John Ballantine Jr.

We need to INVEST a lot more money in our Energy Transition in an increasingly uncertain world. The fiscal and political constraints mean that countries will confront difficult tradeoffs and challenging technical decisions in our imperfect and fragmented worlds. Leaders, companies, and financial players must balance the demands of short-term economic health / growth with the longer-term needs of sustainable economies. Currently, many countries do not have policies, market structure, or institutional framework to address our energy financing needs. We must come up with feasible plans that recognize our regional differences, economic constraints, climate scenarios, and variable energy resources.

" We should devote our efforts to charting Realistic Futures that consider our Technical Capabilities, our material supplies, our economic possibilities, our social necessities, and devise practical ways to achieve them. " Vaclac Smil, Halfway Between Kyoto and 2050

An energy development bank structure-like Turkey's Development and Investment Bank or the World Bank's EBRD-with an expanded mission could invest in a portfolio of public and private projects that is crucial to the MECA transition. Much like the Marshall plan, a regional energy bank would have access to the funds to leverage long-term investments through participation with key public and private players across MECA countries. A regional merchant bank would have the expertise, money, connections, and scenario modeling knowledge to spur many more energy investments over the next twenty years. I The Investment & Financing Challenge (see IAEE MECA program, Energy Finance abstract)

There are huge investment needs for the transition in terms of electricity, infrastructure, buildings, transportation, industry, and emerging technologies. The financing requirements are significantly beyond regional capacity-institutions will need to attract private capital, FDI, and outside funding where the risks are greater than the returns. The energy transition is largely a public good with utility level returns that support the long-term economic and social development of a region. Hard choices are ahead.

The financial markets, private firms, and institutional frameworks are not meeting energy investment needs because of uncertain scenarios, price volatility, risk / return tradeoffs and critical budget / financing constraints (deficits, BOP, FX). Large energy-related investments by private / public players must be made in the next five years with outside funds if the MECA region is to grow over the coming decades.

II Why & How of Energy Merchant Bank Energy merchant banks in partnership with private players are struggling with market failures and public good nature of the energy transition. Examples of public purpose banking frameworks include housing finance banks, World Bank, micro finance, community banks, and larger investment banks focused on energy. The creation of the Marshal plan after two world wars recognized the urgency to rebuild war devastated countries. The World Bank, of course, addresses the development challenges in countries with fewer resources. Housing finance and building societies focused on the market failure to provide adequate funding for middle class housing. And micro finance provides funding for very small family enterprises.

The MECA energy bank helps fund initiatives that move the transition forward quickly. An energy bank has the information, personnel, and access to experts to make long-term investments with key partners like utilities, wind farms, and storage facilities. Operating as a merchant bank with a sustainable mission it allocates its limited structured finance resources to leverage outside investors. In other words, one hundred billion energy bank funding results in a trillion-dollar portfolio invested in fifteen projects.

" Over the next decade, every aspect of national energy systems will be affected by changes in climate and energy policy, and financing, continuous technological advancement, and shifts in energy supply and demand. … The energy transition can no longer be limited to incremental steps. It must become a transformational effort, a system overhaul, based on the rapid upscaling and implementation of all available technologies to innovate for the future. " From 2021 United Nations report on Energy Transition " The current energy networks are complex, their establishment and operation require constant maintenance and upgrading, and their costs are considerable. The global energy transitions are multifaceted, unpredictable … And require decades of steady, high-level investments and political commitments to yield major economic and social changes … Nobody can offer a reliable estimate of the eventual cost of a worldwide energy transition by 2050, though a total suggested by McKinsey's Global Institute of $275 trillion between 2021 and 2050 prorates to $9.2 trillion a year… implies an annual expenditure of 10 percent of the total worldwide economic product for three decades, rather than 0.2 or 0.3 percent of GDP for the Marshall Plan (McKinsey 2022). " Vaclav Smil, " Halfway between Kyoto and 2050 " Convene a three-day workshop focused on building energy banks for Saudi Arabia / Gulf countries. New Funding Frameworks The urgency to build a new institutional framework focused on sustainable energy transitions and climate finance-where the risks are greater than the rewards-is recognized by most players in the field (World Bank, IPCC, IEA, IAEE, KAPSARC, and energy consultants). The argument for establishing regional sustainable energy banks is that: 1. The climate risks / impact vary significantly by region – MENA countries with strikingly different economic capacities will be particularly hard hit over the next fifteen years. In fact, each geographic area confronts enormous climate risks, different governance configurations, and mitigation strategies. 2. The risks of investing in new / proven technologies in large long-term energy projects are significantly higher than the medium term returns even in well managed, less volatile markets that are not the norm. Some regions have well developed aging infrastructure. Other regions, like China, are transitioning deliberately from coal-based economy to more sustainable future. While emerging countries continue to struggle. 3. The funds needed and financial / engineering expertise required are beyond the capacity of many institutions and firms operating in the energy / climate arena. In most OECD countries government budgets are in deficit and debt levels high. And less developed countries have little access to capital and higher project risks. The constraints on investing / funding the energy transition appear insurmountable; and they need to be balanced against the development requirements of each country. However, strategic choices must be made – the economic resilience of the region, the burgeoning climate risks, and the demand for faster energy transitions are pressing, (IPCC, IEA, World Bank, OECD). The uncertainty of prices, costs, and our futures is a call for action, not delay. The KSA and Gulf countries are in unique position with the low cost of energy, financial resources, and engineering expertise to lead the energy transition. The energy bank workshop is a step towards building a regional funding framework that makes realistic investments / technologies within the competing governance demands of the region. The goal of the sustainable finance workshop is to draft a practical path forward in our complex political economies. What Regional Energy Banks Do Regional Energy Banks are separate management entities focused solely on funding the energy transition in different parts of the world. In some cases, they may fall under other banking structures (World Bank, regional development banks); or be part of regional development efforts, such as KSA and MENA countries. The management framework reflects the political economy of our heterogeneous world; however, the mission and operating goals are similar. 1. Analyse information and build a rich knowledge base. The energy mix, technology, and models / scenarios are in constant flux, so much of the effort is focused on accessing a deep base of information that is available from consulting firms and international institutions. Evaluating and absorbing the information is challenging since some of the analysis is contradictory, uncertain, and often advocating certain solutions. Green / blue hydrogen, small nuclear, solar, offshore wind, carbon capture, hybrid transportation, storage. Using information to depict a changing flexible view of our regional energy worlds is key to policy guidelines and longer-term investment priorities.

How do we go about stimulating faster energy transitions with increased low carbon investments – multiples of current levels – with an accessible multi-tiered financing structure that meets the world’s shifting energy needs over the next 10 years? Hydrogen is a clear transitions fuel.

Assumptions and stylized facts (see selected bibliographic references)

• • HUGE financing needs to make energy transition and bend our carbon curve, 3 to 4 times current levels. Trillions more long-term investments per year in -- particularly electrical grids and hydrogen -- by private sector, governments, investors, and companies.
  • Faster and more disruptive climate / weather changes will push the average 2⁰ C temperature envelope with disproportionate geographic impact, unsettling surprises (floods, droughts, fires), and crises that will destabilize many countries. 
  • Continued volatility in oil & gas prices ($50-100/barrel) creating more uncertainty of the economics of sustainable low-carbon investments. Where scenario trajectories show fifty percent variance in electricity demand with changing weights of key drivers
  • Agent differences, divergent investment choices, and heterogeneity among key players with different agendas, capacities, and priorities. Some will invest more with longer horizons and lower costs; others will delay. 

Information asymmetries and rent seeking, the tragedy of the commons is ever present as temperatures climb with the sluggish pace of the energy transition. Investment decisions and uncoordinated policy will confound governments, companies, and people across the planet.

our Energy transition where MOBILIZING finance is essential to bending our carbon curve to the Paris COP Goals by 2035. We need to design a flexible financing structure that is focused on energy. These are not new ideas, however the urgency of stimulating much larger energy investments and providing more money cannot wait. 

Given the pressure for faster transitions the focus of this initiative is on MONEY and redesigning a flexible financing structure that is attuned to the shifting needs of dissimilar markets and players. Redirecting our world economies from carbon intensive fossil fuels takes a lot of time and money. However, disruptive climate events and lack of funds calls for new initiatives. We cannot wait for the right market incentives, well thought-out policies, or proven technologies to guide us smoothly towards a low-carbon sustainable trajectory.

We need an energy bank that is built around energy sources and regions. A financing structure that recognizes our differences. 

The big picture challenges are daunting so the focus on this effort is how we build an energy financing bank that brings Hydrogen to the market quickly. The hydrogen opportunities, technology initiatives, partners, cost estimates, and policy issues have been identified. Now how do we make things happen over the next five plus years? How do we marshal the moneys, the investment partners, and policy initiatives in varying markets to build a robust supply chains and competitive low-carbon energy source. Much like the growth of LNG developing a new, efficient, more sustainable fuel source takes huge investments across many markets / supply chains to build an economic alternative to our fossil fuel carbon economy.

Energy finance must be informed, flexible, and heterogeneous to be successful.

Climate scenarios and extreme weather surprises strongly suggest that faster energy transitions are necessary IF we are to stay below a 1.8 o Celsius rise by 2050 and bend our carbon curve. A review of efforts to decarbonize heavy industry with cleaner hydrogen involves significant capital investment, continued R & D, and a refiguration of our energy supply chains. Our current investment typology and funding structure – in spite of COP28 pledges-does not have the capacity to provide up to $13 trillion for hydrogen over the next five years, or more for our electrical grids. We need to configure a flexible – heterogenous-investment framework to accelerate our energy transitions. Much like the Marshall plan, a focused energy bank using clean hydrogen as an illustrative case study shows the investment funds required to build a more decarbonized world by 2035.

Why are Aramco/KSA and Statoil and other National Energy companies investing billions of dollars in Hydrogen when we do not know the costs of development, the demand, or the investment required to refurbish / construct a new and cleaner supply chain.

In this paper, we examine the bullish investment environment for hydrogen despite technological and financial uncertainties. Through two country case studies -- Germany and Japan -- we also examine the complexities of coordinating a myriad of players who need to invest billions of dollars to move their countries toward the net zero goals while making money and delivering competitive energy source to its markets.

None of this is easy or certain. However the large energy companies / OPEC / NOC suppliers are key players in our decarbonizing economy. With their technology, resources, and longer term perspectives, we have a good chance of navigating the threatening shoals of climate challenged world.

This paper is an exploratory case study working with limited data and emerging information from many players to demonstrate how we move forward, despite the storm clouds swirling around Ukraine.

We also tie the emerging investment in Hydrogen to the boom-bust investment patterns, prices volatility, and industry structure of the energy sector that a fully described / analyzed by many academics / commentators who have followed the industry for years.



hy are Aramco / KSA and Statoil and other National Energy companies investing billions of dollars in Hydrogen when we do not know the costs of development, the demand, or the investment required to refurbish / construct a new and cleaner supply chain.

In this paper, we examine the bullish investment environment for hydrogen despite technological and financial uncertainties. Through two country case studies -- Germany and Japan -- we also examine the complexities of coordinating a myriad of players who need to invest billions of dollars to move their countries toward the net zero goals while making money and delivering competitive energy source to its markets.

None of this is easy or certain. However the large energy companies / OPEC / NOC suppliers are key players in our decarbonizing economy. With their technology, resources, and longer term perspectives, we have a good chance of navigating the threatening shoals of climate challenged world.

This paper is an exploratory case study working with limited data and emerging information from many players to demonstrate how we move forward, despite the storm clouds swirling around Ukraine.

We also tie the emerging investment in Hydrogen to the boom-bust investment patterns, prices volatility, and industry structure of the energy sector that a fully described / analyzed by many academics / commentators who have followed the industry for years.


Aramco / KSA and Statoil and other National Energy companies investing billions of dollars in Hydrogen when we do not know the costs of development, the demand, or the investment required to refurbish / construct a new and cleaner supply chain.

In this paper, we examine the bullish investment environment for hydrogen despite technological and financial uncertainties. Through two country case studies -- Germany and Japan -- we also examine the complexities of coordinating a myriad of players who need to invest billions of dollars to move their countries toward the net zero goals while making money and delivering competitive energy source to its markets.

None of this is easy or certain. However the large energy companies / OPEC / NOC suppliers are key players in our decarbonizing economy. With their technology, resources, and longer term perspectives, we have a good chance of navigating the threatening shoals of climate challenged world.

This paper is an exploratory case study working with limited data and emerging information from many players to demonstrate how we move forward, despite the storm clouds swirling around Ukraine.
Why are Aramco / KSA and Statoil and other National Energy companies investing billions of dollars in Hydrogen when we do not know the costs of development, the demand, or the investment required to refurbish / construct a new and cleaner supply chain.

In this paper, we examine the bullish investment environment for hydrogen despite technological and financial uncertainties. Through two country case studies -- Germany and Japan -- we also examine the complexities of coordinating a myriad of players who need to invest billions of dollars to move their countries toward the net zero goals while making money and delivering competitive energy source to its markets.

None of this is easy or certain. However the large energy companies / OPEC / NOC suppliers are key players in our decarbonizing economy. With their technology, resources, and longer term perspectives, we have a good chance of navigating the threatening shoals of climate challenged world.

This paper is an exploratory case study working with limited data and emerging information from many players to demonstrate how we move forward, despite the storm clouds swirling around Ukraine.

We also tie the emerging investment in Hydrogen to the boom-bust investment patterns, prices volatility, and industry structure of the energy sector that a fully described / analyzed by many academics / commentators who have followed the industry for years.




In this paper, we examine the bullish investment environment for hydrogen despite technological and financial uncertainties. Through two country case studies -- Germany and Japan -- we also examine the complexities of coordinating a myriad of players who need to invest billions of dollars to move their countries toward the net zero goals while making money and delivering competitive energy source to its markets.

None of this is easy or certain. However the large energy companies / OPEC / NOC suppliers are key players in our decarbonizing economy. With their technology, resources, and longer term perspectives, we have a good chance of navigating the threatening shoals of climate challenged world.

This paper is an exploratory case study working with limited data and emerging information from many players to demonstrate how we move forward, despite the storm clouds swirling around Ukraine.

We also tie the emerging investment in Hydrogen to the boom-bust investment patterns, prices volatility, and industry structure of the energy sector that a fully described / analyzed by many academics / commentators who have followed the industry for years./ KSA and Statoil and other National Energy companies investing billions of dollars in Hydrogen when we do not know the costs of development, the demand, or the investment required to refurbish / construct a new and cleaner supply chain.

In this paper, we examine the bullish investment environment for hydrogen despite technological and financial uncertainties. Through two country case studies -- Germany and Japan -- we also examine the complexities of coordinating a myriad of players who need to invest billions of dollars to move their countries toward the net zero goals while making money and delivering competitive energy source to its markets.

None of this is easy or certain. However the large energy companies / OPEC / NOC suppliers are key players in our decarbonizing economy. With their technology, resources, and longer term perspectives, we have a good chance of navigating the threatening shoals of climate challenged world.

This paper is an exploratory case study working with limited data and emerging information from many players to demonstrate how we move forward, despite the storm clouds swirling around Ukraine.

We also tie the emerging investment in Hydrogen to the boom-bust investment patterns, prices volatility, and industry structure of the energy sector that a fully described / analyzed by many academics / commentators who have followed the industry for years.

Researchers from the Brandeis International Business School, in collaboration with King Abdullah Petroleum Studies and Research Center (KAPSARC) are building an agent-based oil supply simulation model that explains oil market imbalances and price volatility. This research contributes to the literature on agent-based models (ABM and complexity) of economic systems, showing how heterogeneity, path dependency, feedback loops, and learning by agents can affect investment, production, and ultimately market prices – today and in the future. Our approach looks at both the traditional VAR explanations (Killian, Hamilton, et. al.) of supply / demand shocks – exogenous and endogenous – and the longer standing Adelman (energy analysts and empirical modeling) approach that look at the market structure and behavior of major players/producers. We argue that parsing the investment and production decisions of different producers gives us the tools to model the dynamics of key energy players with different costs, profit, and production objectives. The heterogeneity of oil agents’ endogenous investment behavior results in lagged investment cycles and differential production patterns from fields throughout the world which, of course, leads to supply: demand imbalances and price volatility.

Our energy worlds have experienced more uncertainty since the1973 OPEC embargo, the Iraq Wars, or 2015 Paris Climate agreements. Oil & gas remains the dominant source of energy as demand shifts and suppliers make huge investments in our evolving energy system. How do today’s players make their investment decisions and prosper in the long run?

The oil industry has faced a whirlwind of exogenous surprises over past decade: financial crises, changing climate agendas, regional conflicts, and the pandemic. However today much of the turbulence is generated within the oil industry: divergent producers operating with different investment parameters. Shale oil in the Midwest with shorter paybacks and lower development costs, compared to the Middle East and OPEC producers, or the North-Sea operators with huge investments, low break evens, and decade long returns. Today's oil & gas sector is characterized by players with dissimilar capabilities operating in a less well-organized market where they are the source of cyclicality and price volatility.

In this webinar, we discuss how an agent-based model brings more realism to the production and investment behavior than macro scenario models.

we focus on the heterogeneity of producers and why this results in different investment behavior
we show what this means for oil market imbalances due to lagged producer responses to demand changes and technology innovations