The backdrop for this year’s CERAWeek conference could not have come at a more pivotal moment, with the oil & gas sector reporting record earnings, the passage of the Inflation Reduction Act with all its implications for clean energy development and the week ending with the collapse of Silicon Valley Bank. I was very excited to be back at CERAWeek and to have the chance to participate alongside my S2G Ventures colleagues in a host of very meaningful conversations with folks from the corporate, finance, policymaking and academic sectors.
The atmosphere was very buoyant with the conference’s narrative very much about the opportunity and growing momentum toward decarbonization. Not one participant I spoke with questioned the notion that the next decade will be about value creation from clean energy solutions. However, there was also a lot of realism about the scale of the challenge. Topics like permitting, transmission capacity, power market design were all high on the agenda as was the need to ensure energy security being maintained as decarbonization progresses.
Whose Conference Is This Anyway?
CERAWeek has come a long way. This year, participation was up more than 50% year over year at about 8,000 participants. Historically it was seen as the “Davos of the Oil Industry.” It is still a must-attend event for the traditional energy industry, bringing together approximately 650 CEO-level executives and more than 90 ministerial/top-level officials mostly from oil-rich regions of the world. Yet, it felt like the center of gravity of the conference had shifted to the “Innovation Agora” program, which showcased more than 125 private companies, the vast majority of whom are focused on clean energy technologies and solutions.
Our S2G Ventures portfolio had a strong showing at the Agora, with eight portfolio companies participating in presentations and panel discussions at the conference. It was particularly interesting to see how the intersections between our work on clean energy, water and agriculture came together. Clean hydrogen and its application in green fertilizer production was a hot topic. The delivery of decarbonized heavy duty transport solutions garnered a lot of interest, as did the potential held out by ocean data technologies and new mineral supply options.
S2G portfolio leaders presented as part of CERAWeek's Innovation Agora program. 1. Ashleigh Ross, Vice President Strategic Engagement and Policy, Carbon America; Global Thinking, Local Impact: Catalyzing the CCS Industry with Carbon America. 2. Nick Dyner, CEO, Moleaer; Increasing the Recovery of Natural Resources with Sustainable Nanobubble Technology. 3. Tim Janssen, CEO and Co-Founder, Sofar Ocean; Decarbonizing the Maritime Transport Chain. 4. Soufien Taamallah, Senior Engineering Product Manager, Electric Hydrogen; Fossil-Free Hydrogen at Fossil-Parity Cost. 5. Kevin Decker, CEO, Ocean Aero; The Rise of AUSVs in Offshore Energy. 6. Tom Towe, Vice President of Marketing & Business Development, Service 1st Financial. 7. Zack Ruderman, Vice President of Sales and Marketing, Orange EV; Fleet Electrification Scaling Now. 8. Hudson Gilmer, CEO, LineVision; Building Grid Infrastructure with Sensors & Analytics
Molecules Versus Electrons
Both hydrogen and carbon capture and sequestration (CCS) got a tremendous amount of airtime, with the discussion focusing on the thorny issues associated with their implementation, such as permitting, interconnection, critical mineral usage, transportation and transmission.
Companies such as Chevron, Enbridge, Equinor and Schlumberger all had large booths and were showcasing how their engineering expertise would make them pivotal actors in the green molecule business: Chevron reported its Talos carbon capture project, Exxon its CCS projects in the Gulf of Mexico, Air Products its green ammonia project for which it is raising green bonds, and all Hydrogen Hub contenders showed up in force. However, despite the optimism on stage, several executives in private still voiced their skepticism around low returns, technical risk and a lack of implementation track record of newer climate technologies.
Capital Flexibility from the Garage to First-of-a-Kind Plants
It was fantastic to see the large number of technologies that are graduating from lab scale and the companies working on commercial pilots and first-of-a-kind plants. Given the tailwinds from the IRA and various Department of Energy support programs, the United States remains best placed for capital formation. Even if the European Union counters the IRA with a significant “green infrastructure” program of its own, the abundance of natural resources, technical talent and risk capital will make the US the dominant market in climate for the foreseeable future.
Despite a large amount of government support, these technologies will require the participation of industrial players with large balance sheets. Furthermore, today’s financial instruments are too siloed between venture capital, growth equity, project finance and infrastructure. As a result, organizations with flexible capital and convening power will form a vital role in the energy transition. Our ambition is that S2G Ventures becomes one of these pre-eminent players.
Expert Energy Insights
Our team was pleased to host the first annual S2G Ventures Salon Dinner, bringing together approximately 35 senior leaders from across the energy sector for a discussion on “Financing the Transition: Challenges and Opportunities in Today’s Clean Energy Capital Markets.” Dr. Ernest Moniz, Founder and CEO of Energy Futures Initiative and former United States Secretary of Energy, and Tom Steyer, Co-Executive Chair of Galvanize Climate Solutions, kicked off the event with a fireside discussion followed by remarks from Jigar Shah, Director of the United States Department of Energy Loan Program Office.
The participants engaged in discussion on how fit-for-purpose today’s capital markets are for supporting the energy transition and if and how financing models need to evolve to support progress on economy-wide decarbonization more effectively. We appreciate the time and thoughtful dialog among our guests and look forward to continuing the narrative and working together throughout the year to turn our discussion into action.