1、Bains third annual survey on the energy transition finds executives increasing investments in low-carbon businesses,but skeptical of consumers willingness to pay more.By Grant Dougans,Neelam Phadke,Alasdair Robbie,and Joe ScaliseState of the Transition 2023:Global Energy and Natural Resource Executi

2、ve PerspectivesCopyright 2023 Bain&Company,Inc.All rights reserved.AcknowledgmentsThe authors would like to thank Nick Baker,Alessandro Cadei,Felipe Gattas,Brian Murphy,Valeria Sterpos,and Tony Walker for their contributions to this work.1State of the Transition 2023:Global Energy and Natural Resour

3、ce Executive PerspectivesAt a Glance Executives believe their companies are outperforming the rest of the world in reducing emissions,but expect the rate of decarbonization to slow down over the next few years.Companies expect to deploy about a quarter of their capital on new growth businesses in 20

4、23,many of these focusing on low-carbon technologies.Respondents say they arent concerned about accessing capital for low-carbon businesses,but need to ensure adequate returns on those investments.Talent shortages are impeding growth,especially for technical experts,as well as frontline workers in N

5、orth America.Executives in the fields of oil and gas,utilities,chemicals,mining,and agribusiness are on the front lines of the energy and natural resource(ENR)transition.While concerns about climate change and extreme weather grow,and customers and shareholders call out for rapid decarbonization,the

6、se executives are tasked with changing the way the world produces and uses energy,food,and many critical materialsall while keeping their businesses viable.At Bain,we work closely every day with executives in these industries across the globe.Our annual survey seeks to assess their opinions and atti

7、tudes about the progress of the energy and natural resource transition,how their companies are managing through these changes,and what barriers they see ahead.This year,we found executives expecting a slowdown in the rate of decarbonization in the short term(by 2030),though their long-term expectati

8、ons remain largely positive.Our 2022 report found executives grappling with increasing complexity and a disorderly transition as they balanced carbon-reduction efforts with the economic realities of their businesses.In the year since,weve seen this complexity exacerbated by geopolitics,which produce

9、d imbalances in the energy ecosystem and may have contributed to executives belief that a short-term slowdown is at hand.Executives remain confident about their own abilities to manage through this complexity to a lower-carbon future,but are less confident about the world at large.These findings com

10、e out of our discussions with clients and our survey in early 2023 of more than 600 executives across the energy and natural resource sector.As last year,we wanted to get a better idea of their views on the energy and natural resource transition,new technologies and investment opportunities,and wher

11、e they see the greatest challenges for decarbonization.2State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesAmong the most interesting findings:Most executives still believe their own companies are doing better on the path to net zero than the world as a whole,and a

12、bout one-third believe theyre doing better than their peers.Companies expect to deploy 24%of their capital on new growth businesses in 2023.North America is catching up with Europe.Access to capital for new low-carbon investments isnt a major constraint,but ensuring a return on investment certainly

13、is.Most customers arent willing to pay much more to support these new businesses at scale,so companies will need government policy support to incentivize the investment.Renewables,artificial intelligence(AI)and other digital technology,and energy storage are the most critical technologies for the se

14、ctor through 2030.Executives in the Middle East are bullish on hydrogen and carbon capture,but executives in most other regions expect these technologies to become more important only after 2030.Talent shortages are a significant barrier,especially for frontline workers in North America and the Midd

15、le East and for engineers and digital experts in all sectors.Global perspectivesExecutives anticipate a slowdown in the rate of decarbonization over the next few years(see Figure 1).But a slowdown is expected to be modest,and their long-term expectations havent changed.Although efforts to decarboniz

16、e are still progressing,turmoil in energy markets resulted in more coal being burned to make up for shortfalls in Russian-supplied natural gas.Several told us that the events of 2022 could shift the focus of investments back toward addressing scarcity and making energy affordable in the short term.H

17、owever,geopolitical events also accelerated the deployment of capital to renewables as countries and companies look to become more self-sufficient.“The success of the pivot to clean energy technologies will be determined by the extent to which people see the benefits while minimizing disruptionswith

18、 focus on affordability and fairness.”New energy executive,IndiaAveraged across our survey participants,2057 remains the consensus date when the world could reach net-zero carbon emissions(see Figure 2).As a group,they expect emissions reductions to broadly track current pledges through 2030,then ac

19、celerate to achieve net zero by 2057.For this to happen,a lot would have to change after 2030.For example,the International Energy Agency estimates that for the world to reach net zero by 2050,annual investments in clean energy would need to increase to$4 trillion 3State of the Transition 2023:Globa

20、l Energy and Natural Resource Executive PerspectivesFigure 1:Energy and natural resource executives anticipate a slowdown in the rate of reduction of carbon emissions over the next few yearsNotes:Bains 2023 ENR Transition Survey includes answers from 608 executives from more than 200 companies acros

21、s 46 countries;58%of the respondentswere vice president or higher(including C-level executives and board members),and the combined market capital of the companies covered is about$4.5 trillionSources:Bain ENR Transition Survey 2022(n=1,037);Bain ENR Transition Survey 2023(n=608)Expected change in gl

22、obal CO2e emissions by 20302022 survey12.1%2023 survey9.8%by 2030 from the current level of about$1 trillion.All the while,the companies implementing these investments must also ensure that these projects are economically viable and can be executed given physical constraints(for example,availability

23、 of materials,labor,supply chain).About one-third of executives believe their own companies are further along the path to net zero than their peers,and two-thirds believe theyre moving faster than the world as a whole.67%36%believe theyll decarbonizefaster than peersexpect to decarbonize fasterthan

24、the world as a wholeSource:Bain ENR Transition Survey 2023(n=608)4State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesReduction of Scope 1 and 2 emissions remains the top ESG priority for energy and natural resource companies(88%rank emissions reduction in their top

25、 three issues).ENR executives are also thinking about their impact on local communities,a point that remains a top-three issue in all regions other than Europe,where it ranks below Scope 3 emissions and circularity(see Figure 3).Interest in circularity is also growing.In the chemicals sector,its a t

26、op-two priority,and weve seen an 8-to 10-percentage-point increase in interest in agribusiness,mining,and oil and gas,where roughly one in three executives consider it a top-three priority.Four out of five executives consider the ability to create acceptable returns on projects a main barrier to dec

27、arbonization of the energy system.Their concerns are based on customers unwillingness to paynot universal,but enough to make it hard to scale low-carbon businesses.So they look to government policy and regulatory support to help bridge the gap.Fewer than 20%expressed significant concerns about acces

28、sing capital(see Figure 4).Figure 2:On average,executives expect emissions reductions to reflect current pledges until 2030,then accelerate to achieve net zero by 2057 Note:Baseline estimate from Climate Action Tracker December 2018 updateSources:Climate Action Tracker,November 2021;IEA;Bain ENR Tra

29、nsition Survey 2023(n=608)Global greenhouse gas emissions(GtCO2)02040602009.8%by 2030Existing policies and actions:temperatures rise about 2.7CPledges and targets:temperatures rise about 2.1CBains 2023 ENR Transition Survey:net zero by 2057Actual emissionsProjections if survey expectation

30、s are met5State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesFigure 3:Emissions reduction and the impact on local communities remain top concerns across ENR industriesNotes:Scope 1 measures greenhouse gases directly emitted by an organization or by activities under

31、 its control;Scope 2 measures indirect emissions from electricity or other power used by an organization;Scope 3 measures other indirect emissions related to an organization,including those resulting from the use of its productsSource:Bain ENR Transition Survey 2023(n=608)UtilitiesOil and gasChemica

32、lsAgribusinessMining andmineralsScope 1 and 2emissions reductionScope 1 and 2emissions reductionScope 1 and 2emissions reductionScope 1 and 2emissions reductionScope 1 and 2emissions reductionScope 3emissions reductionImpact on localcommunitiesCircularitySupply chaintraceabilityImpact on localcommun

33、itiesImpact on localcommunitiesScope 3emissions reductionScope 3emissions reductionScope 3emissions reductionScope 3emissions reductionRanking bypercentageof execswho includedeach topicin their topthree priorities12384%69%59%95%95%56%51%71%66%86%86%54%49%73%55%Figure 4:Executives say the greatest ob

34、stacles to decarbonization are customers unwillingness to pay higher prices and the difficulty of ensuring adequate returns for investmentsSource:Bain ENR Transition Survey 2023(n=608)Percentage of executives who selected each barrier in their top three78%56%36%32%23%19%12%9%7%Limited ROI/customer w

35、illingnessto payLack of policy andregulatorysupport Lack ofrequiredtechnologySlowpermittingand legalprocessesSupplychainconstraintsShortfallof capitalStakeholderchallengesLack oforganizationalexpertiseLack oflabor andserviceproviders 6State of the Transition 2023:Global Energy and Natural Resource E

36、xecutive Perspectives“Transition will not occur if it has a negative impact on companies economic bottom line.Companies cannot transition if their businesses are at risk by doing so.”Mining and minerals executive,Latin AmericaSlow permitting is also a major concern,even where the policy environment

37、is more accommodating.Most North American utilities executives cited it as one of their top concerns,although they also see policy as much less of a barrier than do their counterparts in Europe and Asia(see Figure 5).In Europe,where more than half of executives from the utilities and mining sectors

38、cite slow permitting as a top issue,the European Union has announced a draft regulation that aims to reduce permitting times for large energy transition projects to no more than 12 months.“While it can be a worthy goal to cut emissions,there will be a large societal cost if we move too quickly in th

39、e short term and leave people at risk of dying because they cant afford to heat their homes.”Utilities executive,United StatesSurprisingly,not many executives identified service providers(e.g.,engineering,procurement and construction contractors,as well as maintenance companies)as a bottleneck.Only

40、7%flagged it as a major problem,possibly because many decarbonization projects are still at early stages with only limited capital deployed so far.In the Asia-Pacific region,availability of technology also shows up as a critical barrier.“The complications in developing economies is the reliance on t

41、he core businesses for provision of labor and economic opportunities which may not be replicated in the energy transition.”Chemicals executive,AfricaOther executives expressed concerns about price spikes if fossil fuels are defunded too quickly and energy supply cannot meet demand.Some also describe

42、d a lack of understanding on the part of policymakers,the media,and the public about the interconnectedness of the energy system,and they look to governments to help determine realistic paths and goals.7State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesFigure 5:No

43、rth American and European utilities executives are concerned about permitting;executives in Asia-Pacific see technology as a top barrierSource:Bain ENR Transition Survey 2023(n=608)65%56%56%of North American utilitiesexecs consider permittinga top barrierof European utilitiesexecs consider permittin

44、ga top barrierof Asia-Pacific utilitiesexecs consider technology a top barrier“There is a basic lack of understanding of how a fully decarbonized system may work and at which cost.Policymakers yearly increase decarbonization targets,without any reality check.Top-down processes are predicted to fail

45、unless they find support from people,especially when these targets erode spending power by increasing the cost of energy and fuels.”Utilities executive,EuropeProspects for core businessesEvents of the past year show no significant effect on executives beliefs about the durability of their core busin

46、esses.Executives in utilities and new energy are most optimistic,with nearly two-thirds expecting their business to grow rapidly,owing to continued tailwinds from electrification and low-carbon energy increasingly a part of their core business.The percentage of oil and gas executives anticipating a

47、rapid decline of their core business over the next 10 years fell to 4%from 8%the previous year.But,as last year,about half still expect some decline(see Figure 6).8State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesCapital for low-carbon business.ENR companies plan

48、 to allocate more capital to new,low-carbon growth areas.Across sectors,they plan to allocate about 24%of their capital to new growth businesses in 2023,up from 16%in 2020,consistent with the trend we saw last year(see Figure 7).Regionally,North America is catching up with Europe due to incentives i

49、ncluded in the USs Inflation Reduction Act(IRA)an early indication of how quickly companies can react to positive policy signals(see Figure 8).As a result,some executives in other regions expressed concerns about competitiveness and the need for equivalent policy support in other countries.“In the t

50、ransition process towards a more sustainable industry,policymakers must make sure that Europe can maintain its competitiveness vs.other regions that do not apply the same environmental standards.”Chemicals executive,EuropeAcross sectors,executives expected about the same levels of capex investment,e

51、xcept in mining,where expectations increased significantly,possibly in response to rising demand for transition minerals like copper,nickel,and lithium(see Figure 9).Figure 6:Oil and gas executives are less sanguine about the prospects of their core business than their peers in other ENR industries

52、Note:No respondents for agribusiness expect a declineSource:Bain ENR Transition Survey 2023(n=608)Share of executives who think that,over the next 10 years,their core business will.See some declineGrow rapidlyDecline rapidly9%Oil and gasUtilities andrenewables4%48%64%30%19%24%14%37%14%Miningand mine

53、rals ChemicalsAgribusiness9State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesFigure 7:Companies continue to increase their capex allotment to new,low-carbon growth areasSources:Bain ENR Transition Survey 2020(n=81);Bain ENR Transition Survey 2023(n=608)Expected sh

54、are of capex allocated to new growth areas2020 survey 16%2023 survey 24%Figure 8:Government policy changes may have spurred growth in North American low-carbon investmentsSources:Bain ENR Transition Survey 2022(n=1,037);Bain ENR Transition Survey 2023(n=608)Expected share of capex allocated to new g

55、rowth areas0102030%North America20222023EuropeAsia-Pacific10State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesNew technologies.As they did last year,executives believe the three most important technologies for 2030 will be renewables,digital,and energy storage.By

56、2050,they expect hydrogen to replace digital as a key technology,with more than four in five believing it will have a significant impact on their business.We found other notable spikes by region and sector(see Figure 10).Scaling new businesses.Executives remain confident that their low-carbon busine

57、sses will become significant by 2030,with 70%expecting these businesses to account for more than 10%of company profits or valuation by 2030(see Figure 11).We see some variation by sector.For example,executives in mining and minerals raised their expectations significantly this year,whereas oil and g

58、as execs showed a bit less optimism in the prospects for their new,low-carbon businesses,perhaps due to improved medium-term prospects for their legacy ones.“The energy transition is something essential for survival,and it will arrive sooner than expected.”Oil and gas executive,South KoreaFigure 9:C

59、apex allocation to new growth areas across industries is fairly consistent with last year,except for a notable increase in mining and minerals Sources:Bain ENR Transition Survey 2022(n=1,037);Bain ENR Transition Survey 2023(n=608)Expected share of capex allocated to new growth areas0102030%Chemicals

60、20222023Oil and gasUtilities andrenewablesMining andminerals Agribusiness11State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesFigure 10:Across sectors,executives expect different technologies to matter most by 2030 Source:Bain ENR Transition Survey 2023(n=608)Chemi

61、cals executives who expect circularity tosignificantly changetheir businessOil and gasexecutives who expect carbon capture,usage and storage(CCUS)to be significantAgriculture andchemicals executiveswho expectbiobased productsto be significantUtilities executiveswho expect energystorage tobe signific

62、antExecutives inthe Middle Eastwho expectlow-carbon hydrogen tobe significant67%71%70%67%74%Figure 11:Expectations are high for the contributions of new,low-carbon businesses by 2030 Sources:Bain ENR Transition Survey 2022(n=1,037);Bain ENR Transition Survey 2023(n=608)Share of executives expecting

63、their low-carbon businesses to account for more than 10%of theircompanies profits or valuation by 2030 020406080%Total energyand naturalresources 20222023Mining andminerals Oil and gasUtilities andrenewablesChemicalsAgribusiness12State of the Transition 2023:Global Energy and Natural Resource Execut

64、ive PerspectivesHowever,scaling low-carbon businesses remains extremely challenging.Executives told us that the roadblocks are less about bold ambition and company culture and more about building a scalable model that delivers acceptable returns(see Figure 12).(For more on the early lessons from Eng

65、ine 2 buildouts,read the Bain Brief“How to Do Engine 2 for the Energy Transition.”)Return on investment remains a significant challenge for individual companies,which they are addressing by being more selective and focusing on opportunities that generate acceptable returns.Maintaining those acceptab

66、le returns while scaling new growth businesses remains difficult since most customers are unwilling to pay higher prices for essential mass market goods and services.Government policy and regulatory support are critical to develop and grow these markets.Investors may also need to reconsider their ca

67、pital allocation strategies in order to fund the lower-risk,lower-return investments needed in some new low-carbon businesses.Companies also cite uncertainty about access to talent and organizational capabilities as serious impediments to growth.While government policy and permitting remain the pred

68、ominant roadblocks to the growth of new,low-carbon businesses in the sector,our survey revealed regional nuances.For example,almost twice as many European oil and gas executives blamed policy uncertainty for delayed investment decisions,compared with the previous year(61%vs.36%in 2022),while fewer e

69、xecutives in North America assigned similar blame(50%vs.59%),possibly showing the effects of the IRA(see Figure 13).Figure 12:Executives are less concerned about internal constraints,more concerned about government policy and building viable businessesSource:Bain ENR Transition Survey 2023(n=608)Sha

70、re of executives who consider each factor to be a very significant roadblock to scaling their low-carbon growth businesses0204060%ROI/customerwillingnessto payGovernmentpolicy andregulationsLack oforganizationalcapability for scalingat speedLack of experience/talent in newbusinessareasSupply chainco

71、nstraintsLack ofcash/capitalLack of boldambition/support fromcompanyleadershipCulturalresistancewithin thecompany13State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesBuilding organizational capabilities and finding talent remain major challenges for growing low-car

72、bon businesses,especially in several key roles(see Figure 14).Digital and information technology talent is at a premium in all sectors and regions.About 60%of executives expect digital and AI technologies to change their businesses significantly by 2030,but theyre struggling to find talent that can

73、help them manage the change.In addition,about one in three companies report difficulty finding the engineers they need,and one in four are having trouble hiring frontline workers.The situation is more acute in North America,where 39%of companies are having difficulty finding frontline labor(see Figu

74、re 15).Talent is the top roadblock to scaling growth businesses in the Middle East,where 42%of companies have difficulty finding frontline workers and 33%have trouble finding sales and marketing talent.The market for frontline workers appears much more favorable in Latin America and Asia.A final poi

75、nt of concern is the issue of resilience.Our survey found executives confident or very confident about their companys resilience to the physical effects of climate changethough whether this confidence is justified remains to be seen(see Figure 16).Observing the industries in the energy and natural r

76、esource sectors,we believe that risks to physical assets may be greater than many companies anticipate,and these risks havent been fully factored into their planning and capital deployment.Figure 13:Views on policy uncertainty shifted among North American and European oil and gas executivesSources:B

77、ain ENR Transition Survey 2022(n=1,037);Bain ENR Transition Survey 2023(n=608)Share of oil and gas executives who believe that uncertainty over future government policies is delayinginvestment in new business areasNorth America202259%202350%Europe36%61%14State of the Transition 2023:Global Energy an

78、d Natural Resource Executive PerspectivesFigure 14:Digital,engineering,and other technical roles remain the toughest to fill,with frontline labor increasingly difficultFigure 15:Labor market challenges vary by regionSource:Bain ENR Transition Survey 2023(n=608)Share of executives who cite an unfavor

79、able environment for finding and keeping talent in these roles010203040%Digitaland ITEngineersand technicalexpertsFrontlinelaborOther backoffice and supportfunctionsRegulatoryand legalaffairsStrategy,M&A,andpartnershipsInvestor andstakeholderrelationsSales andmarketingSource:Bain ENR Transition Surv

80、ey 2023(n=608)Middle EastNorth Americaof execs say the market forfrontline labor is favorable,compared with only 16%whosay its unfavorableLatin America39%50%of mining execssay the market for engineersis unfavorable,as do 38%in the oil andgas sectorof execs saythe market forfrontline labor is unfavor

81、able,including over 50%in mining,chemicals,andagribusiness39%of execs saythe marketfor sales and marketing talent is unfavorableof execs say the market for frontline labor isunfavorable42%33%15State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesIn other aspects of r

82、esilience,executives are more concerned.For example,fewer than one in five are very confident of their resilience to supply chain bottlenecks,which are likely to become even more acute as new businesses with new supply demands(for example,new feedstocks for recycling or biofuel)attempt to scale.Whil

83、e energy and natural resource executives see real challenges in policy,permitting,talent,and scaling new businesses that can generate acceptable returns,they remain committed to steadily increasing capital deployment and playing their part in the worlds bumpy journey to net zero by the late 2050s.Fi

84、gure 16:Executives are most confident about their organizations physical resilience 020406080100%Input shortages and bottlenecksTechnological vulnerabilityGeopolitical realignmentFinancial instabilityPhysical effects of climate changeExecutives level of confidence regarding resilience of their compa

85、ny to different factors Source:Bain ENR Transition Survey 2023(n=608)Somewhat confidentNot at all confidentVery confident16State of the Transition 2023:Global Energy and Natural Resource Executive PerspectivesBold ideas.Bold teams.Extraordinary results.Bain&Company is a global consultancy that helps

86、 the worlds most ambitious change makers define the future.Across 65 cities in 40 countries,we work alongside our clients as one team with a shared ambition to achieve extraordinary results,outperform the competition,and redefine industries.We complement our tailored,integrated expertise with a vibr

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