Energy

The energy industry collectively is grappling with five primary issues that will shape its future: environmental/regulatory concerns, labor issues, rising costs, infrastructure issues, and long-term concerns about fuel reserves. Although each sector of the industry experiences these issues in a different way, they are changing the way energy companies do business.

Environmental/Regulatory Issues and Laws

For many decades, scientists have reported that the emissions from burning fossil fuels such as oil and gas are harmful to the environment, primarily due to the high percentage of carbon they contain. In fact, scientists estimate that fossil fuels are responsible for more than 75 percent of all carbon, methane, and other “greenhouse” gas emissions. Greenhouse gases are those that are considered responsible for global warming. As a result, the United States government gave its environmental regulatory arm, the Environmental Protection Agency (EPA), the authority to develop, publish, and enforce regulations limiting the amount of greenhouse gases that can be released into the environment. In deciding a 2007 case, Massachusetts v. Environmental Protection Agency, the United States Supreme Court ruled in favor of the EPA with regard to having authority to enforce such regulations. In 2015, the Obama administration released the final version of the Clean Power Plan, which established state-by-state targets for carbon emissions reductions by power plants. Following the election of President Donald Trump in 2016, the federal government changed policy on greenhouse gas limits and other environmental concerns. The Trump administration repealed the Clean Power Plan in June 2019, and replaced it with the Affordable Clean Energy Rule.

Regardless of government policy, many power companies are switching to natural gas, rather than coal, as a means of generating electricity. Although natural gas is a fossil fuel, it is considered “cleaner” and can meet the new standards. Companies and research organizations continue to research methods of generating electricity in a more environmentally friendly way because they are aware that the general trend is toward finding ways to reduce harmful carbon emissions.

The electricity sector isn’t the only one that has been dramatically affected by environmental regulations. The oil industry, specifically the transportation oil industry, also has been subjected to ever-changing regulations. For example, the EPA launched its Renewable Fuel Standard (RFS) program as part of the Energy Independence and Security Act of 2007. The goal behind the regulation and RFS program is to encourage increased use of alternative, renewable fuels by refiners and importers in the transportation sector. Each year, the RFS updates the quantities it requires for the use of these renewable fuels: biomass-based diesel, advanced biofuels, and cellulosic biofuels. Refiners and importers continue to work to meet these levels and prepare for increased levels in the future. Biofuel use has received a mixed reception by the industry as it displaces the use of oil and affects profits. Some companies, however, have realized that producing and selling biofuel can add a new stream of revenue.

Since many oil and natural gas producers have begun to use fracking methods to extract previously inaccessible oil and natural gas reserves, there are concerns that the chemicals used in the fracking drilling process will infiltrate groundwater supplies. Fracking wells also uses a great deal of water, and there have been some reports linking fracking with some small-scale earthquakes in various parts of the country. Additionally, the release of methane (a major greenhouse gas) during fracking is causing increases in global warming. As a result, there has been growing public concern over fracking and the EPA tightened its oversight of this industry.

Other generating sectors, such as nuclear energy, also work to meet EPA regulations. Although most other sectors are considered environmentally cleaner, there are other environmental challenges they must overcome, such as natural resource use, and waste release.

The election of Joe Biden as U.S. president in November 2020 had a major effect on U.S. energy policy. The Biden administration reversed many environmental regulations established by the Trump administration. On his first day in office, President Biden signed the instrument to bring the United States back into the Paris Agreement. Major laws that were passed during the Biden Administration include the Infrastructure Investment and Jobs Act of 2021 and the Inflation Reduction Act of 2022, which included tax credits, loans, and grants to boost the domestic production of renewable energy; tax rebates and credits for electric vehicles, stand-alone storage, and clean energy manufactured components; and tax credits that helped households lower energy costs. “After historic clean energy incentives were signed into law in August 2022, clean power has seen record levels of announced activity, with the development pipeline swelling to 137 GW by the end of 2022—14 percent above where it was at the same point last year,” according to a 2023 report from the American Clean Power Association (ACPA). The ACPA also reported that “in the 137 GW development pipeline, solar accounted for 58 percent of all clean power capacity. Land-based wind accounted for 15 percent of the pipeline, battery storage represented 13 percent, and offshore wind claimed the remaining 13 percent.” Worldwide, the clean energy industry now employs more than 50 percent of total energy workers, according to the International Energy Agency.

Also in 2022, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act was signed into law. According to the U.S. Department of Energy, it authorized “historic levels of funding to support the production of semiconductors and other strategic technologies, including $67 billion to the DOE to enable cutting-edge research and development in clean energy, improve infrastructure at the National Labs, and support investments in innovation and technology hubs across the country.”

With that said, the future of federal energy policy in the United States depends on who holds the office of president and which political party controls Congress. While current laws and regulations seem to favor the development of renewable energy and energy efficiency jobs, that may change if the political winds shift and policies and laws are changed to benefit the fossil fuel industry.

Labor Issues

Older, established energy industry sectors such as electric, natural gas, and oil have been affected by an increasing number of retirements. A large percentage of current workers belong to the Baby Boom generation, which began reaching retirement age near the end of the 20th century. These retirements have led to an increased demand for new, qualified employees. Unfortunately, there isn’t a big enough pool of qualified workers to fill the number of positions, and many of the retirees held key leadership positions, which are more difficult to fill, and are taking the core wisdom, knowledge, and expertise about their jobs with them when they retire. Additionally, many people are moving from employment with fossil fuel employers to the renewable energy due to the fact that it is growing more quickly than the fossil fuel sector and the perception that the clean energy sector provides more job stability.

Dane Groeneveld, the former CEO of PTS Advance, an energy and infrastructure recruiting firm, notes that this shortage began in the 1990s. “The industry failed to develop enough technical professionals in the 1990s, where such career paths fell in popularity,” he says. “This was partly due to the introduction of the Internet and dotcom boom, and also due to the bust cycles prevalent in the energy sector in that era. Furthermore, we are now seeing the departure of the Baby Boomer generation from the workforce. Hence, there is a general shortage of experienced professionals in this sector.”

Subsequently, Groeneveld says, there has been a focus on training new talent with much investment in specialized tertiary education programs. Groeneveld is seeing companies invest in peer-to-peer mentoring, fast-tracking, and knowledge-transfer between employees approaching retirement and new workers in order to keep up with the world’s energy demands.

Rising Costs

Costs are rising across every sector of the industry. Energy companies must pay more to meet environmental regulations, increased labor costs, increased cost of fuel, increased cost of long-term power contracts, and inflation. In some sectors, there is a shortage of trained workers, so companies are spending a great deal of money to provide them with the education and training they need to be effective. During deregulation, many energy-producing utilities were required to sell off their generating plants, forcing them to rely on huge purchased power contracts to serve their customers, and these contracts for power on the open market can fluctuate wildly in price.

Meeting peak demands can also be costly. Often all generating plants on a system need to be online for only a couple of hours per day to meet peak demand, meaning that many generating units sit idle 20 hours a day. These “peaker” plants are expensive to maintain, fuel, operate, and have ready as needed. In addition, as system peak demand continues to increase more sharply each year, more peaker plants delivering expensive power during limited time periods will be needed. Utilities are trying to offset this effect through “demand response” programs, where customers reduce their demand or shed load during peak hours. This is a whole industry itself in which jobs for engineers, analysts, technicians, managers, and sales and marketing professionals abound.

In the oil and natural gas extraction industry, equipment costs are going up and so are the costs for preventing groundwater contamination and keeping employees safe. The expense of offshore drilling is often much higher than drilling at other locations.

Electric generation companies have been spending large amounts of capital to replace or repair old equipment or generating plants, or in many cases, to convert to or build natural gas-based power plants to meet EPA regulations. Employees must then receive additional training for the new environment, adding to the cost. Other factors driving the increase are the implementation of new technologies and rising health care costs.

For renewable energy companies, it’s necessary to spend a great deal of capital to build infrastructure and systems.

Infrastructure Issues

All energy sectors are facing infrastructure challenges. Established electric generating companies must replace inefficient old equipment and generating plants as well as distribution lines and poles that have aged beyond usefulness. Many companies are converting coal-burning plants to natural gas in an effort to meet current and future greenhouse gas emission standards. Transportation energy companies are purchasing new equipment to extract reserves in rock formations and investing in new or updated infrastructure to meet environmental regulations for equipment used to store and release waste. Renewable energy companies are building the infrastructure and systems they need to expand their service and generating and storage capacity. The current infrastructure simply isn’t in place to allow customers widespread access to the energy they generate, and some companies have struggled to obtain financing to address infrastructure issues.

Long-Term Concerns about Fuel Reserves

Since the 1970s, the public and government officials have expressed concern about the country’s supply of energy, especially oil and natural gas. Producers and energy companies have responded in two ways. First, exploration and extraction companies have increased their use of offshore drilling and other sources that were previously less explored. They have also developed techniques such as fracturing (which is also known as fracking) for obtaining supplies of natural gas and oil that were once considered unrecoverable. The Energy Information Agency reported that as of January 1, 2021, there was 2,973 trillion cubic feet of technically recoverable natural gas resources in the United States. The EIA also projects that tapping into these formerly inaccessible reserves will give the country enough natural gas to last for the next 86 years. A third approach being explored is to develop alternative energy sources. Electric cars and vehicles that run on biofuels, fuel cells, and natural gas are increasing in popularity. The U.S. government is also requiring refiners to increase their production and use of biofuels. More and more people are installing solar energy systems and wind energy systems in their homes. Americans and businesses are also focusing on reducing energy waste and improving energy efficiency. The average U.S. household spends $5,550 a year on energy, according to the Alliance to Save Energy. This amount can be significantly reduced if energy efficiency practices are implemented.

New Technologies and the Energy Job Market

As in many other industries, new technologies are reshaping the energy job market in significant ways. For example, many power utility companies are installing smart meter technology (also known as advanced metering infrastructure) that the utility can read remotely that eliminate the need for a person to travel from home to home to read each one’s meter. The U.S. Energy Information Administration reports that in 2021, U.S. electric utilities had about 111 million advanced (smart) metering infrastructure (AMI) installations, equal to about 69 percent of total electric meters installations.” This was a significant increase from the 86.8 million AMI installations in 2018. The introduction of this type of technology has hurt the job market for meter readers, but the technology has created new jobs for workers with different skills suited to the new system.

Energy companies are increasingly using technology to save money, improve energy efficiency, better predict and manage maintenance issues, predict and plan for energy demand from users, and more effectively communicate with customers. Technological innovations were adapted much faster as a result of the COVID-19 pandemic. A survey by the data analytics and consulting company GlobalData found that cybersecurity, Big Data, cloud computing, robotics, and the Internet of Things (IoT) are viewed as the top five technologies that will have the maximum impact on public utilities over the next three years. “With more data coming out of customers’ meters, utilities are focusing on data analytics for load forecasting, generation planning, managing peaks and increasing customers’ awareness regarding energy efficiency,” according to Harminder Singh, power director at data and analytics firm GlobalData, in an interview at Nsenergybusiness.com. “Big Data and cloud computing are useful tools that are aiding these initiatives. Cloud models are helping utilities to lower their information technology capital expenditures and offer unlimited computing and advanced analytics, while IoT is helping power companies to remotely monitor and manage their assets. Utilities are also able to conduct predictive maintenance of their assets with the assistance of IoT.” Artificial intelligence (AI) will also be used to analyze weather data and make meteorological forecasts in order to help energy companies better predict expected energy usage and potential risks to energy infrastructure, among many other uses. “There are already promising attempts to use AI in simulating new catalysts for more efficient chemical processes and developing new nano materials for higher capacity batteries,” according to “5 ways Big Tech could have big impacts on clean energy transitions,” an article from the International Energy Agency (IEA). AI (including machine learning) will also be used to power autonomous energy systems, which allows utilities to improve and optimize performance with minimal human interaction. Generative artificial intelligence (AI) is one of the newest technologies being used in the energy industry. It is a form of machine learning algorithms (including large language models) that can be used to create new content (including text, simulations, videos, images, audio, and computer code), as well as analyze and organize vast amounts of data and other information. “Generative AI is particularly well-suited for energy sector use cases that require complex data analysis, pattern recognition, forecasting and optimization,” according to Smart Energy International. Areas of current and potential use for generative AI in the energy industry include demand forecasting, renewable energy output forecasting, grid management and optimization, energy trading and pricing, customer service and marketing, and energy storage optimization. Energy companies are also using more drones to replace human inspectors in order to reduce the risk of infection to workers during the COVID-19 crisis and to save money. The adoption of these and other technologies is creating demand for an entirely new set of workers, including data analytics professionals, AI scientists, cloud computing developers and engineers, IoT experts, and cybersecurity specialists.

According to Dane Groeneveld, nontraditional roles and new exploration and extraction technologies will create increased job demand. “We believe the shift toward ‘nontraditional’ energy sector roles, with more emphasis being placed on sustainable development and compliance will continue to strengthen. As such, we expect to see greater growth in these roles. Also, technology is moving at a fast pace and we expect more data management and modeling roles will be created as we see further advances in the software, seismic, drilling, completions, and production technologies.”