For most of the world, 2021 has felt like the slow emergence from a crisis. No one is sure when we will fully recover from the pandemic, but we all know it will take a lot of work.
For the energy sector, the focus has been longer-term. The transition to alternative energies, environmental, social and governance concerns and the industry’s commitment to net-zero emissions has disrupted the industry for years, if not decades.
Yet, there is an optimism in the energy industry that seems out of step with our pandemic-induced malaise.
“There seems to be an appetite for companies expanding their capital programs [and] for investment in the oil patch these days, with record-high prices for oil and natural gas and continued M&A activity,” says Christine Milliken, a partner in Blake, Cassels & Graydon LLP.
And it is not just private-sector activity that is looking good. Across the political spectrum, governments are developing more cohesive regimes and incentives to encourage the energy sector to thrive as it shifts to renewables.
Policies encouraging carbon pricing and the use of lower-emitting technologies are not “a here today, gone tomorrow trend,” says Glenn Zacher of Stikeman Elliott LLP.
“All indications are that climate change is a focal point of governments and societies everywhere, manifested in significant metrics including large pension funds earmarking billions in investments in this area, and to some extent reducing investments in companies and sectors that emit a lot of carbon,” he says.
Yet, the energy industry is still facing significant challenges. Alexandria Pike of Davies Ward Phillips & Vineberg LLP says that although many large oil and gas companies have diversified their range of products to include hydrogen and renewable forms of energy, “there’ll have to be a lot done to make sure other energy companies are on track for this.”
Energy companies are operating in a dynamic and challenging market, like the rest of us. But their longer-term horizons can be a lesson for the rest of us: In a crisis comes opportunity. And, eventually, we will learn how to thrive.