“The times they are a-changin”

Doug Nester, Founder, MENA Power and Infrastructure    

As we closed 2024, industry was buzzing about the investments being made in major clean energy projects here in the States and around the world.   It was just in January of this year when ExxonMobil boldly announced 2024 as ”A breakout year for our carbon capture and storage business”.  As we now know, the breakout turned more into rubble in 2025 due in part to the collapse of clean energy support by the incoming Administration.  In May, the Department of Energy terminated 24 awards totaling over $3.7 billion issued by the Office of Clean Energy Demonstrations (OCED) and in October terminated another $7.56 billion in awards to 223 additional projects. 

Included in these terminations was a $331.9 million federal grant for ExxonMobil’s blue hydrogen and CCUS project in Baytown.   As a result, and in less than 10 months from their proclamation of 2024 being a “breakout year”, ExxonMobil announced,  a pause to this $7 billion project.  This pause or potential cancellation underscores the ongoing political, economic and public challenges facing large-scale deployment of clean energy projects not only in the U.S., but internationally as well. 

POLICY CHANGES

The U.S. clean energy economy is experiencing instability due to a shift in federal policies that have introduced roadblocks to clean energy development and rolled back tax incentives for renewables. Among a flurry of executive orders signed on the first day of his presidency, Trump withdrew the US for the second time from the 2016 Paris Agreement to curb climate change, declared a national energy emergency aimed at filling up strategic oil reserves, and froze various Biden administration measures designed to boost green jobs and investment and regulate the fossil fuel industry.  By mid-summer, lawmakers voted to terminate tax credits for solar, wind, EV’s and other clean technologies. According to E2, a non-Partisan group promoting clean energy, U.S. businesses have scrapped 42 clean energy projects in 2015, up from 14 in all of 2024 and just nine in 2023.  The value of the lost 2025 projects is estimated at $24 billion. 

It is important to note however,  the Administrations’ “One Big Beautiful Bill Act” (OBBBA) did not remove the 45 Q tax credits that provides federal incentives to encourage the capture and sequestration of carbon dioxide (CO₂) emissions.  The OBBBA did include modifications including credit parity for different sequestration methods, making the credit transferable, and adding restrictions on foreign entities. Based on these actions, I am encouraged that 45 Q credits will remain viable financial rewards as the profitability of CCUS projects relies heavily on receiving these government incentives. 

FOLLOW THE MONEY

As noted above, the erosion of support for clean energy projects is not just isolated to the States.  Globally, political friction and the withdrawal of major financial players from coordinated alliances are significant factors that have slowed the momentum for net-zero investments.  During 2025,  prominent financial institutions and investment firms have exited the Net-Zero Banking Alliance (NZBA), a United Nation backed initiative that aims to unite global banks in efforts to align their lending and investment portfolios with net-zero emissions by 2050. Domestically, these departures included the world's largest asset manager BlackRock, and the six largest U.S. financial institutions, Goldman Sachs, Wells Fargo, Citigroup, Bank of America, Morgan Stanley and JPMorgan Chase. Internationally the departures included the six largest banks from Canada, Royal Bank of Canada, TD Bank, National Bank of Canada, Canadian Imperial Bank of Commerce, Bank of Nova Scotia and Bank of Montreal.  Also withdrawing was Australia’s Macquarie and most recently Japan’s Nomura Holdings and Sumitomo Mitsui Financial Group. 

In addition, major financial institutions were lowering their emission reduction targets.    Europe’s biggest bank, HSBC, announced in February that it was abandoning its target of achieving net zero carbon emissions across its own business activities by 2030 because of the slow pace of change in the economy. It is now aiming to reach net zero 20 years later than previously planned, by 2050, and has lowered its expectation for emission reductions in its operations, business travel and supply chains this decade to 40%.  Wells Fargo says it is dropping its goal of achieving net zero emissions across its financing portfolio by 2050 and UBS blames its acquisition of domestic rival Credit Suisse for pushing back a target to cut its own greenhouse emissions to net zero by a decade, from 2025 to 2035. 

AWARENESS OF O&G AS THE FUEL OF THE FUTURE

Perhaps in 2025, the world finally woke up to the fact that for the foreseeable future, coal, oil and gas will continue to maintain their dominant role in global energy production.  According to the International Energy Agency (IEA), fossil fuels which currently account for 80% of global energy demand are projected to still account for 60% of the total global energy production by 2050 (Figure 1). In a marked contrast to its previous reporting, the IEA no longer sees peak oil demand occurring within their entire 2050 forecast period.  As stated in their November 12^th release, this revised long-term outlook is due to shifting US decarbonization goals, rapid growth in electricity consumption and slowing adoption of electric vehicles.   

Fig. 1. Global energy demand

Some of this fossil fuel awareness likely comes from the well-publicized growing power demand required by data centers which Goldman Sachs Research estimates will grow 160% by 2030. At present, data centers worldwide consume 1-2% of overall power, but this percentage will likely rise to 3-4% by the end of this decade. In the US and Europe, this increased demand will help drive the kind of electricity growth that hasn’t been seen in a generation. 

Most of this awareness is, however, driven by the innate desire for governments and people to have affordable and reliable power.   Today, around 730 million people still live without electricity, and nearly 2 billion rely on polluting cooking methods.   Our industry is continuing to demonstrate that the use of fossil fuels to help satisfy this basic desire can be done in an environmentally responsible manner.  Companies are ever increasingly utilizing technological advances that both optimize performance and mitigate the environmental impact of their operations.  Such advances are occurring in water recycling, methane emission reduction, construction of digital oilfields with real time monitoring and Ai review of operational data.   

As suggested by Wood Mackenzie in their Energy Transition Outlook 2025-2026,  “surging power demand and mounting geopolitical tensions have made 2050 net zero goals unattainable”.  While such forecasts and reported causes of change will vary over time, I believe there is one stable innate desire that will ultimately guide our industry into the future, and that is to “simply be responsible custodians of our world”.   

DOUGLAS C. NESTER is a founder of MENA Power and Infrastructure;  a  company focused on helping governments and companies meet their decarbonization goals and energy demands by monetizing unused natural gas potential to generate distributed local power.  He is a distinguished industry entrepreneur with over 40 years of global upstream operational experience that includes assignments within countries having some of the most complex political, cultural, and logistical challenges. Mr. Nester has a BS degree in Geology from Indiana University of Pa., performed his Master’s studies in Geology at the University of Houston-Clear Lake, and received his MBA in Finance at the University of St. Thomas in Houston.