Why you should work in oil and gas

Nick Butler FT

Nick Butler, Financial Time Energy Commentator

The industry may be vilified but there are creative groups with long perspectives.

Forty-odd years ago, about to graduate from university, I received my first job offer, from BP. I accepted instantly. Oil was the industry of the moment. North Sea oil and gas was being developed, offering the UK a degree of freedom from the power of Opec and the risk of embargoes. The combination of economics and politics and the idea of working for a great company operating on a world stage was irresistible.

Now I’m often asked by students or their parents if they should consider a job in the sector. Would I make the same decision now?

Things have certainly changed. The oil and gas industry is under attack on many sides. Vilified by environmentalists for its contribution to the continuing growth in emissions and global warming, it faces an increasing number of court challenges from those seeking to prove the liability of individual companies for the damage done by climate change.

At a different level of the debate the industry is seen by some investors as vulnerable to the loss of market share and profitability as renewables, helped on by falling costs and public policy support, take up an ever larger volume of demand.

So given this perception of the industry as one whose best days are past, what would advise someone starting out? I would say yes, work in the sector — but choose your employer with care.

Many large companies in many sectors are unpopular and face fundamental competitive challenges. Think of Amazon or Volkswagen. But few — the tobacco industry is an obvious exception — attract the visceral hostility that confronts the oil and gas sector or the epithet of “dinosaurs”, relics of the past destined to extinction. Who would want to work for a dirty dinosaur?

That is the fashionable view but it is too superficial. If you are offered a job in the industry, you should be asking what future the company envisages for itself. One of the greatest pleasures of working in the energy business is the length of the horizon. The companies — especially the oil majors — think and plan on the basis of a 30- to 40-year strategy. That, after all, has been the lifespan of all major provinces from the North Sea to Alaska.

Given this refreshingly long perspective, all the companies should now have strategies that take them to the middle of the century. Of course the details will evolve continuously, but it is the underlying strategic approach that matters. Such thinking is what distinguishes creative companies from dinosaurs trapped in their past successes. It has allowed the majors to adapt and remain relevant and successful through more than a century of war, political upheaval and dramatic economic change.

The problem is that the companies are finding it hard to articulate any such long-term strategy. Very few deny that change and a shift to a lower carbon economy is coming, even if there are legitimate differences about the timing and pace of the shift. But there is little clarity on how they see themselves operating in the coming new world.

There is, of course, no single strategic answer to the challenge of the energy transition. It would be perfectly legitimate for company A to decide that it will stick to what it does well for as long as that is possible and profitable; having harvested its resources it will then return residual value to the shareholder. Company B might take a different approach, waiting to shift the balance of their activity until the timing is clearer and the choices more obvious. The first of these alternatives will be more attractive to investors than the second. Neither are likely to be terribly enticing to an aspiring new graduate.

The third approach is more complex but much more interesting. That is to ride both horses — creating an organisational structure which creates two entities with very different characteristics. The strategic objective should be to hold a leadership position in both elements while over time the balance will naturally shift from hydrocarbons to low carbon.

Riding two horses at once is a great intellectual and organisational challenge. The two entities will require different skills and market knowledge. For investors they will be different animals — requiring a very careful alignment of expectations, perhaps through a twin stock market listing, and distinct processes of capital allocation. But the quality of any serious job depends on there being tough challenges. There are no great careers to be made in doing work that is mechanical and filled with drudgery.

Navigating the energy transition matters not just for individual and companies but for society as a whole. It demands the entrepreneurial drive and global reach that is part of the DNA of the oil and gas majors. So to any youngster offered a job in a company prepared to think in this way I would say: you should be as thrilled as I was over 40 years ago. Personally, I would not hesitate to make the same choice again. Oh, to be 21.

This article was first published on ft.com on 1 April.


A light bulb moment for the planet?

Nick Howard

Nick Howard IEng MEI MSLL Chartered Energy Manager

We must – and can – take matters into our own hands on climate change rather than wait for governments to deliver, says Nick Howard IEng MEI MSLL Chartered Energy Manager and member of the Energy Institute’s Energy Management Panel.

If it were possible to draw only one conclusion from the climate change debates of the past few years, it could be that politicians and national governments won’t solve the planetary crisis alone.

The United Nations Framework Convention on Climate Change process is case in point. The 2015 COP21 in Paris was remembered for its outstanding political goodwill, optimism about reducing emissions and limiting global warming and close cooperation between the USA and China, the biggest emitters among developed and developing countries. By contrast, three years on, December’s COP24 in Katowice, Poland displayed dampened enthusiasm. Although the delegates successfully managed to deliver the “rulebook” to implement the emission reduction promises agreed in Paris, the summit demonstrated that it’s much easier for politicians to set targets than to agree on how to reach them, implement actions and measure progress.

It’s all the more surprising given that the scientific understanding around the scale of the risk of climate change to assets, investments and the public is more acute than ever. The recent Intergovernmental Panel on Climate Change report was downplayed by some politicians gathered in Poland, despite it suggesting the world is on a devastating track to overshoot the targets of the Paris climate agreement and warm by 3°C by the end of the century.

The salutary lesson from these developments is that companies, businesses and local authorities all need to ride in behind the ambition set out in Paris rather than wait for the politics to deliver. Together, by taking the initiative and leading by example, we can make those intentions real, making real inroads into emissions and building resilience against climate change impacts. Most specifically, we must focus on translating rapidly evolving and far-reaching technological innovations into day-to-day life.

Too often ignored amid the noisy, polarised debate about nuclear, renewables and shale gas is the Cinderella of decarbonisation – the ‘first fuel’ – energy efficiency. It is a source of energy in its own right, in which energy users can make no-regrets investments ahead of other more complex or costly energy sources. Indeed, there’s been something of a quiet revolution under way in the UK – highlighted by Carbon Brief’s recent number crunching that found electricity generation last year was down to the same level as the mid-1990s, despite a growing economy, due largely to improvements in energy efficiency.

At an organisational level, energy efficiency efforts are understood as improving the ability to reduce energy consumption, based on the results of energy audits and surveys, for example a mandatory Energy Savings Opportunity Scheme (ESOS) assessment, the forthcoming Streamlined Energy and Carbon Reporting (SECR) or, globally, certifying an ISO 50001 Energy Management System.

Unfortunately, the take-up of energy efficiency projects by some industries in the UK has been slow, in many cases glacial or non-existent. This may be due to political uncertainties, or difficulties justifying funding or capital expenditure where margins are low and international competition high.

Additionally, present legal energy reduction schemes such as ESOS and Display Energy Certificates (DECs) don’t have teeth. There is no compulsion to implement measures identified through the schemes’ mandatory surveys. The new reporting scheme, SECR, which from April 2019 will replace the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, is yet another missed opportunity for the mandatory installation of energy efficiency measures by businesses and organisations.

Serious actions are required to better encourage organisations to install efficiency projects and fulfil energy saving opportunities. After all, the ‘O’ in ESOS stands for Opportunity! Phase 2 of ESOS, which is in its compliance period between now and 5 December, shouldn’t just be a tick box exercise. Instead, energy managers should use it as an opportunity to review decarbonisation strategies and explore long-term energy saving possibilities, such as demand-side response or smart appliances.

Additionally, there is a need to revise the ESOS regulations for future phases 3 and 4. Ideally, the scheme will be complemented by a legal requirement for energy saving measures identified in the ESOS assessment to be put into practice, not on the shelf to gather dust. Capital funding support is actually already available – Salix Funding is an independent, publicly funded company, providing the public sector with interest-free loans for energy efficiency projects; the Carbon Trust provides loans for private organisations. Tax incentives could also be used to help fund these measures. Similarly, implementation of SECR should be encouraged as a way for business and industry to gain economic benefits, improve productivity and cut energy costs at the same time as reducing carbon emissions.

One of the best places to start is lighting – responsible for 20% of all the electricity used in UK commercial and industrial buildings. Almost three in four buildings have outdated lighting installations, so it’s no surprise that installation of more efficient lighting was the most common recommendation from the first phase of ESOS assessments. A lighting upgrade or replacement can be simple and inexpensive but may lead to large energy and cost saving impacts.

Lighting technology has been developing rapidly over recent years, driving remarkable cost reductions. Traditional incandescent bulbs are fast being replaced by a new generation of lighting such as light-emitting diodes (LEDs) or compact fluorescent lamps (CFLs). The Energy Institute’s new Lighting Guide* is a great place to get the full picture.

It’s clear that LEDs are now the standout technology for saving costs and energy in many circumstances. Research by IHS Markit showed the use of LEDs to illuminate buildings and outdoor spaces reduced the total global CO2 emissions of lighting by an estimated 570 million tons in 2017. This is equivalent to shutting down 162 coal-fired power plants! Overall, LED component and lighting companies can claim credit for reducing the global carbon footprint by an estimated 1.5% in 2017. The share is much higher if we consider energy saved by LEDs in sectors other than the building lighting market, such as automotive and consumer technology.

Using efficient lighting products could save up to 75% of the electricity consumed for lighting in the UK each year and correspondingly reduce energy costs. A focus on practical energy saving – efficient lighting, heating and insulation – will not just help mitigate the disappointment felt by many at the failure of governments to deliver, but also I hope mobilise more people on the ground to take steps that really can making a difference to energy use, carbon emissions and the bottom line.

The Energy Institute’s new Lighting Good Practice Guide can be found at https://knowledge.energyinst.org/collections/energy-management

This blog first appeared as an article for The Energyst.

Methane leakage is putting long term role for natural gas at risk

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

As the Energy Institute (EI) becomes a supporting organisation to the Methane Guiding Principles, Chief Executive Louise Kingham OBE FEI explains why she wants to see CH4 discussed alongside CO2 at next week’s IP Week conference.

Two trends are rushing headlong in opposite directions.

Greenhouse gas emissions continue to rise. Despite the promise of Paris, global emissions are believed to have reached a new high last year and the IPCC’s conclusion is that we’re hurtling toward a devastating 3C temperature rise by the end of the century – double the 1.5C aspiration needed to protect low-lying Pacific islands, avoid the worst human health impacts and retain our planet’s fragile coral reefs.

At the same time growth in demand for fossil fuels remains strong. The IEA reports that the proportion of the world’s energy sourced from fossil fuels is still around 80% – the same as it was more than three decades ago – and that’s 80% of 2.5 times the amount of energy! Even with impressive progress on energy efficiency and renewables, and signs of a slowing in demand growth for coal and oil over the coming years, demand for natural gas from developing economies in Asia and elsewhere is expected to maintain an upward trajectory.

Squaring this circle will be one of the central themes at IP Week 2019, hosted by the EI next week and attended by some of the energy industry’s most senior figures including Bob Dudley of BP plc, Chad Holliday of Royal Dutch Shell plc and Amin Nasser of Saudi Aramco.

Alongside geopolitics and technology, sustainability is one of our themes and we’re sure to hear plenty of insight into the oil majors’ low carbon pathways and enthusiasm for reducing carbon emissions during combustion, in particular through carbon capture, usage and storage. All of this is crucial.

But the release of so-called fugitive methane during oil and gas production tends to get too little airtime, despite it being 28–36 times more potent as a greenhouse gas than CO2 over 100 years. The problem is occurring in the middle of producers’ own operations and is particularly acute during shale gas extraction, which in the US alone has grown by a factor of 14 since 2007.

So what are the prospects of action on CH4?

Research by the International Energy Agency suggests it’s technically possible to avoid 75% of current methane emissions in the natural gas supply chain, of which as much as half could be avoided at net negative cost because of the value of the methane saved.

Despite this, awareness within the industry is woefully low. More than 80% of international oil and gas professionals surveyed by the EI last year were unaware of the extent of the possibilities to tackle the problem.

As in so many aspects of tackling climate change, there’s perhaps a prisoners’ dilemma to overcome. In the absence of international regulation with teeth, companies need to have confidence that they won’t be disadvantaged by bearing perceived additional cost if their competitors are able to ignore it.

So we need to ramp up collective action.

The Methane Guiding Principles are the bedrock of that. The commitment from 18 global operators to reduce methane emissions and improve accuracy and transparency around methane emission data is crucial. The EI is today becoming a supporting organisation, with a commitment to raising awareness among our members, partners and customers, for the public good.

More tangibly, we saw a pledge from the Oil and Gas Climate Initiative during September’s Climate Week in New York, that its 13 members will reduce the collective average methane intensity of their aggregated upstream operations by a fifth by 2025, with a further ambition to achieve a one third reduction.

We’ll hear from head of OGCI Climate Investments Pratima Rangarajan at IP Week and I hope to see methane leakage taken seriously right across the conference – at the lectern, on the panels and from the floor.

As an industry, we have to meet this challenge head-on, not head-in-sand. Methane must not continue to play second fiddle to carbon. If we don’t up the ante on CH4, there’s a risk efforts to reduce CO2 emissions elsewhere in the lifecycle could be undermined, and with them natural gas’s licence to operate as a cleaner fossil fuel and bridge to a sustainable energy future.

International Petroleum (IP) Week runs from 26-28 February in London. More information can be found at www.ipweek.co.uk.

This blog first appeared on Energy Voice on 19 February 2019.

Is Brexit the birthday present the Climate Change Act could do without?


Nick Turton, External Affairs Director, Energy Institute

The UK’s Climate Change Act is ten years old, but what does Brexit augur for it and its targets? The Energy Institute’s CCA at 10 ‘class of 2008’ – a virtual panel of energy influencers who held key positions around the time of the Act’s introduction – have been reflecting on this thorny topic.

The legal answer has the glass half full – “in a strict sense Brexit makes no difference because the CCA and its targets are entirely national” [former BBC Environment Correspondent, Richard Black]. Or, to put it another way, “the CCA has “made in Britain” stamped all over it” [CCC and IPCC member Prof Jim Skea].

In practice, although it’s possible “the transition is sufficiently locked in, that Brexit will not impact it” [former MP and Energy Minister Charles Hendry], there are red flags on the horizon for investment in low carbon tech. “Will manufacturers of low emission vehicles or wind turbine blades want to invest in the UK? Will consumers be willing to pay to import energy efficient technologies as sterling dips in value?” [Skea]. It certainly could have “a negative impact on the deployment of renewables” [Good Energy CEO Juliet Davenport].

Perhaps more worryingly, what will the divorce mean for climate change policy, once the UK is outside the EU tent? “The balance of views within the remaining EU27 might be different” [former National Grid CEO Steve Holliday], given the UK was always one of the strongest advocates of ambition within the bloc. Conversely, “if Brexit leads the UK to distance itself from the European consensus, then [UK] climate policy could come into question” [former Consumer Focus CEO Ed Mayo]. Freedom from the common EU regulatory frameworks, specifically designed to avoid a “race to the bottom”, could lead to the UK doing just that – a “bonfire of environmental regulations” [Friends of the Earth CEO Craig Bennett].

However these unknowns pan out in the long term, there are still big immediate questions standing in the way of a ‘frictionless’ energy Brexit. Minimising the impact requires us to “stay very close to Europe” [former Shell UK Chair James Smith] including “participation in common arrangements for trading in electricity, gas and emission permits” [Holliday] and to “maintain our co-operation and dialogue with our European partners on climate change, despite Brexit” [former DECC Director General Simon Virley].

And, with the UK due to leave the EU on 29 March next year, it’s urgent – “business really needed answers a year ago, because uncertainty delays investment and makes it more expensive” [Black].

No pressure then.

Full contributions from the panel can be found on the CCA at 10 web page.

Heat and transport need to get in on the Act

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

When we embarked on our CCA at 10 project to commemorate the tenth anniversary of the UK’s Climate Change Act, we did so as much to assert the value of this ground-breaking legislation as to assess the challenges that lie ahead.

In relation to the Act and its architecture, our ‘class of 2008’ – a carefully selected virtual panel of EI Fellows and other influencers who held key positions around the time of the Act’s introduction – are as one.

A “leap of faith” [Good Energy CEO Juliet Davenport] that “went into the DNA of policy makers” [former OFGEM CEO Alistair Buchanan] and put the UK in the climate “vanguard” [former BBC Environment Correspondent Richard Black].

It benefited from the mobilisation of “a very broad coalition” of civil society [Friends of the Earth CEO Craig Bennett] and from Parliament being “overwhelmingly united” [former MP and Energy Minister Charles Hendry]. Put simply, “the timing worked in political terms” [former DECC Director General Simon Virley].

The success story of the Climate Change Act so far is undoubtedly electricity. Half of Britain’s power last year was low carbon, thanks to the dramatic rise of solar and offshore wind, compared to around 20% at the time of the Act’s introduction. The dirtiest fossil fuel, coal, has plummeted from a third of the mix back then to less than 7% last year.

Prioritising the grid as the “enabler of decarbonisation elsewhere in the economy” [former National Grid CEO Steve Holliday] certainly made sense. And overall emissions are down – by some 43% on 1990 and in line with the early carbon budgets.

But the “sequencing” rationale [Steve Holliday] is now running on borrowed time and closer examination of our panellists’ views reveals serious underlying concerns about heat and transport.

Progress is now seen as “unbalanced even backwards” in some areas [CCC and IPCC member Prof Jim Skea]. The policies designed to achieve the fifth carbon budget in particular are “well and truly off track” [Craig Bennett].

Despite exciting headlines about phasing out new petrol and diesel cars by 2040, the fact is 98% of road fuel remains petroleum-based; indeed transport now trumps electricity as the biggest emitter.

Likewise in heat. The Committee on Climate Change believes the UK’s heating needs to be virtually zero-carbon by 2050 and yet the vast majority – more than four-fifths – is still provided by gas, coal and oil burnt at the point of use in our homes and industries. Energy efficiency in the UK “is already way behind some other European countries and falling further behind” [Richard Black] and “an end to fuel poverty remains a distant dream” [former Consumer Focus CEO Ed Mayo].

Tackling climate change simply cannot be done without an integrated transition in all three spheres of the energy system. Electricity is well on the way but decarbonising heat and transport will yet have “major infrastructure implications” [former oil and gas chief James Smith] that can no longer be put in the ‘too difficult’ box.

Climate change targets – indeed climate change itself – are starting to bite. And, in light of the IPCC’s 1.5C report, we may even see the Climate Change Act’s 80% target upgraded to a stringent new net-zero goal – seen by some as “the only game in town” [Richard Black].

The destiny of the Climate Change Act lies in the shared hands of government, consumers and industry. Above all, Ministers needs to develop stable, long term measures and present “clear and consistent messages…rather than chopping and changing” [Craig Bennett].

Our panellists are also clear that “the next steps could affect people’s lives more directly” [Jim Skea]. “We need to have the conversation with the wider public” as consumers are “the big untapped potential” [Juliet Davenport] who need to be “engaged and informed” [Ed Mayo]. We will simply not succeed without “affordable and effective consumer products for transport and heat” [James Smith].

And our industry has a decisive role to play. The Energy Institute is helping to push forward the necessary debate in transport and heat. Our Energy Barometer 2018 this summer investigated the views of our professional members on the challenges in transport. Later this month our Heat and Decentralised Energy 2018 conference – hosted jointly with the Association for Decentralised Energy – will explore how the energy system is reacting to a growing pressure to make deep emissions cuts in heat.

At the Climate Change Act’s (fantasy!) tenth anniversary party, when the three essential components of the low carbon energy system are invited to line up for their group photo, electricity will be there, beaming, centre stage. Heat and transport on the other hand may be conspicuous by their absence.

Working together we can put that right, but we need to do it fast.

The blog first appeared as a blog on Energy Live News on 12 November 2018

The smart grid of energy professionals

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

The future of electricity grids is pretty exciting.

In many countries we still look to the national transmission lines that feed power from large scale, centralised power stations to population and industrial centres, and that will continue to be essential.

But that’s increasingly combined with activity deeper in the distribution system, where advances in technology are allowing businesses and households to generate power on their own rooftops, sell it to others or back to the grid and vary their demand in response to price signals. This flexibility will help accommodate intermittent renewables, meet demand more efficiently and reduce carbon emissions. It’s now about smart demand management rather than being all about the supply.

My vision for the Energy Institute is not dissimilar. Let me explain…

The member benefits, products and services we provide from the centre are the mainstay of our contribution to the development of skills in the sector. The professional recognition, the training programmes, the good practice, the magazines and other knowledge resources and the events programme.

But if you’ve visited our new website or watched our new film, you will have seen we talk about ‘bringing global expertise together’. This means a lot more than a centralised organisation would ever be able to achieve.

In truth, the EI is a network. It stretches across the energy system, from oil and gas through to innovative low carbon technologies. It’s a global network, concentrated in Europe, South East Asia, the Middle East and West Africa. It’s an inter-disciplinary network – from engineers and scientists to energy managers, economists and lawyers. And it’s a network spanning all stages of the career journey.

My role, and that of the EI staff team, is to foster collaboration within this unique network. Indeed ‘collaboration’ is one of our core values – being inclusive and diverse in our approach, engaging with stakeholders and working in partnership.

My vision of a porous, relevant, smart model of the EI, focuses my mind on three things:

First, nurturing our volunteer base
The involvement of members in our work is our greatest strength. It’s their – your – expertise that is the foundation of our credibility and has been for a century.

More than 1,600 volunteers currently donate their time, energy and expertise to the EI. From our technical committees developing the good practice used the world over, to the programme boards of our industry leading events, the assessors reviewing applications from new professional members and the branch committee members building the network at the local level.

The same goes for our governing Council. We were pleased over the summer to see some familiar names re-elected by the membership and to welcome new faces – notably Dr Simon O’Leary CEng FEI, Dr Waddah Ghanem FEI representing our branches and Sinead Obeng AMEI representing our young professionals. Steve Holliday became our President Elect, to take up post as President next July. The leadership provided by our Council helps project the credibility and profile energy professionals deserve.

Second, better reflecting society
We probably all recognise that this is an industry that needs to catch up with the shape of society. And yet the recent data released by POWERful Women still shocked – on the boards of the top 80 energy firms in the UK, almost 9 in 10 members are men. Half of those boardrooms have no women in them at all. This is not a problem confined to the UK.

As the sector’s professional body, the EI’s role is not to accept and replicate these failings, it is to be the critical friend and to lead by example in promoting the modern, inclusive sector we should aspire to be.

I’m pleased to be able to say, at both a senior level and across the organisation, more than half of the EI’s staff are women. Our own gender pay gap is negligible – just 0.84%. And our Council is also one of the most diverse of any professional institution.

And third, to listen
If we only listened to you as members during Council elections and at the Annual General Meeting, we would be failing you.

Digitalisation makes us more readily connected and provides greater opportunity to be open and responsive than ever before.

Through our Energy Barometer survey and EI Views series we are able to gather your collective wisdom and articulate it in the public debate.

Social media – Twitter and LinkedIn in particular – allow us to maintain a conversation on topical issues in real time. We’ve introduced a ‘live chat’ function on our new website. And right now our magazine readership survey is seeking views on Energy World, Petroleum Review and our other communications. The deadline has been extended to 14 September, so please take ten minutes to complete it at bit.ly/2B6XUdB

The EI is a smart grid of energy professionals, built around a supportive central structure but increasingly interactive and far more than the sum of its parts.

It’s an organisation I love belonging to and participating in. I hope you do too. Equally, if you aren’t involved but would like to be please get in touch at comms@energyinst.org so we can talk about how to make that happen.

This blog first appeared as an article in the September editions of Energy World and Petroleum Review.

Should all-male boards put themselves on their own risk registers?

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive of the Energy Institute, surveys the Energy Barometer’s findings on sector diversity.

It would be strange for a business to needlessly surrender market share. Or cut into its profit margins for no good reason. But the evidence is stacking up that many of the biggest corporates in the UK energy sector are doing exactly that.

In January, research from McKinsey found that companies with the most gender diverse leadership teams are 21% more likely to experience above-average profitability than their less diverse competitors.

Cue the POWERful Women initiative, which last month crunched the latest numbers and found that almost 9 in 10 board members at the UK’s top 80 energy firms are men. Half of those boards have no women on them at all.

Against this backdrop, the Energy Institute’s Energy Barometer, which provides a representative snapshot of opinion among energy professionals working in the UK, this week entered the debate.

The report found the benefits of a diverse workforce, in terms of gender as well as ethnicity and other measures, are understood by a healthy majority. Two thirds see it as important for the future success of their company or sector. This rises to more than three quarters among younger professionals in the first 5 years of their careers.

The main benefits identified by respondents are an increase in skills and capabilities, the introduction of a wider perspective and an increase in the ability to attract and retain staff. No doubt, these are precisely the factors that underpin McKinsey’s findings.
Now comes the but.

1 in 10 respondents to the Barometer survey continue to see diversity as unimportant and a further 16% are ambivalent. Furthermore, 30% of respondents do not believe there are any obstacles to diversity in their company or sector. This is either encouraging or rose-tinted.

Given POWERful Women’s findings, I find it hard to see it as anything other than a cause for continued concern and action. Ambivalence risks unconscious bias and this underscores why all companies in our sector should be upping their game to foster inclusive corporate cultures.

The evidence connecting diversity with financial performance and enhanced reputation is mounting such that if all-male boards do not correct this – perhaps by putting themselves on their own risk registers – their shareholders will surely intervene and do it for them.

All this talk of business benefits helps make the case. But let’s not lose sight of the reasons all of this ultimately matters.

First – if humankind as a whole is to rise to the twin challenges of climate change and global access to energy, we’re going to need every bit of talent available to us. Building a modern, diverse energy system demands a modern, diverse workforce.

And second – women have a right to play an equal part in an exciting sector of the economy, one that offers some of the most rewarding careers.

As tomorrow is International Women in Engineering Day, and during the Year of Engineering, I want to end with a special shout out to the women who are thriving in energy, helping to solve some of the world’s most pressing challenges, and changing the sector for the better.

This blog first appeared as a blog post in Energy Live News on 22 June 2018.

Thickening Brexit fog obscures future for UK energy

Steve Holliday

Steve Holliday FREng FEI, Vice President of Energy Institute and former CEO of National Grid

Energy and politics don’t make good bedfellows in the same way that investment lead times don’t fit well with election cycles.

There are various ways that business and logistics can rub up horribly with politics. Policy can suffer at the hands of kneejerk decision making, the complexities of technologies and markets don’t readily translate into headlines and tweets, and physical interconnection across national borders can jar with parochial national interests.

And yet energy is essential to our economic prosperity and social wellbeing. Ministers need work with the industry to make sure demand is met, emissions are cut and bills are kept under control. This has always been the case, but Brexit throws the challenges of keeping all these plates spinning into even sharper relief.

A year ago, the Energy Barometer – the annual ‘state of the nation’ survey from the Energy Institute – revealed acute concern among the UK’s energy professionals about the impact of Brexit.

They advised ministers to seek means of continued close cooperation with the EU in this area. Existing EU energy laws governing how our markets work need to be seamlessly transferred into UK law. A comprehensive energy and climate chapter needs to be stitched into the future trade agreement with the EU.

Workforce availability was also singled out a significant concern for energy professionals, with 60% of them anticipating struggles in employing the skilled workers the sector needs.

What a difference a year doesn’t make.

Twelve months on and the fog of uncertainty has, if anything, thickened. The new Energy Barometer, published yesterday, shows Brexit is now the second-most pressing concern for energy professionals in the UK.

There are no clear answers on the future immigration regime, or the UK’s anticipated relationship with the EU single energy market.

During my decade leading National Grid, I was acutely aware of the interconnected nature of the UK’s energy system.

More than 40% of the gas we use is imported through pipes joining us to the European mainland. About four per cent of our electricity is already imported via four power lines from Europe. This could move closer to ten per cent if some of the dozen or so proposed new cross-border interconnectors go ahead.

Membership of the EU isn’t essential to a fruitful relationship with our European neighbours – after all Norway provides up to a fifth of the UK’s gas. But the efficiencies that we have developed through trading energy freely with our EU partners have brought huge benefit to the price paid by consumers, the resilience of our economy and the prospects for the climate.

The lack of clarity around the future of the Northern Irish border muddies the already complex process of establishing the island’s integrated single energy market and casts doubt over the proposed new North-South electricity interconnector.

The sad irony is that these problems are emerging just as extraordinary things happen in the energy system of the UK. Cost reductions in clean electricity have all-but wiped out coal and low carbon sources now provide more than half of the power flowing over our grid. Similar moves are expected for road fuels even before the government’s proposed 2040 ban on new petrol and diesel cars takes effect.

In the Barometer, professionals do acknowledge some possible long-term benefits for a more ‘global Britain’ – new trade deals, flexibility around infrastructure investment, greater control over carbon pricing policy and export strengths in energy services and smart technology know-how. Under better circumstances, I would be shouting all of this from the rooftops.

But, with March 2019 fast approaching, answers to the biggest questions are needed. The stakes are high. Energy is critical to the UK’s economic prosperity and social wellbeing. It must not be left to chance.

This blog first appeared as a comment piece for politics.co.uk on 20 June 2018.

Now for an energy record really worth celebrating

Steve Holliday

Steve Holliday, Vice President of Energy Institute and former CEO of National Grid

Steve Holliday reflects on the 10th anniversary of the UK’s last generation-related power cut, and a decade in which the grid has coped admirably with an ever cleaner electricity mix.

Almost every week it seems that Britain’s energy transition breaks new records. Already this year we have had the longest period (three days) without using any coal generation since coal generation began, while we have also seen that on one perfect early summer’s day solar was the biggest source of electricity in the nation. On both the demise of coal and the advent of renewables we had better get used to the records coming thick and fast.

This weekend, however, we should be celebrating a different milestone in Britain’s energy progress – one that is, I would argue, much more profound. Sunday 27th May marks the 10th anniversary of this country’s last power cut caused by a problem with electricity generation. We do of course have local power cuts, but they are virtually all caused by breakages in the local electricity distribution networks, when, for example, a workman cuts through a cable or wind brings down a power line. Despite occasional outbreaks of doom-mongering headlines, outages caused by a shortage of electricity generation simply haven’t happened – one of the reasons why Britain can boast one of the most secure energy systems in the world.

The events of 27th May 2008 demonstrate just how bad things have to be before a generation problem compromises our electricity supply. The problem began when Scotland’s biggest generator, the coal-fired power station at Longannet, went offline unexpectedly. Five minutes later, in a completely unrelated incident, Sizewell B nuclear power station in Essex followed suit. The odds of such a twin outage are vanishingly low; even so, we almost coped. Managers reduced the voltage on the grid, which normally would have kept things stable until another power station could fire up. But on this occasion, incorrectly set controls on smaller generators meant that the voltage drop tripped them out too. The only solution then was to cut power to an estimated 580,000 homes, for an average duration of 20 minutes.

Our historical records are not perfect, but I believe this was the only power outage that anyone in the UK has suffered caused by a lack of electricity, as opposed to the lack of an intact cable, in well over two decades. The lights stayed on during the Didcot B fire in 2014, when two nuclear power stations were also shut down for unexpectedly long periods; stayed on too during the 2016-17 winter when a large chunk of the French nuclear fleet was shut down for urgent safety checks. This winter as the Beast from the East cast its icy blast across the country and the gas supply faltered, again, we had no issues.

Britain’s energy security record is worth celebrating for two reasons. One is simply that energy is the lifeblood of a modern developed nation. From the pensioner in a council flat to the boffins in the high-tech data centre, a constant, reliable supply of electricity is essential. And Britain’s electricity system provides it.

The second reason is that our energy system is in the middle of what some observe as a messy-looking transition. We need first to shut our coal-fired power stations (which will be done within seven years) and then clean up gas generation, while continuing to increase the use of wind and solar power with their rapidly falling costs and contribution to decarbonising the system. Ten years ago, grid engineers warned that deriving more than 20% of our electricity from variably-generating wind turbines and solar panels would put too much stress on the system. That is one prediction that emphatically missed the mark: in the first quarter of this year, wind and solar generated nearly 20 per cent of our electricity – and the system coped just fine.

Which is good news, because we will certainly see that 20% proportion increase. Onshore wind and large-scale solar power are now the cheapest forms of new electricity generation we can build – and so long as we also invest in technologies like battery storage alongside them, the lights will continue to stay on, in fact arguably more securely than 10 years ago when two giant power stations could abruptly remove five per cent of our generation by failing simultaneously.

Although National Grid should take a lot of the credit, this is not a paean of praise for my former employer. Other countries – Germany is one – obtain an even higher proportion of their electricity from wind and solar energy than we do, and their energy security record is just as good as ours. The point is that modern electricity systems are highly reliable – and the word ‘system’ is the important one. Generators, transmission and distribution operators, regulators and a government department steering change proactively and facilitating innovation – this is the system that thus far has proved the scaremongers wrong. The lights are staying on securely as we cut damaging carbon emissions – and that is worth raising a glass to this Bank Holiday weekend.

This blog first appeared as an article on BusinessGreen on 25 May. 

The energy industry needs more female Energy Superheroes

Isabelle - Big Bang Fair

Isabelle Wilton, Communications Officer, Energy Institute

Volunteering at the Big Bang Fair last week I hoped to have the chance to understand more clearly the reasons for the continuing shortage of women in science, technology, engineering and maths.

As coachload after coachload from schools across the UK filed into the NEC’s cavernous halls to get their hands on the mind-boggling exhibits laid on by Engineering UK and its partners, I saw engagement, fascination and enthusiasm demonstrated by both girls and boys.

And, as my colleagues from the EI and I set about polling more than 1,300 of them – who we subsequently labelled Energy Superheroes – about their views on energy and climate change, if anything, I found girls to have a stronger sense of the intergenerational issues at stake.

And yet women are under-represented in the energy industry, and in engineering. As someone relatively new to working in this area, the numbers make tough reading.

Only a third of those taking STEM subjects through to A level are female. In fact, girls are underrepresented in all STEM A level subjects except for biology and chemistry, despite making up the majority of all A level entries.

Furthermore, only 8% of those starting engineering-related apprenticeships are female.

This hit home to me when speaking to the children at the Big Bang Fair about a future career in engineering. While many of the boys I interviewed appeared excited about working in this field, when I brought this suggestion up with girls, the same did not seem to be the case.

Many didn’t appear to make the link between their desire to take action on climate change and the possibility of a career in engineering being for them.

It’s easy to say this is rooted in centuries of male-dominated social norms, going back generations.

But it’s also attributable to signals in the present day. It’s not surprising, when you look to the top of the UK energy industry and find only 5% of executive board seats are held by women, that girls don’t see it as a world for them.

Progress is being made, however. I’m lucky to work with a female Chief Executive who leads an organisation that outstrips the industry it represents in terms of valuing and exhibiting gender diversity.

In my short time at the Energy Institute I’ve also had the privilege of meeting some inspiring female winners of our EI Awards.

Last year’s highly commended young energy professional was Rose Atkinson who works in Uganda transforming the lives of East Africans by providing them with quality solar energy and financing solutions. It’s people like Rose that will help inspire the next generation of female energy professionals.

I’m hopeful that the Big Bang Fair and the Year of Engineering more generally will succeed in getting more young women to join the pipeline of fresh talent in these important professions. And with initiatives such as POWERful Women supporting senior female energy professionals into leadership positions – the future also looks bright.

Only by succeeding at this, drawing fully on the diverse ingenuities of men and women, can the energy industry hope to find the best solutions that serve us all.

So, while the findings of our Big Bang poll won’t be published for some weeks (watch this space!), my experience at Big Bang Fair has left me sure of one thing – that the future Energy Superheroes must be – and can be – men AND women.