What is the energy transition? There are indicators that we are finally moving away from the burning of fossil fuels like gas and oil, and steps towards cleaner resources such as wind and solar energy. This transition has been discussed over years and now it is gaining momentum. As a result, there will be a profound impact on the global economy and the environment in the coming future. This energy transition is now leading towards an industrial transition and it will create both opportunities and challenges to businesses. How is energy transition driving towards industrial transition? How will it impact the corporate world?
Here’s everything that you need to know about the industrial transition that is happening as a result of the energy transition and its impact on the corporate world.
The industrial transition – what is it?
Industrial transition is not new. Since the first industrial revolution and the beginning of modern industrial creation, economies have undergone major changes. Today, we are experiencing yet another industrial revolution which drives along with the energy transition. That is the transition in investor intention about how companies engage with environmental risk. This move towards necessary exposure of risk is one of the megatrends driving today’s markets and corporate operations. Industrial transition means to balance economic, social and environmental and climate challenges. Considering the transition towards a climate-neutral economy is crucial for organizations if they want to stay ahead in the changes that are happening around.
Energy transition leading to Industrial transition
How will the energy transition impact industries?
As I mentioned earlier many of the key drivers behind the energy transition are environmental. This change to carbon-free energy production will deliver both challenges and opportunities to businesses.
Industrial transition is linked with innovation
Industrial transition often involves a process by which traditional structures are replaced by modern industries. It is the outcome of processes reflecting the ability of a firm, the industry responds to new market pressures and creates new opportunities for workers. On the other hand, failure to react to a varying market environment can result in economic decline, unemployment and rising inequalities, environmental externalities and falling land values.
It brings long term benefits with short term costs
Industrial transition is neither automatic nor immediate. The most important expenses related to the adjustment process are correlated with structural unemployment and environmental degradation, which in turn can generate significant consequences for social welfare, especially where lasting over many decades.
Long term benefits from short term costs
Focus on the consumer expectations
Customers are now showing a growing interest in green energy. This has made many companies across various sectors to distinguish their products and change their production processes where possible. Thus, it has become necessary for the companies to focus on the demands of the consumers and adopt along with the energy transition that is happening.
The energy transition has led to the industrial transition. To cope up with the current situation the corporations have to develop their governance to support their activities in the energy industry, as well as developing the analytical skills and insight to recognize opportunities as they arise. A successful industrial transition needs to move along with the energy transition. It will not happen overnight. Such expertise will grow over time. The question is are you ready to be a part of this new world?
