How energy diversification can drive development | Special pre-ADIPEC preview episode

0:00Adapak 2025, the world's largest energy event, returns to Abu Dhabi this November under the theme Energy Intelligence Impact. More than 1 ,800 speakers and 205 ,000 attendees come together to address a dual imperative, strengthening today's energy systems and scaling intelligent solutions. Join us in Abu Dhabi from the 3rd to the 6th of November to explore how the convergence of energy, AI, investment and emerging economies is advancing global progress. Register now at adipec.com.

0:36Hello and welcome to The Energy Gang, a discussion show from Wood Mackenzie about the fast-changing world of energy. I'm Ed Crooks, and this is the third and last in a short series of special episodes looking ahead to the Adipec Energy Conference in November. In this show, we're going to be talking about energy and economic development, and in particular about the role of diversification into low carbon energy and other new technologies in supporting economic growth and rising living standards. Now to talk about those issues, I'm joined by Charlotte Wolfe-Bai, who is the Group Chief Sustainability Officer at Petronas, which is the National Energy Company of Malaysia.

1:10Hello, Charlotte. Welcome to the show. Hello. Hello to you, Ed. Great to have you here. Thanks very much for joining us. And it's also a pleasure to welcome Andrew Smart, who's the Senior Managing Director and Resources Client Group Lead for the Middle East at Accenture. Hi, Andrew. Thanks for joining us. Ed, thank you. Wonderful to be here. Yeah, thank you very much for joining us. Now, before we get into the heart of this discussion, I think it would be useful for our listeners perhaps to just get a bit of an idea of where you're coming from in this whole debate about energy diversification and development.

1:40Charlotte, start with you. Tell us about your role at Petronas. What do you work on there? Certainly. So I'm the Group Chief Sustainability Officer. Me and my team, We set the strategy for net zero carbon emission. We also look at nature. So we have a strategy around thriving with nature as well as fostering a just transition. So as you mentioned, Petronas is the national oil and gas company in Malaysia. And we are also here to support nation building and to support the development of the country. Right. Thanks very much. And I want to drill down certainly to that notion of the just transition and exactly what that means a little bit later on in the show.

2:18So before we get to that, though, Andrew, same question for you, really. What do you do at Accenture and what is your perspective on that issue of energy and development? So two roles within Accenture. So the lead for our energy business and have responsibility for setting the strategy direction of our energy business across Europe, Middle East and Africa. And, you know, by energy, we principally focus on the oil and gas sector. But then within the Middle East, I broaden out slightly from an industry perspective and branch into the power sector, the chemicals and natural resources value chains.

2:56And I'm responsible for all of the work we do with clients in the region focused on those industries. So I guess our principal role in all of that is to help bring together the possibilities of technology, innovation and human ingenuity to look for future possibilities, opportunities and help organisations reach their ultimate stakeholder goals. So something I feel very strongly about the debate about energy, and I think we're perhaps guilty of it sometimes on this show as well, is that we have a tendency to see energy too much from a North American and European perspective. It's clear that perceptions of energy are very different in different parts of the world.

3:38Global inequality is still very great. And in many low and middle income countries in particular, there are concerns about whether investing in new energy technologies and cutting greenhouse gas emissions might actually conflict with raising living standards. Andrew, maybe talk to you about this first. When you think about these issues and the work that you're doing in the Middle East and elsewhere in the world, what do you think is the contribution that energy can make to economic development? I think what's interesting having moved to the Middle East and specifically to Abu Dhabi just over a year ago is I see very much that the Middle East sees itself in this pivot point between the global north and the global south and sees itself offering that possibility to connect opportunities from the developed world that you were describing into the growth opportunities in the economic development of the less well energy served nations.

4:32And I think that remains a fascinating opportunity set. And I think increasingly a fairly unique position that the Middle East plays within that context. And, you know, you definitely see the ambition, you know, and the connectivity that they're starting to play here in that role. And, you know, it's been very exciting and uplifting to see that. And I think it's true, you know, specifically in energy terms, but I increasingly see it true in wider economic and investment terms. I think it's a, you know, increasingly, it is that trading point. So I think we can see, you know, the business models and operating models of what would have been traditionally very specifically energy companies broadening into economic and financial organizations and increasingly technological ones.

5:24Yeah, we'll get into a few examples of that in a moment. Before we do, Charlotte, to get your perspective on this. Petronas, international company, operates all over the world. As you said, economic development is a crucial part of your role when you're thinking about sustainability. And you also use that phrase, the just transition. Could you talk a little bit about what that phrase means and how you see Petronas' role in supporting him? Certainly. So maybe just to take a few steps back, what is the role of a national oil company? And certainly in the case of Petronas, we are the stewards of the hydrocarbon resources of Malaysia, but we shoulder much broader responsibilities than pure market players.

6:09So we're there to develop the industry, of course, the energy industry, but also to ensure energy security for the country, as well as income for the country. So since Petronas was formed back in 1974, we contributed more than$350 billion to Malaysia through dividends and cash payments and fees and royalties and so on. But we've also supported over 39 ,000 people through tertiary education, and in some cases also secondary education. And many of those work in our company today. And that is a true contribution to nation building. And we continue this. So as the energy system continues to proliferate, we're also broadening our scholarships to cover more than just hydrocarbon related engineering.

7:04Just transition back to your question. It is about making sure that our investments, existing investments into existing oil and gas resources, but also into new value chains, create as many opportunities as for many people as possible. Better prospects for more people. And I also believe that this is sort of once in a generation opportunity where so much investment is going to go into infrastructure. So we have to make sure that it benefits more people and really lifts people out of poverty and supports economic development in general. Right. So let's think a bit about what that actually means then.

7:42So in terms of how you make that happen, what kinds of things are you thinking about? For us, we are sort of working on what does just transition mean? Very importantly, it is to work with our vendors and our supplier community, because as part of our role as a national oil company is also to support a thriving energy sector in the country. But many of our vendors, we have about more than 4 ,000 in Malaysia alone, they're small and medium-sized companies. And they're not necessarily have the right level of awareness or know-how to embrace a lower carbon energy future. So we want to support them in that.

8:23And we actually launched a program that we called the Petroner Supplier Support Program, which provides training and capacity and tools, as well as matching finance with the companies that are embracing sort of more energy efficiency efforts and reporting on carbon emissions and so on. So that's sort of one way that we're trying to support just transition through our vendor community. But we're also working with communities. We are looking at nature-based solutions, very much so, because of course we are in a mega diverse, biologically diverse country here in Malaysia. So we also need to make sure that we use nature to adapt to climate change and also as we continue mitigating the effects of climate change.

9:09So give me an example of that. What does a nature-based solution look like in Malaysia? So today we are very much in the infancy of developing nature-based solutions. So we are looking at forest mainly, but also mangroves, for instance, to generate carbon credits. And this is one way that the world knows how to make sure that we will have a good biological diversity also for the future. So this is a very early, early stages in Malaysia. We're working very much with states and the federal government, as well as with developers. to foster a good development of this, of high integrity and high quality.

9:48Today, for instance, we hosted a roundtable with representatives from indigenous people communities to discuss, you know, how can we uphold their rights in nature-based solution projects. But going further, I would also say that it's about engineering solutions. And back in June, we hosted an event. We think it might have been the world's first event of its kind. I don't know, but we called it the Energy and Nature Forum. And we had about 350 people coming from all around the world to discuss how can we consider nature in the energy transition? How can we consider nature in grid development, subsea cabling for renewables, perhaps carbon capture and storage, biofuels and so on?

10:31So there's a lot more to do in this space. But I feel that the industry is embracing this now and also the EPC contractors and the developers. Yeah, that's really interesting. Thanks. So, Andrew, get your perspective on this then. So you talked earlier about the role of the Middle East and the role of the Middle East, obviously, as a very important energy supplier to the world and also as that kind of pivot point between global north and global south. What does that mean then in terms of specific projects, investments, specific corporate strategies? How does that get reflected in the decisions that companies and countries are taking?

11:13Yeah, well, maybe, you know, firstly, just to pick up on your theme of the just transition, I think, you know, very often we, you know, rightly and understandably focus on, you know, consumers, you know, with access to affordable energy. You know, in reality, equally, those same consumers also need economic opportunity, they need jobs, and they need to, you know, be part of, you know, not just today's economy, but a pathway to the future economy. I mean, I think when you think about the fact that, you know, while we talk about the North and the South, there's also another divide between the nations who are rich in natural resource and energy sources and, you know, 100 nations or more who continue to depend on energy imports in order to drive their economic growth.

12:02So I think when we think about a just transition, in many ways, what we're talking about is ensuring that, you know, all nations, you know, have affordable, reliable and sustainable access to energy. And that's obviously needing to take place within a global landscape where, you know, we increasingly have geopolitical fragmentation. You know, we've got financial tightening and we're seeing, you know, technological acceleration and disparity between access to technology, but also disparity in terms of the impact of changing climate and climate conditions. So I think when we think about the just transition, that's the context in which we're looking to make those considerations.

12:50It's very interesting how rapidly that has developed to an acknowledgement that no one nation, no one company can ultimately be fully self-sufficient. And so we're actually, out of the embers of globalization, I think we're seeing much significant strengthening of regionalization and the type of collaboration that Charlotte referenced. We see it here as well with the GCC moves for interconnection across the Gulf states. And I think it's very noteworthy that that collaboration is both sought after but also being progressed. and we are genuinely seeing that. And I think that the nature of the electricity systems that are being developed with inherent intermittency, again, Charlotte referenced, the realisation that resilience will come from interconnection and therefore interstate and multinational collaboration is so, so important.

13:53This episode of The Energy Gang is brought to you by ADAPEC 2025, the world's largest energy event returning to Abu Dhabi from the 3rd to the 6th of November. Under the theme Energy Intelligence Impact, ADAPEC brings together the entire energy ecosystem to address a dual imperative, strengthening today's energy systems and scaling intelligent solutions that advance global progress. More than 205 ,000 attendees and 2 ,250 exhibiting companies will gather to exchange ideas, forge partnerships and mobilize investment, showcasing solutions that deliver energy to more people, more affordably, and with lower carbon intensity.

14:29Across 380 sessions, over 1 ,800 expert speakers will explore how the convergence of energy, AI, investment, and emerging economies is reshaping markets and driving opportunity worldwide. Join us this November in Abu Dhabi. Discover more and register now at adipec.com. Right. So what do countries need to make this investment in new energy technologies and new energy infrastructure work? Charlotte, you mentioned the importance of policy and regulation in supporting something like offshore wind and international transmission connections to make offshore wind viable. what does that really need? Is that national policies?

15:11Is that regional policies? Is that global policies that we need to support that and other kinds of new technology investments? Well, I think as Andrew mentioned, the focus is probably more national and regional now. Investments are real, infrastructure is real, and we are all looking to develop bankable projects. But I also would say that energy going forward will come from more sources. And we probably see more hybrid solutions as well, where you combine different sources of energy. And oil and gas is going to remain, but we need to make sure that it is much lower carbon than it is today, both at the production side, but also on the consumption side.

15:56So that's something that's very important. But also for that to fly, if you like, you do need strong regulation. The challenge in many emerging countries is that the ability to regulate is not always there. And it's not easy. If we look at the European context, we've had many reiterations of the European emission trading scheme. It's not easy to regulate. And when technology is at perhaps different stages of maturity, you need to have different policy mechanisms. Where do you provide subsidies or tax breaks and where are the commercial models? And we see this on carbon capture and storage, for instance.

16:33There's been many different business models tried. Some work, some not so well, and others are still in the development. And here, regulation is absolutely critical. So the regulators also need to have a full understanding of economics, but also on the technology and where it is at. So it's really important for industry to work with regulators more so than ever before. So I would say that the real hindrance perhaps to develop the energy systems we want for the future is the lack of fit for purpose regulation. But there is no perfect performer what it should look like. It really requires very much close collaboration between industry and decision makers.

17:16And if I may say again, because we hosted, not we, but Malaysia hosted the ASEAN Energy Ministerial here in Kuala Lumpur this week, you can see really much more closer engagement and alignment between the decision makers and industry. Everybody was here from financiers all the way to developers and equipment suppliers. And we're coming together and trying to figure out what would work here and now and also in the future. Right. You mentioned finances because, again, when I think about obstacles and barriers to getting this investment in low carbon energy, other kinds of new energy technologies, finance seems to be a crucial issue.

17:59Raising finance is really difficult. we've had a big push at the global level in successive COPs to try and mobilize finance for investment in low carbon technology in low and middle income countries it does not seem to have been entirely successful there's been some progress but it certainly hasn't lived up to the hopes I think that a lot of people in those countries would have had for it is the finance there? Is it available? And if not, what needs to happen to make it available? Financing needs are very nation specific. But I also believe that if you have well-defined projects, finance will find it.

18:41But to develop these projects, you need capacity building. And this is something that Petronas holds very dear to our hearts. So a few years ago, we launched something called the Methane Leadership Programme with the other national oil companies in the region. And this is really to build capacity and capability to develop those projects so that they are bankable. Now, where do you need finance? Typically, it is for some studies to see, you know, what is feasible, what's not feasible. And here we've had great support, for instance, from the Japanese government for projects here in Southeast Asia.

19:15Then after that, there are opportunities to develop bankable projects. And I think there's a lot of learnings to be had from other parts of the world where they have managed, for instance, to commercially finance carbon capture and storage. In my mind, cost of technology is important and then markets will find its place. So once you have real commercial business models, then I think we have a good system. No bilateral donor money will ever be sufficient to develop the next generation of energy system that we need. Right. Thank you. So look, let's cast our eyes, let's say maybe 10 years ahead and think about where some of these trends are going then.

20:02Maybe Charlotte, get your thoughts on this first. Where are we going to be? Where could we hope to be by 2035? I think much progress would have been made in 10 years time. We already see it. I've been living here in Malaysia just under five years and I've seen the development. Even in Petronas, we used to be an oil and gas company five years ago, and today we have a much more broader offering of renewables. We're also working on hydrogen, bio-based fuels, and so much more. But if we take Malaysia, which is an emerging market, as I mentioned before, Malaysia has a national energy transition roadmap, and it sets six energy transition levers, and Petronas is part of this effort.

20:45this effort. So it's sort of like demonstrator projects to take us into the future. And carbon capture and storage is one of those that we're very supportive of. And biofuels is another one, as well as hydrogen. At the same time, the country is also developing a climate change act, which is in the works. And we also have the climate change policy 2.0 that was launched earlier this year. So all of this will sort of policy will be more aligned and also give us a signal for investors of where the country is going. And I think this will fast track the development as well as with technology prices coming down.

21:24And this is true for all emerging markets. I believe that technology, as prices come down, there will be a development in this direction in many, many countries. But policy is kind of key and critical. And I feel here in Malaysia, it's becoming very much aligned. But it's perhaps not true for all of the countries there. And this is where the capacity and capability support needs to come through from those multinational agreements. So, pardon me, from the multilateral agreements that are negotiated every year through the COP process. Yeah, got it. Thanks. So, Andrew, what do you think the Middle East in 10 years from now?

22:01Well, maybe to broaden it slightly, Ed, to think about it, you know, in global terms, only because, you know, when we do an interesting study, we've been working with the World Economic Forum for some 25 years now. and we have a particular role in working with them on the energy transition index. You know, I think, as Charlotte says, what's always reassuring is that underneath, you know, all the noise, actually system performance continues to improve and actually sustainability continues, you know, an upward climb. I think what we've focused on a lot today is maybe the component of the security of the system.

22:41And I think if we can see that the energy mix continues to broaden and the import exposure can be managed, I think we will see progression on security. I think linked to that, if we, you know, the acceleration of infrastructure build out and development, I think, you know, particularly, as I say, on a grid first basis, that will enable even further acceleration to renewables and storage deployment. And that will create the flexibility in the power systems that will sit alongside, you know, an electron and a molecule based system that will reduce congestion and curtailment. So I'm positive that, you know, these features and facets will develop inevitably when world order and geopolitics gets in the way.

23:33These are typically some of the things that have been interrupted, you know, along with supply chains and trade frictions that we need to alleviate. yeah no good point good point so as i was saying at the beginning this is a podcast looking ahead to adipak i think you're both going to the conference aren't you i'm interested in hearing what you want to hear at the conference and also what message you would like to leave other people with what do you think they should be taking away from the event maybe andrew start with you on that what do you think? Adipak is an amazing event. I've been coming here for over 10 years now, and it's evolved incredibly.

24:14I'm always intrigued to see who the new players are that arrive and participate. Last year, we saw the emergence of the hyperscalers and many of the Gen AI companies, not just as technology providers to the industry, but actually as energy consumers and maybe even increasingly energy players. That was fascinating to see. I think with that comes the emergence of new opportunities. So I'm, again, always interested to see, you know, technically, geographically and collaboratively what's emerging. And finally, you know, who's going to lead the way, you know, from a financial, political and willingness perspective.

24:54So those are the things that I'll be looking out for, for sure. I'm delighted to say I'll be hosting a roundtable looking at the the future of molecules at the event. And I think what we'll really be trying to drill into is, you know, very specifically, where are the market opportunities from a local perspective? You know, how does that come together in terms of integration? And, you know, what's the range of participants we need in those new molecular value chains? And what particular innovations are going to make new molecules viable into the future and how do we connect supply and demand in that context.

25:36So Charlotte, what about you? What do you want to hear and what do you want people to hear from you? So as Andrew said, ADIPEC is the most tremendous event, must be one of the biggest conferences in the world. So what I really would like to hear is what are the bankable business models for new energy value chains? So we're talking hydrogen, hybrid solutions, mixing various energy sources, CCS and so on. I think that would be very interesting to hear. I'm expecting to see more bankers perhaps at effect this year to talk to that point. And then also how do you balance current energy investments into the existing energy system with sort of long-term decarbonized energy pathways, because there's been a lot of talk about backtracking and so on.

26:27But of course, the needs of today are not the same as needs of tomorrow. So that'd be interesting to hear about that. But I also want to hear some visionary and provocative perspectives that challenge industry norms and mainstream views. So I hope people will come armed with a lot of thoughts and opinions that we can then battle out at the various panels. My message is perhaps to ADIPEC, we just need to share our progress and exchange innovative ideas and deepen our collaboration. We need to collaborate like never before, but also across sectors. And ADIPEC really lends itself very well for that because it brings in different sectors around the energy challenge.

27:08So I would say deepening collaboration is absolutely key. and finally of course me and my colleagues we are warmly welcoming you to the Petronas exhibition pavilion at ADIPEC so do come over and I think there might be a coffee machine and a few baristas to welcoming you there that sounds fantastic thanks very much indeed and I definitely look forward to seeing you both again there unfortunately we do have to leave it but it's been fantastic talking to you both thanks very much Charlotte thank you thank you for having me thank you very much Andrew thank you Ed thanks very much to our producers Stuart Duffy Toby Biggins Gilchrist and Dan Cottrell and above all as ever many thanks to all of you for listening we really value your feedback please do keep that coming and we'll be back soon with all the latest news and views on the future of energy until then goodbye