Sir Andrew Mackenzie, a member of the Advisory Board at Tsinghua University School of Economics and Management (Tsinghua SEM) and Chair of the Board of Shell plc, delivered his compelling lecture "Three Perspectives on the Energy Transition" to a gathering of more than 80 Tsinghua SEM Executive Education students on October 18, 2023. The event was moderated by Professor LI Jizhen, associate dean of Tsinghua SEM and professor of the school's Department of Innovation, Entrepreneurship and Strategy, who provided an insightful look into the critical issues surrounding global energy transition.

Sir Andrew Mackenzie speaks at Tsinghua Students Dialogue with Board Members

Drawing upon his extensive experience in the mining and energy industries, Mackenzie underscored the pivotal role of fossil energy in global development during the past century, as well as its contribution to improved living standards and increased life expectancy across the world. However, the goal of global carbon neutrality and energy transition necessitates a reduced dependence on fossil energy and the development of a low-carbon energy landscape.

Mackenzie named three major challenges the current energy transition is facing:

1. Climate Change: The adverse effects of rising greenhouse gas concentrations, which is responsible for global warming and frequent extreme weather that affects both human lives and the ecological balance.

2. Energy Access: Approximately 1 billion people, primarily in Africa, lack access to electricity or are in short supply of energy. Access to energy is crucial in efforts to reduce poverty and improve health and education. It is not only an economic imperative but also a moral imperative.

3. Energy Security: Recent global events, such as the COVID-19 pandemic and the Russia-Ukraine war, helped many to realize that we cannot dismantle the current energy system quicker than we can build the clean energy system of the future.

Sir Andrew Mackenzie and LI Jizhen (left) discuss with the students.

In addressing these challenges, Mackenzie shared his three perspectives on energy:

1. The Geologist's Perspective: The fossil fuels used by people today come from ancient organisms. Mackenzie said understanding geology may help to push boundaries in securing the energy we need today and may aid in the development of low-carbon energy. The development of offshore wind power, for example, requires sufficient understanding of the structure of the submarine continental shelf, as does the development of carbon capture and storage technology.

2. The Economist's Perspective: Supply and demand equilibrium is an important economic model and also plays a role in the energy transition. Energy supply is largely determined by demand: if the supply is stopped without changing the demand, it will lead to a sharp increase in energy prices and carbon emissions may not be significantly reduced. The reduction in emissions will only happen as people change the types of energy they use. Mackenzie said that on the supply side of new energy, when renewables such as wind and solar are integrated into the energy mix, natural gas has a vital role to play to ensure power supply reliability in meeting the daily electricity demand. Shell is intensifying its efforts to provide the Chinese market with natural gas and electric vehicle charging solutions, both of which play a significant role in the reduction of carbon emissions. Concurrently, the company is advocating for the adoption of carbon capture and storage technology and forging partnerships with relevant Chinese enterprises. These initiatives may make substantial contributions in China's journey toward a low-carbon future.

3. The Mahjong Player's Perspective: As a useful analogy when considering the energy transition, Mackenzie said mahjong players need to have a deep understanding of the needs and motivations of other players. At the same time, mahjong players need to be calm and careful in their analysis and pragmatic in their action. These attributes provide valuable guidance when considering the energy transition and how governments, businesses, communities, and energy consumers need to strengthen their interactions to pursue the shared objective of achieving near-zero emissions.

Mackenzie concluded by expressing his optimism about achieving global net-zero carbon emissions and his enthusiasm for innovative solutions that the next generation of change-makers will bring to facilitate a balanced energy transition.

Students ask Andrew Mackenzie their questions.

During the Q&A session, Mackenzie answered questions on topics such as hydrogen energy development, advancements in energy storage technology, transformations in energy enterprises, the future of energy technology innovation, and opportunities in the Chinese market. The ideas exchanged during this session were enlightening and thought-provoking.

LI Jizhen (third from the left) presents a gift on behalf of Tsinghua SEM to Sir Andrew Mackenzie.

As the event concluded, LI Jizhen presented Mackenzie with a paper cutout featuring his portrait as a token of the school's appreciation. Participants expressed their enthusiasm for his insights, which they found inspiration for understanding the energy industry's future transformation. They also looked forward to further dialogue and collaboration with Shell plc.

Source: Executive Education