Maciej Kolaczkowski leads the World Economic Forum’s Advanced Energy Solutions sector which engages leaders in frontier segments of the energy system such as clean hydrogen, sustainable aviation fuel [SAF], advanced biofuels, new nuclear, storage, demand management, services and carbon management. Before joining the Forum he worked in the Office of the Prime Minister of Poland and at the Ministry of Foreign Affairs dealing with international energy negotiations. Kolaczkowski started his career at the Polish Oil & Gas Company in the strategy department. He recently spoke to The Innovator about how the Forum is trying to help accelerate the energy transition.
Q: Why did the World Economic Forum create the new Advanced Energy Solutions group?
MK: Solutions like clean hydrogen sustainable aviation fuel, new nuclear and others are key enablers of the energy transition. There is a massive need for all those solutions if we want to reach Net Zero in the year 2030 and have a reliable and affordable energy system. These technologies are poised for exponential growth but we are not deploying them at the scale and at the pace that’s needed. The reason for that is that a lot of those solutions are relatively early and they’re expensive. We can reasonably expect the cost to eventually go down but to get to Net Zero by 2030 advanced energy solutions need to reach scale in the next couple of years, not in a couple of decades. So how we do that? It’s a huge, huge challenge. Battery capacity needs to grow 15X by 2030, carbon capture utilization and storage by a factor of 40. The market for clean hydrogen is expected to grow from half a billion dollars in 2021 to $120 billion in 2030 and, in the same time frame, the market for advanced biofuels is estimated to grow from $3 billion to $180 billion. So, we’re talking about the need for all the segments to double or more every year for the next decade. There is a need for innovators, large energy companies, corporations that are large consumers of energy, and investors to play their parts. We also need government to create conditions for that. That’s why we created this community. We want to shorten the time needed for deployment of advanced solutions from decades to years and months.
Q: What sort of action plan is the Forum putting into place?
MK: First, there is a need for holistic, global, and systemic thinking about this. We elevate this discussion about bigger and faster deployment of advanced energy solutions to the business and political leadership agenda. Secondly, we provide a platform that brings innovators that are scaling, large energy companies, large energy consumers and investors together. At the World Economic Forum we engage 850 of the world’s largest companies across 20 different industries and we work with the leaders of those companies. There is an amazing and unique opportunity to bring these business leaders together with innovators, put them in one room and get them to engage with one another. This is what we are doing at our meetings in Geneva, New York, Tianjin and elsewhere. The third thing we want to do is to help address governance of these new energy technologies. The biggest challenge is always transforming global discussions on policy and regulation into local practical action but the Forum is very strong when it comes to engagement of public figures.
Q: What are some good examples of partnerships or purchase agreements between traditional companies and innovative young companies developing advanced energy solutions that the Forum can point to that others might emulate?
MK: There are many examples of companies across industries, including oil and gas, electricity, chemicals, and others, that have managed to form efficient partnerships with innovators in the energy space. When they work together things can really move at scale. It may sound like a trivial thing to say but it always works best when all partners are able to leverage their strengths. When we think about new technologies and new solutions, we often think about greenfield projects and building the most modern kinds of facilities. Clearly this is the future when we reach scale but to get there it is also worth leveraging facilities that we already have. For example, there is a refinery in Spain that is being retrofitted with a green hydrogen electrolyzer by a number of partners from energy, technology and government. It will mix green hydrogen with carbon dioxide to form synthetic gas that can then be upgraded into sustainable aviation fuel. In this kind of situation you don’t need tens of billions of dollars of upfront investment to have a big impact. These kind of projects can move much faster than building something from scratch thanks to existing infrastructure, land and competence with minimized permitting requirements. It is very practical and there is immediate business value.
Q: How much investment is needed to get to Net Zero?
MK: The IEA [International Energy Agency] estimates that $0.9 trillion needs to be invested in 2030 in modernizing electricity networks and building public electric vehicle charging stations, hydrogen refueling stations, direct air capture and C02 pipelines, storage facilities and import and export terminals. Some $1.7 trillion needs to be invested annually in low-carbon technologies in end-use sectors and another $1.3 trillion in wind and solar generation. This compares with total energy investment in 2021 estimated at $1.9 trillion.
Q: What needs to be done to motivate venture capitalists and private equity?
MK: Capital is increasingly available and a growing number of investors seek opportunities in the sector, from specialized smaller funds to large infrastructure funds with billions allocated to energy transition. Moreover, there is strong support from governments through policies aiming to multiply clean energy investments. Investors tell me, however, that it is often challenging to find and assess opportunities that match their profile in terms of scale, maturity and risk. What helps them a lot is if there is already a partner like a large energy company. For the investor it’s great because they can rely on the expert from the industry to assess the technology innovation and how it works so that they can focus on the investment details and can move much faster.
Q: What you describe is a classic chicken and egg situation. Oil and gas and electricity companies won’t invest until the projects get big enough, but investors are reluctant to help new energy players scale until industry players do. How could government help? If they agree to subsidize some of these technologies, wouldn’t it make a huge difference?
MK: For sure government has a big role to play. As the U.S. is demonstrating, different forms of incentives and subsidies can greatly accelerate pace and scale. Standards are another example. What qualifies as green hydrogen? No one knows exactly because there is no standard. Permitting is also an issue. I often hear that there is no need to change any regulation or law, just hire more people to process applications. Governments can also help by becoming first adopters of these technologies.
Q: What about the role of large corporate consumers of energy in helping scale up new technologies?
MK: I think that energy consumption needs to gain much greater prominence in public discourse and in our minds. For example ‘hard-to-abate’ sectors such as aviation, aluminum, chemicals, concrete, shipping, steel and trucking represent more than one-third of the world’s carbon emissions. A great example of how these can be tackled is the First Movers Coalition. Its members are committed in advance to purchasing a proportion of the industrial materials and long-distance transportation they need from suppliers using near-zero or zero-carbon solutions despite the premium cost.
Q: What message would you like readers to take away from this interview?
MK: Virtually all technologies needed by 2030 already exist to achieve the Net Zero energy system by 2050. The good news is that wind and solar along with gigascale and industrialization of advanced solutions will drive the cost down. The challenge is that we need to achieve in years what took wind and solar decades. Get in touch if you are excited about it!
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For more on the Forum’s Advanced Energy Solutions community see this article in The Innovator.
