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Good morning and welcome back to Energy Source, coming to you from London where traders and executives are gathering for International Energy Week.

In recent years, the three-day conference, previously known as International Petroleum Week, has sought to jettison its oily image and opened the gathering up to a much wider range of industry participants.

A quick glance at the agenda of the main event, which runs through Thursday, shows they have been successful. This year the speakers include the chief operating officer at struggling Danish wind developer Ørsted, the chief executive of French utility Engie and the boss of the Emirati renewables champion Masdar. The conference even welcomes a representative of Just Stop Oil, a UK environmental activist group better known for its acts of civil disobedience than its participation in energy forums.

The conference promises to dig into the challenges and opportunities of the energy transition. But at the many receptions and nightcaps that occur alongside the event, trader chat is more likely to focus on the effects of western sanctions policy, competition for European refining capacity and what Opec+ is likely to do next. Check for our coverage throughout the week.

First, though, the newest member of the Financial Times’ energy team, Lukanyo Mnyanda, looks at a worrying report on the progress of the UK’s energy transition and shares his reflections on Europe’s energy earnings season.

Thanks for reading — Tom

Is the UK losing its pole position in energy transition?

In recent months, there has been much speculation among UK energy specialists about whether the government’s flip-flopping on green commitments might deter the investment needed to build a competitive renewables industry.

A survey — published on Monday — of 100 “decision makers” across the UK energy sector in companies with a combined £700bn in revenue appeared to confirm some of those worst fears.

The report by the UK Sustainable Investment and Finance Association found that 63 per cent of the energy companies surveyed had either moved or were planning to move to markets that were “more supportive of their sustainability goals”.

Some 81 per cent of companies said the country was falling behind in making itself an attractive investment destination.

The reasons will be familiar to people who follow the sector — a lack of grid capacity, an onerous and time-consuming planning and consenting process, as well as subsidy levels that have since been rendered uneconomical by inflation and supply pressures faced by developers.

The report should be difficult reading for a government that was the first among G7 economies to pass legislation for legally binding net zero targets and appeared to be at the vanguard of the energy transition when it hosted COP26 in Glasgow just over two years ago.

But all is not lost. The UKSIF also said that there was a potential £115bn that could flow into the UK energy sector if the government moved faster with implementing “favourable” policies.

The “contracts for difference” system through which the government guarantees developers a fixed price for the electricity they generate over 15 years was not necessarily broken, but was set at an incorrect level, said James Alexander, chief executive of UKSIF.

“We are in a global fight for capital and in order to win that fight . . . the UK must take some key and bold steps,” he said. (Lukanyo Mnyanda)

Results season shows primacy of returns over potential

Meanwhile in the corporate world, the annual reporting season for Europe’s oil and gas companies showed, once again, that investors remain more interested in immediate financial returns rather than the long-term potential of any “transition” business.

Equinor delivered, according to chief executive Anders Opedal, its “second-best results ever”, but its shares still took a beating. Investors were disappointed by the Norwegian energy giant’s reduction in dividend and share buybacks this year, down to $14bn from $17bn in 2023.

BP’s shares, in contrast, closed up 5 per cent on February 6 after new chief executive Murray Auchincloss committed to buy back at least $14bn in stock over 2024 and 2025.

Meanwhile, the panic that gripped European nations in the past two years over the loss of Russian gas supplies has emboldened executives to make a more public defence of their cash-generating legacy businesses.

“You have to be rational . . . and forget any ideological point,” Claudio Descalzi, the long-serving chief of Italian energy group Eni, told the FT.

Descalzi was enthusiastic about the potential of Eni’s renewables business — which he valued at about $10bn after the sale of a 9 per cent stake late last year. But he said he would cut Eni’s emissions, not by reducing fossil fuel production, but by increasing its output of gas relative to crude, describing the former as “the bridge for the transition”.

Eni’s adjusted net profit for 2023 was €8.3bn, down from €13.3bn the previous year.

One of the lessons from the 2022 energy crisis, Descalzi said, was that when gas prices surged, consumers did not have the option of opting for renewable energy, which is not yet available with enough abundance or reliability. Instead countries went back to coal.

“If you compare 2021 and 2022 when we had a strong scarcity of gas because of the Russian war, what happened in Europe? We increased by about 10 per cent the coal utilisation,” he added. (Lukanyo Mnyanda)

Power Points

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu and Tom Wilson, with support from the FT’s global team of reporters. Reach us at and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.

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