NEW YORK (Reuters) - - The breakneck pace of change in the energy sector is creating a challenge for energy leaders not only in its scope but its speed. As technologies unlock new resource opportunities and redefine relationships between producers and consumers, geopolitical events are posing new supply threats and difficult policy and investment decisions, all against a backdrop of the growing need for action on climate change.
Successfully navigating such a complex landscape, whether in government, non-profit or private sector, requires a vastly different skill set than was needed not long ago.
A few decades ago, senior government officials were forced to learn the details of nuclear weaponry such as throw weights and ballistic trajectory to create sound policy at the height of the Cold War. Now they must integrate finance, engineering, science, foreign policy, and economics to spur action on climate change or boost energy security. Think of the complex calculus and understanding of the role of energy markets needed to inform sanctions against Iran, react to Russian aggression against Ukraine or respond to the threat from ISIS in Iraq.
Diplomats today must understand how shifts in global energy demand affect actors outside the OECD, how diversification of oil supplies can reduce geopolitical and market risks, and how growing competition in global gas markets can be a source for energy security. Moreover, a sophisticated understanding of finance is necessary to effectively assess what forms of power are competitive in national markets, how to design climate policy, and navigate the complex geopolitics of climate negotiations.
The oil and gas sector faces no less of a daunting task. Change is afoot at the top of the oil and gas sector, with CEO turnover from Statoil to BG to Shell to Total. It is no longer adequate for CEOs and private sector decision makers to have expertise that is solely geological and technical, or be national champions focused on developing their own country’s resources. When contemplating investments today, multinational companies must consider factors such as sanctions against Russia and Iran; security and stability issues in areas from Nigeria to Libya to Iraq; and cultivating markets and government relations in growing economies like India, China and the ASEAN nations. Even within areas such as Europe and the United States, understanding issues such as popular opposition to nuclear power or hydraulic fracturing is critical.
Successfully navigating these complex issues requires geopolitical and cultural expertise. Today’s oil and gas CEOs must understand history and religion to develop insights into the dispute between Baghdad and Erbil over Iraqi oil revenue, or the potential to bring Eastern Mediterranean gas resources to market. They must understand cultural and local norms to evaluate the future of shale development from Colorado to France to China’s Tarim Basin, or the future of nuclear power in Germany or Japan. They must understand politics to assess the potential impact of climate policies or EU renewable targets.
The same breadth of skills, perspective, and experience will be necessary for leaders in every other aspect of the energy sector as well, from NGOs to finance to academia.
For a major university like ours, that means that training the next generation of energy leaders requires not only geology, engineering or mathematics, but geopolitics, history, and anthropology. These new energy leaders are going to need to combine a vastly broader toolkit to succeed in today’s complex geopolitical and economic environment.
This is a truly transformational moment in the world’s energy history, with new technologies unleashing vast new sources of energy, geopolitical risks proliferating, business models being upended, and the threat of climate change looming. There has never been a more interesting, exciting or consequential time to work in the energy sector, and the diversity of talent, skills, and perspectives needed to successfully meet tomorrow’s challenges has never been greater.
Jason Bordoff and Carlos Pascual are, respectively, Founding Director and Fellow at Columbia University’s Center on Global Energy Policy. Mr Bordoff previously served as a White House energy advisor to President Obama from 2009 to 2013. Mr Pascual established and directed the State Department’s Energy Resources Bureau as Special Envoy and Coordinator for International Energy Affairs from 2011 to 2014.