It is an honour and a privilege to take over as Chair of the Energy & Natural Resources Community advisory group. I would like to thank William Roberts, the outgoing Chair, for his leadership over the last six years. He has been and I will continue to be supported by our advisory group, namely, Fabiola Branz, Jo Butlin, Asif Chowdhury, James Close, Edwin Hamilton, Julia Piechozek, Karen Smout and Tania Songini.
We are always seeking to reinforce our advisory group. If you are interested in joining, you should contact Sophie Hickson (sophie.hickson@icaew.com).
Europe is currently experiencing an energy crisis following the war in Ukraine. The elimination of fossil fuel supplies from Russia is leading to much higher energy prices. These higher prices are impacting industry, services, and households. These immediate problems need to be addressed as the whole economy is impacted. At the same time, we need to act urgently on the climate crisis.
To maintain global temperatures at 1.5 degrees above pre-industrial levels, we need to reduce our carbon footprint by 45% by 2030. However, we are currently on track for a 14% increase [1]. The size of the challenge should not be underestimated. To close this gap, there needs to be fundamental changes in the way that governments, businesses, and consumers operate.
The systems change needed is called the “Energy Transition”. It involves several elements:
- Technology – A switch from fossil fuels to renewable sources of energy.
- Scale – Moving from large scale energy production to smaller scale local production.
- Ownership – A change from large energy companies to smaller local producers.
- Local Adaptation – Optimally using the local resources that are already in place.
- Efficiency – Reducing the demand for energy through eliminating waste.
- Inclusion – Areas deprived of energy should have access to clean energy.
- Regulation – Adapted to encourage renewable energy implementation.
Accountants and finance professionals are supporting the energy transition in several ways:
- They have adapted performance measurement so that it accurately reflects the environmental impact of activities (eg, carbon emissions).
- They have included carbon taxes in their investment decisions even though these are not legally in place yet.
- They have developed new ways of financing value creating activities (eg, green bonds).
The Energy & Natural Resources Community will continue to support our members with webinars and articles that address the key issues of the energy sector. It is important that communication on climate initiatives accurately reflects the effectiveness of the measures taken. With the focus on ESG by investors, “greenwashing” – making sustainability claims that are misleading – has been on the rise. We will be addressing this in future webinars.
Whilst we concentrate on the energy sector, we must not forget that our Community also includes natural resources. The worst drought in Europe for 500 years is a reminder of the importance of water. We will continue to provide information on this vital resource. Energy plays an important part in water treatment, as well as the extraction and processing of other natural resources. The energy crisis is everybody’s crisis.
There is an understanding that we need to accelerate the energy transition. We look forward to supporting our members in driving the necessary change.
*The views expressed are the author’s and not ICAEW’s.[1] Tatiana Valovaya, Director General of the United Nations Office in Geneva at the “Assises Européenes de la Transition Energétique” on 31 May 2022.
