Questions loom large over the energy business as the calendar turns to 2025. What will continued geopolitical instability do to commodity supply, demand and prices? To what extent will a second Trump presidency shift energy and climate policies and priorities in the US? And how will developments in the US impact carbon-reduction and renewable energy development efforts globally? How will energy companies adjust their postures and pursuits as they seek to balance today’s realities with tomorrow’s priorities?
As elusive as answers to questions like these might seem amid so much uncertainty and flux, if you connect enough dots, energy industry trendlines for 2025 begin to emerge. Here are five trends that SAP’s oil, gas and energy team sees shaping the global energy business in the year ahead (with the usual caveats that accompany predictions of this sort).
1. A renewed emphasis on domestic oil and gas production in the US, balanced with a continued push to develop renewable energy sources: Another Trump administration means a greater focus on domestic exploration and production, solidifying the US as a net oil and gas exporter amid record production levels.
That, plus a quiet wind-down of production quotas within OPEC, will apply downward pressure on energy prices in North America and globally. Meanwhile, global energy companies that have been particularly aggressive in decarbonising their portfolios will pull back a bit in that effort to rebalance their portfolios, recognising they must balance longer-term carbon-reduction goals with near-term energy market demands and realities related to security of energy supply.
We are also likely to see a push to repeal or reduce tax credits and other incentives for electric vehicles (EVs), for example, perhaps with a shift in emphasis to longer-term renewable transportation options such as hydrogen as a vehicle fuel. Meanwhile, unlike in the US (and perhaps in response to what is happening there), policymakers in the EU will more aggressively pursue incentives and mandates to accelerate mainstream adoption of renewable fuels and EVs, building on existing programmes.
2. Shareholders, consumers and regulators drive energy companies to maintain focus on decarbonisation: Even with the US likely to double down on domestic oil and gas exploration and production in 2025, global pressure from sources such as the recent agreement among climate policy negotiators to establish an international carbon credit trading programme will prompt energy companies to approach all their activities and relationships through a carbon-reduction lens.
We expect the US will retain a seat at the Paris Agreement negotiating table to ensure it has a voice in ongoing UN climate policy discussions. We also expect hydrocarbon-focused companies to embed emissions and carbon-reduction KPIs into their management of the hydrocarbon molecule and in their decision-making across the business. As more extended producer responsibility and greenhouse gas reporting regulations take hold in Europe (e.g., the Carbon Border Adjustment Mechanism) and in the US (e.g., California’s emission disclosure requirements, which apply to entire value chains), as consumers and shareholders continue their calls for energy companies to decarbonise, and with the importance of flexibility in meeting energy demand, these companies will realise they cannot afford to dial back their efforts on the carbon-reduction and renewable energy fronts.
As a result, we will continue to see them diversify into new lower-carbon energy products, services and lines of business, such as carbon capture, retail EV charging and repurposing of refineries for renewable energy production.
3. A push by energy companies to capture efficiencies in their hydrocarbons businesses: Due to a greater emphasis on the oil and gas portfolio, energy companies will prioritise finding new ways to run their hydrocarbons businesses more efficiently and profitably.
To those ends, expect to hear more about companies moving away from expensive, customised digital infrastructure to embrace industry-standard digital IT infrastructure, based on a realisation that they can save substantial costs—up to tens of millions of dollars annually—by adopting simplified market-standard digital practices and processes rather than repeatedly trying to reinvent the wheel by developing proprietary software that requires expensive, difficult-to-maintain custom code.
Rather than invest substantial IT resources in custom digital systems that do little to strategically differentiate them, energy companies will work together to develop market-standard solutions to manage non-differentiating workflows and processes in areas such as finance, accounting, logistics and HR. That will free them to focus on activities and workflows that do move the needle competitively. Companies such as Shell and Halliburton already are embracing this approach.
4. AI: The aforementioned fit-to-standard approach is part of a broader push likely to intensify in 2025 towards integrated digital environments with embedded business AI that enables energy companies to better manage and understand their data in order to respond rapidly to shifting market conditions and nimbly pursue opportunities in new and existing markets. We see AI cementing its role as a go-to tool for energy companies in 2025, enabling them to improve in an area where they are already adept: managing the hydrocarbon molecule. In particular, we see generative AI-driven copilots and agents helping companies in areas such as commodity trading and risk management.
5. Prioritising partnerships and collaborations: Earlier I referenced a collaborative effort among energy companies to develop market-standard IT solutions that multiple companies can integrate into non-differentiating aspects of their operations. That is one example of a new open-mindedness among energy companies to build or participate in cooperative initiatives and in broad, multi-industry ecosystems to bring new value-added energy products and services to customers. By participating in joint initiatives and ecosystems in areas such as biofuels, energy storage, hydrogen, carbon capture, EV charging, and the like, they can accelerate innovation while sharing risk and reward.
Brent Potts is head of global marketing for the oil, gas, and energy industry at multinational software company SAP.
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