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Firms embracing digitalisation set to thrive

Climate change and regulatory intervention are combining to create unprecedented opportunities across the energy sector

The value of implementing digital technologies into businesses across the energy sector will intensify over the next decade—hastened by pledges to tackle climate change—participants in the afternoon session of IP Week heard yesterday.

“New digital ecosystems that support carbon-neutral solutions will create billions of dollars, and in the longer-term create trillions of dollars,” says Sonia Van Ballaert, global client director at technology firm IBM Global Markets. 

The immediate priority for companies is to mitigate the effects of climate change on their operations. Data can be used to model or simulate business risks and lessen the impacts of catastrophic events, such as Hurricane Harvey in Texas or bushfires in Australia. “Data is still not being fully exploited,” says Ballaert.

In addition, there is an accelerating global trend for governments and businesses to vow to reduce their emissions and carbon footprint. The opportunity for smart solutions and other digital products will gather pace as companies reconfigure their portfolios in favour of more environmentally sustainable resources.

Leading the pack

Many companies are embracing the ‘digital frontier’. France’s Engie was among the early adopters in Europe when it declared its digital decarbonisation strategy many years ago and firms continue to join the movement by developing new and exciting technologies.

Canadian firm Suncor added 87,000 sensors into its operations to collect and analyse data. The company also launched a strategic alliance with Microsoft last year to integrate Cloud solutions into its business, aimed at improving safety and productivity. Almost C$1bn of free cash flow will be derived from its digital strategy by 2023, according to the firm.

“Digital technology has the potential to make operations smarter and more connected” Ballaert, IBM Global Markets

Finnish refiner Neste Oil is integrating blockchain solutions into its operations. Investors and consumers will be able to track the company’s supply chain—for example, as it sources sustainable palm oil for biofuels—using a blockchain-based dashboard. Combined, it will make the business more accountable to its sustainability pledge.

French bank BNP Paribas launched its Climate Seeds venture that will allow its clients to offset carbon emissions. The voluntary carbon trading market is still in its infancy, but digital products are increasingly needed to ensure credibility and transparency. “Digital technology has the potential to make operations smarter and more connected,” adds Ballaert. 

German automotive manufacturer Daimler has launched a collaborative partnership with Google to research the commercial uses of quantum computing. Advances in the technology could potentially be expanded into the fields of material science and chemistry. New processes could eventually lead to more durable, less expensive electric vehicle batteries, which would accelerate the nascent electric vehicles industry.

Make a decision

Fossil fuel companies ultimately have three potential directions to choose from to survive the accelerating energy transition, says Ballaert. Producers can continue with a business-as-usual mindset, which prioritises assets over customers. But this approach will inevitably suffer from sliding margins and attract negative popular opinion. So the lifespan of the business will be limited, she says.  

87,000 - Suncor sensors collecting data

The second approach is to evolve, gradually shifting to a greater share of renewables and gas. This direction is more customer-focused and allows for smarter solutions, particularly for the supply of electricity.

The third option is to disrupt the industry. Disrupters will likely be digital from the beginning, she says, born in the Cloud and making use of 5G, the convergence of AI, HPC and the IoT to create new business models.

“In the next few years we will see emerging energy leaders. They could be oil and gas [companies], or they could be newcomers,” says Ballaert.

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