Referrer’s Lunch Recap: Energy Futures

The changes happening in the energy sector – whether driven by technological advancements, policy shifts, or the increasing focus on energy efficiency and carbon emissions reduction – are affecting us all.

While Energy Futures may seem a curious topic choice at first glance, we picked it because it’s front of mind for many business leaders and organisations right now. The energy market’s complexities are deeply tied to the next federal election, global events, and rising cost-of-living concerns. The question we’ve been asking ourselves is: how are we going to tackle this at a business level? So, we thought it would be great to answer this question by discussing it with the people who have helped align.me grow.

For this reason, we invited Steve Peters, an accomplished engineer and adviser in the energy and environmental sectors, to give us first-hand insight into this topic. Formerly a Senior Energy Specialist at the Asian Development Bank, Steve now leads Planetary.blue, an AI-powered platform providing curated information on directors’ ESG (Environmental, Social, and Governance) obligations and interventions, as the curator. His work focuses on real, measurable activities backed by credible science to do more with fewer resources and less pollution – exactly what we needed for this conversation.

Innovation and resilience amidst sobering stats

Our Co-Founder and Executive Director, Brett Bonser, took the helm and started the proceedings with a sobering fact: despite most of the current political debate focuses on energy production transition, globally, nearly 700 million people lack access to electricity (World Health Organization).

To shift our perspective, Brett introduced a story of resilience, innovation, and proactivity. At only 15 years old, Ann Makosinski invented “the human torch,” a flashlight powered only by heat from the user’s hand. When faced with a challenge, we must remember that, on the flip side, there are always opportunities.

The energy market is in transition with growing needs, increasing costs, technological change, and climate impact creating a difficult environment for political and business leaders to plan their future.

Here are a few more statistics showcasing how the energy market is changing:

• By 2050, global energy use will increase by an average of 50%, with 17% going just into AI. (1)
• By 2050, fossil fuel use will decline to 20%. While this is great news from a sustainability point of view, the downside it that this will lead to 300,000 jobs lost in the fossil fuel sector between now and 2050. (2)
• Australia’s oil refining capacity has dropped from 12 refineries in 2012 to just 2 today. With fuel security a major concern, that’s not great news for us. Australia has only 27-32 days of fuel reserves, far below the recommended 100 days. This led Qantas Chairman John Mullan to warn, “Our way of life could stop.” (3)

These are confronting predictions, but important signposts to guide us through our discussion – and reinforce the urgency of finding solutions.

Connecting these figures to businesses and energy futures

In light of the alarming statistics around energy use, fuel insecurity and global emissions, organisations are increasingly focused on energy diversity and reducing emissions across their supply chains with the aim of mitigating supply risk, stabilising cost and delivering brand protection.

In dealing with these challenges, businesses must consider:

Evolving ESG (Environmental, Social, and Governance) standards

ESG is a framework for assessing a company’s sustainability and ethical impact. Currently, it focuses on qualitative tactics – which are no longer sufficient. Steve believes that businesses need quantitative outcomes that can accurately measure and track their impact.

The problem of greenwashing

Greenwashing – where companies falsely claim to be environmentally friendly – is another significant challenge. In Australia, legislation has been introduced to curb it, with companies now held accountable. But many business leaders – especially those without technical backgrounds – may not fully understand the risks of their activities. This leaves room for inadvertent greenwashing, undermining efforts to build credibility.

The Paris Agreement’s fading promise

And lastly, the Paris Agreement’s goal of limiting global temperature rise to under 2°C is, unfortunately, a thing of the past. Businesses must not only adapt to this new reality but take proactive steps to mitigate their own risks and contribute to a more resilient future.

What can Australian businesses do?

Now that we’re aware of the challenges, risks, and the current state of the world, what can Australian businesses do? While some of the trends emerging in the energy sector may not be fully ready for implementation, they provide valuable insights into the direction the market is heading.

These four key trends are shaping the future of energy:

Cloud

The transition to the cloud is an important step forward. As cloud services adopt more renewable energy sources like solar and wind, their PUE (Power Usage Effectiveness, a standard efficiency metric for power consumption in data centres) improves, offering businesses a way to boost energy efficiency.

Innovation

Innovation is a powerful tool in reducing emissions and driving business growth. Companies can innovate within their energy supply chain, technology platforms, or transport systems. Businesses should start considering how they can use emerging technologies as they mature.

Hydrogen

In Australia, there’s a lot of talk about producing and exporting hydrogen. But as hydrogen is hard to ship, its role may be more impactful in decarbonising hard-to-abate industries, such as cement and steel production.

SMRs

Small Modular Reactors (SMRs) are generating interest as a safer, more compact alternative to traditional nuclear reactors. The U.S. Navy has long operated small nuclear reactors on its submarines and aircraft carriers, and this technology is now being explored for commercial use. While SMRs aren’t expected to be commercially viable for another 6-8 years, businesses should keep an eye on the development of this technology as it could eventually offer a dependable, low-carbon energy source in the future.

Practical steps businesses can take to respond to challenges

Understanding where we stand, now businesses need to consider how they can adapt to emerging trends while addressing their own energy needs. Here are some practical steps businesses can take:

Diversify the energy mix

Australian industries should first explore ways to diversify their energy sources. Biomass, tidal power, and offshore wind energy – resources abundant in Australia – are worth considering for becoming more sustainable and achieving lower energy consumption rates. Collaborating with retailers supporting these activities can provide businesses access to affordable, reliable power. This diversification can help reduce energy consumption and ensure a more resilient future.

Offsetting vs insetting

Offsetting refers to compensating for emissions by funding external projects (e.g., renewable energy projects elsewhere), while insetting involves businesses taking action within their own operations or supply chain to reduce emissions.

An example of offsetting can be that you’re paying an organisation to plant trees in a distant country, often without a meaningful impact. On the other hand, insetting is about integrating innovation into your operations.

If you have technology that can make your process cheaper, Steve advises investing in it. Businesses should look for ways to gain control over such technologies and innovations that can improve internal processes. This approach allows companies to reduce their emissions directly, making a more meaningful contribution to the energy transition.

AI in energy planning

Of course, there’s no conversation that doesn’t involve AI. Everybody’s talking about it. Everybody has AI in their business. So, it’s no surprise that AI is beginning to be used in energy planning (optimising grid management, predicting demand, enhancing efficiency), but it’s at an incipient phase.

Energy security, certainty, and resilience

Steve argues that businesses are not having enough conversations about preparing for worst-case scenarios, such as energy disruptions caused by natural disasters or geopolitical crises. Effective risk management should be a priority, with businesses needing to consider how they would respond to potential energy disruptions and who will take ownership of these improvements.

To achieve energy security, Australian businesses must focus on cost reduction, certainty, and resilience. Planning for energy security not only helps mitigate risk but also provides a foundation for long-term operational success in an increasingly uncertain political and policy environment.

Group discussions  

With that context in mind, we moved to one of our favourite parts of every lunch: the opportunity to hear your thoughts. Attendees broke into four groups to discuss the issues that our provocateur Steve had raised.

The first question we asked was “What factors should we be considering when placing our big energy bets?” or, echoing our referrer Clive Milham, “Without a crystal ball, how confident are you that you are tapping into a reliable source of energy?”

1. One key theme that emerged was the importance of flexibility in achieving energy independence. Political influence on energy investments, particularly the reliability of coal producers, was seen as a key factor affecting cost structures. The discussion also highlighted how advances in battery storage and the declining cost of solar energy are enabling more reliable and flexible energy sourcing.
2. The conversation also centred around investment trends, with a focus on quick wins like solar adoption. ROI was identified as a key metric for decision-making, while it was also noted that businesses should consider both short-term returns and the need for long-term energy transitions.
3. There was a general consensus on the importance of having unbiased, reliable information when making energy investments. The discussion highlighted the need for diverse energy technologies, such as nuclear and solar, to offer balanced solutions for future energy needs.

The groups collectively emphasised that cost, resilience, and certainty are key priorities when making energy investments – echoing Steve’s presentation.

After this, we moved straight to the second question: “What actions should businesses take to mitigate energy-driven risk?”

1. A key point that came up was the need for businesses to develop structured, proactive strategies for managing energy risk. Key steps are:
   • Auditing current energy consumption to establish a baseline.
   • Implementing risk mitigation strategies, including policy advocacy.
   • Securing backup energy sources and conducting real-world testing.
   • Optimising business-wide efficiency while staying informed about market and regulatory changes.
2. Insetting was highlighted as a key way to reduce risk. It was discussed that businesses should focus on technologies like solar and battery storage, which provide opportunities for self-reliance and enhance overall energy security. Energy audits, solar adoption for industrial sites, tendering energy contracts, and cost-effective battery backups for offices are actions that can be taken immediately.
3. The conversation also stressed the importance of technology-driven solutions. This includes integrating off-grid power solutions and IoT-based energy management technologies to optimise energy use. The group recommended businesses focus on planning for energy hedging, improving storage profitability, and making smarter operational decisions such as optimising travel, increasing remote work, and improving overall energy efficiency.

Key takeaways

The key takeaway from this discussion is that to achieve the cost, resilience, and certainty outlined in the first discussion, businesses must take a structured approach to energy risk mitigation. Immediate actions like energy audits and contract management provide quick wins, while longer-term strategies require investment in technology, policy influence, and self-sufficiency.

The conversation surfaced some tough challenges, but it’s clear that businesses must take proactive steps in energy management. So, when placing bets, we must look at the whole ecosystem – and model forward. In terms of actions to take, managing supplier risk (to the point of having someone on the board of key suppliers) is crucial. Make smarter decisions around energy consumption, from moving to the cloud and owning your infrastructure to optimising travel and getting business interruption insurance.

We walked away with plenty to think about – but also a clear sense that we can take control.

A big thank you to everyone who attended

This Referrer’s Lunch was a huge success, and we truly appreciate the time, insights, and energy our guests brought to the table. While we may not have all the answers yet, our discussions made it clear that meaningful change can start now. With continued collaboration, we can take practical steps towards a more resilient, sustainable future.

Sources

1. U.S. Department of Energy
2. Australian Financial Review
3. The Australian Institute of Petroleum