Navigating Net Zero – The Emerging Role of the National Energy Company

Abstract

Executive Summary In this session we will aim to present a possible pathway for National Energy Companies (NECs) to promote country inward investment that supports climate resilience, a managed transition from hydrocarbon overdependence and net zero goals. We will aim to address how NECs, in close cooperation with their respective Ministry, can develop country analytics that lead to a comprehensive national energy plan that prioritizes climate resilience, renewable energy sources and energy efficiency measures. We will show how countries such as Namibia understood that they have a once-in-a-generation opportunity to significantly reduce their emissions by leveraging their natural resources to attract muchneeded foreign direct investment and how they moved decisively to develop a portfolio of complimentary infrastructure projects, with a vision to create a hub of renewable assets and effectively transforming their country. The complexities of the different roles that the NECs have to play today are well recognized. They need to protect core energy assets, revenues and existing cash flows, create jobs and ensure energy security. The NECs are also expected to confidently step towards a net zero and sustainable future on behalf of their country. Global governments expect NECs to deliver emissions reduction at a country level, the practical steps for energy transition and, to a large extent, the delivery of the National Determined Contribution. In this current environment, NECs around the world are starting to pivot towards climate resilience and renewable energy investments. The NECs must compete for access to capital and participation in the race for a "just" transition. In 2019, the IMF issued a report calling for more transparency in the management and governance of National Oil Companies (NOC) – calling them the "hidden economic giants". Remaining opaque or "hidden" is no longer an option. In a world that demands transparency which addresses ESG and sustainability commitments, capital markets expect consistent reporting. This is a big task for organizations which still face major shortcomings on their reporting practices, and in some cases, have no history of environmental reporting. To complicate matters further, there is currently no universal standard for external reporting of environmental data, so it is for the individual NECs to determine which data analytics and insights will allow access to energy transition finance at competitive rates. There is general agreement though that data driven investment decision making that allows for transparency, stakeholder engagement and private/public sector collaboration is now needed more than ever for capital allocation and access. In this context we will aim to present how NECs can use historic static and dynamic operational data analytics to understand and address risk and opportunity and successfully develop their energy investment decision frameworks.