The Back Page: Energy Transition

Energy transition means different things to different people. At its core, the focus of the energy transition is moving toward zero- or low-carbon energy consumption across industrial sectors, including electricity generation, transportation, and manufacturing, among others. The goal is to reduce greenhouse gas (GHG) emissions to meet international, national, and subnational climate change objectives, while maintaining a modern standard of living and allowing developing economies to grow in a sustainable manner. However, there are strong disagreements related to the energy transition, including how fast the transition must be made, the future role of fossil fuels, and whether certain technology and infrastructure should be part of the solution.

Emerging technology and innovations will likely be a key to the energy transition. For example, emerging artificial intelligence technology is being used to improve the efficiency and sustainability of energy-related operations, including for use in monitoring methane emissions, reducing the amount of energy needed to be generated, and assisting to create new lower-carbon energy systems.

Further, technologies that fell out of favor or have been slow to emerge will likely form a core part of the energy transition. Nuclear power, for example, is seeing a resurgence. The COP28 agreement specifically called for accelerating nuclear energy solutions and marked the first time nuclear energy has been formally specified as one of the solutions to climate change in a COP agreement. In addition, nuclear facilities are seeing extended life in the United States, small modular reactor technologies are emerging, and the European Union has called for nuclear power to play a key role in the transition to clean energies despite deep divides across the EU about its use.

Carbon capture and sequestration (CCS) is another established technology that is emerging in new ways to be a critical part of the energy transition, but with strong opposition from environmental organizations. Despite some opposition, CCS garners unique bipartisan support along with significant expected capital investment in various industrial sectors. COP28 called for the acceleration of abatement and removal technologies such as CCS. The U.S. EPA has explained that to reach the climate goal of net-zero emissions, economywide, by 2050, the United States will likely have to permanently sequester significant quantities of carbon dioxide, and California has noted that CCS is a necessary tool to reduce GHGs and mitigate climate change.

One important factor in the future of the energy transition is the private sector having certainty to make the necessary investments, including political and regulatory certainty. For example, will there be changes to the tax credits and other federal incentives that are driving energy transition investments? Will future political leaders support expanding wind generation versus other forms of energy? Due to geopolitical or national security factors, will barriers emerge to low-cost imported electric vehicles that could drive down GHG emissions in the transportation sector? Further, while it appears there is continued investment in energy transition projects and related infrastructure, higher interest rates, global inflation, and regulatory hurdles, among other factors, have created headwinds.

The bottom line appears to be—notwithstanding some of these considerations—the energy transition is marching forward, and along with it there is a critical role for lawyers, especially those focused on environmental, natural resource, and climate-change-related matters, irrespective of your opinion on the pace, the technologies, and the nature of the energy transition.