Q&A with KBR Lead Economic Advisor Dr Valentina Dedi

Green investments have boomed in recent years, signalling a golden age for the energy transition. Referring to the socially responsible investing in companies that support or provide environmentally friendly products and practices, green investments encourage new technologies that support the transition from carbon dependency to more green, sustainable and environmentally-conscious alternatives.

Dr Valentina Dedi is Lead Economic Advisor at KBR, Vice President of Access for Women in Energy and Vice President of the Greek Energy Forum. Her work as an economist — specialising in global oil and gas markets and energy transition projects — has seen her focus on the likes of oil refining, petrochemicals, natural gas, LNG, renewables, hydrogen, ammonia and carbon capture and storage.

In this Q&A with Energy Digital, Valentina delves into the dynamics of finance, technology and policy, exploring how the convergence of these elements can mitigate investment risks and catalyse the transition towards sustainable energy solutions. 

What are some of the risks that face green investments and those backing them?

It depends on which ‘green investments’ we are referring to. For renewable energy technologies, such as wind and solar, financing has become easier over the years. These technologies have matured and are now market ready thanks to a continuous decline in technology costs and the advances in efficiency over the past decade. 

However, for technologies like green hydrogen or ammonia, or carbon capture and storage, things become more challenging, with investors facing several uncertainties and risks. These can entail technology failures, cost overruns, extended time frames and high capital costs, among others. When it comes to investing, there needs to be an attractive risk-return proposition. While these technologies are not new, the challenge lies in scaling up these projects as there are limited applications of large-scale deployment and, therefore, the business models are widely untested. 

Another significant risk factor typically experienced is the lack of clarity with respect to the demand outlook. A good illustration of this is hydrogen, where demand assessments have varied widely and the potential role that hydrogen can play has also been projected differently. This makes it challenging for investors to understand the scale of opportunity, and that’s why many projects have struggled to reach a financial investment decision. In 2022, despite strong policy support and momentum, hydrogen projects received the least financial commitment, accounting for a mere 0.1% of global energy investments. 

What policy frameworks do you believe are most conducive to fostering investment in green technologies and mitigating associated risks? What roles do the likes of incentives, tax allowances and low-interest loans play in making technologies viable?

The scale of investment required to meet the climate pledges that have been made over the coming decades is huge. It is projected that existing targets made by the world’s major economies under the Paris Agreement would require more than US$5tn to be invested each year between 2023 and 2050, according to S&P Global Platts. This is well beyond what government budgets can afford, so large-scale private sector engagement is required too. As such, coming up with the right policies and financing tools will be critical to enable private investment at scale. 

Governments will need to set clear targets and priorities, as well as legally binding policy and regulatory frameworks over the short-, medium- and long-term to minimise policy uncertainty while helping create stability and revenue predictability. These policies should align with other national development plans and regulations, so they do not contradict each other. 

At the same time, policy efforts should centre around the introduction of ‘de-risking’ mechanisms and incentives that support green growth and foster green investment. This is especially pertinent for technologies and infrastructure which might stand at a risky point of their deployment curve. A wide range of instruments and approaches could be considered, from phasing-out energy subsidies to carbon pricing instruments, carbon credits, tax incentives, guarantees, low interest loans, remuneration regimes for electricity from renewables and green bonds, among others. 

A careful design and assessment of each targeted financing mechanism and the role they can play is crucial. This should be executed on a national level, based on each country’s unique economic, social and environmental circumstances. The goal should be the creation of economically sustainable markets. 

With your involvement in organisations such as Access for Women in Energy and the Greek Energy Forum, how do you see the role of gender diversity and inclusivity in shaping the success of initiatives aimed at de-risking investments in green technologies, and how can these principles be effectively integrated into policy and industry practices?

Given the unprecedented scale of changes the energy industry is faced with, a drastic response is required from corporations wishing to thrive in today’s fast-changing world in terms of maintaining profitability, while also looking at developing strategies that will enable them to gain a competitive advantage by exploiting emerging opportunities in the energy sector. 

Creating an equitable environment for women and fostering gender parity at leadership level will be key. This is not only crucial from a national point of view — as governments aim to deliver a just energy transition that will be sustainable and inclusive — but also from a business perspective as, based on evidence from academic research, diversity can drive better financial performance. Gender-diverse leadership can also lead to a more balanced decision-making process and, therefore, a better management of risk. The latter is of particular importance as many of these ‘green investments’ face significant cost risks and market uncertainties today. So, for companies wishing to gain a competitive advantage in those markets, managing risk efficiently will be critical.

While gender parity cannot be achieved overnight, there are strategies and initiatives that can effectively promote it. These include creating and adopting transparent policies that ensure gender diversity, guaranteeing equal pay for equal work and providing equal opportunities for promotion. Facilitating work attachment and reintegration is also key. Governments could, for example, sponsor return-to-work or career training programmes which would strengthen women's participation in the labour market.

Awareness-raising campaigns that challenge traditional stereotypes of the energy sector can also be very impactful, promoting women in the industry, which typically has a reputation of being dominated by men. Mentoring programmes and leadership coaching can also encourage diversity at leadership level too. 

At Access for Women in Energy, one of the oldest groups established, we aim to raise awareness and promote the development of women in the energy industry globally. To do so, we embark on several initiatives including providing career talks and advice, offering training and conference support by helping conference organisers increase the participation of women by tapping into our extensive network of female energy experts. However, it’s vital to ensure men are also engaged in the conversation to facilitate true gender-diverse dialogue to drive the industry forward. 

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