantaBaltimoreBostonCharlestonCharlotteCharlottesvilleColumbiaGreensboroGreenvilleHoustonHuntsvilleIrvineLosAngelesNashvilleNewYorkRaleighResearchTriangleParkSanFranciscoSiliconValleyTysonsWashington,D.C.WilmingtonWinston-Salem