Time to Act: 3 Industry Trends at CERAWeek 2024

Each year, over 8,000 energy industry delegates meet in Houston for CERAWeek. Often referred to as the 'Davos of Energy' or the 'industry's Super Bowl,' CERAWeek's impact on the energy industry is clear as day.

More than just a place to spot leaders like Bill Gates, John Kerry, and Joe Manchin, CERAWeek is a finger in the wind for the energy transition. I’ve found that the key to understanding CERAWeek’s impact is to look at the action: projects, policies and partnerships.

Here are three trends that have stood out to me during this year’s event:

Carbon management is developing rapidly

As Zoe Yujnovich, said on Monday, “It’s no longer about promises. It’s about demonstrations.” To that, I mentioned how MHI is seeing a wave of interest in #carboncapture in the form of 200 inquiries and 20 FEED studies. These projects draw investment and utilize new technologies, which will, in turn, lay the foundation for additional projects.

The 45Q tax credit expansion to $85/t is significant and a step in the right direction; however, it's still insufficient to cover capital expenditure, debt servicing, and provide a return. Although I believe there is still more work to be done on the policy front, the industry must understand that the IRA is not designed to pay for all the capital costs, debt service, and provide a return. It's up to the emitters to work with their clients and determine how to price a premium for their clean product.

The first wave of commercial CCUS projects in America is critical to attracting new investment, proving technology at a commercial scale, and discovering how we can refine our processes to become more efficient. There's no way to sugarcoat it - the first few projects before we go down the learning curve will not be inexpensive; however, they're necessary if we are serious about reaching our net-zero commitments.

Government policy and regulation have a key role to play

We’ve seen firsthand how the U.S. Inflation Reduction Act (IRA) legislation has catalyzed new projects, spurring other countries to pass similar legislation. As we approach the two-year anniversary of the IRA, the energy transition landscape has shifted drastically, and we're seeing glimpses of the future of clean energy. I like to refer to this current era as "IRA 1.0" - where industry stakeholders, governments, and corporations navigate their decarbonization approach and discover how to turn net zero into a reality.

"IRA 2.0" is where we must put our heads down, get to work, and make significant progress towards decarbonization. It's where next-generation clean technology is implemented commercially, projects consistently expand, and investment grows significantly. The public and private sectors must work together to achieve this era of the energy transition to drive costs down and shift our energy mix. Just as wind and solar have developed to become affordable and realistic energy options, the next phase of the IRA and green policy will turn the conversations at CERAWeek from what can be done to what is being done.

Geothermal is heating up

Energy Secretary Jennifer Granholm highly praised geothermal during her remarks last year at CERAWeek, and this year proved no different. She announced the newest Pathways to Commercial Liftoff Report: Next-Generation Geothermal Power, highlighting geothermal energy's enormous potential for the United States.

Although traditional geothermal energy has limitations that have hindered its expansion, enhanced geothermal systems are unlocking a new generation of reliable and cost-effective carbon-free energy in previously inaccessible locations.

I was honored to join my friends Tim Latimer, CEO of Fervo Energy, and Jane Stricker, Executive Director of Houston Energy Transition Initiative (HETI), to share more about Mitsubishi Heavy Industries' recent investment in Fervo, the future of enhanced geothermal, and how Houston is positioning itself to lead the nation in the energy transition.

When you combine the know-how of the oil and gas industry, innovative clean energy solutions, and a city all-in on energy transition, magic happens. I truly believe there is no better place in the U.S. to accelerate the energy transition than Houston and the Gulf Coast region.

After this week of dialogue, I feel optimistic about the state of our industry. The energy transition is a monumental challenge, and much work remains to be done. However, commitment from the industry is clearer than ever before. It's now on us to take the learnings and inspiration from this past week and usher in a new clean energy generation.