"Despite the increased focus on domestic energy sources, energy infrastructure, and alternative energy sources, a realistic assessment of technology and investment in the industry suggests energy independence is not realistic for at least two decades," said Bill Kimble, executive director of the KPMG Global Energy Institute. "The executives' perceptions of energy independence mirror their views on the viability of alternatives in the near-term as well."
Executives expect alternative and renewable energy sources to receive the most focus in President Obama's energy policy, the KPMG survey found. However, 52 percent said it will not be viable to mass produce any alternative energy sources by 2015, compared to 54 percent last year and 60 percent two years ago.
Winners and Losers in the New Energy Policy
Although executives did not think alternative energy sources were immediately viable, they did have clear opinions on which ones would benefit most from the Obama administration's energy policy. Thirty-five percent of respondents said that wind energy would be the biggest winner as a result of Obama's policy, followed by 18 percent for natural gas and 17 percent for biofuels. Conversely, 42 percent of executives see coal as the biggest loser while 36 percent say oil.
"These results clearly show the momentum wind energy has gained as a clean energy solution," said Kimble. "But 93 percent of our respondents see wind generation growing to only six percent of our energy generation by 2015 and only 17 percent say wind energy is viable for mass production by that year."
Marked Shift: More than Half Now Acknowledge Human Impact on Global Warming
When asked which areas in the Obama administration's energy policy would receive the most focus after alternative energy, executives cited greenhouse gas emissions and cap-and-trade. And, though the EPA recently pointed to CO2 emissions from burning fossil fuels as the main cause of global warming, nearly half (47 percent) of executives still believe that global warming, is a natural weather cycle, although this number is down from 62 percent in 2008.
"Our data shows a noted swing in executive perceptions on the issue of greenhouse gases and global warming," said Kimble, "but there is clear reluctance to support proposed actions and regulations to stem CO2 emissions."
In fact, when asked if they would support a cap-and-trade or carbon tax to reduce CO2 emissions, KPMG found that 59 percent do not support either, 23 percent would support carbon tax, and 18 percent would support a cap-and-trade system.
Spending and Business Challenges
When asked about capital spending and key business challenges in the coming year, KPMG found that executives have a subdued view. Sixty-five percent of those surveyed expect their company to decrease capital spending, including 47 percent who predict a drop of greater than 10 percent. Only 17 percent expect an increase over 2008 levels. These views are in stark contrast to those from KPMG's 2008 survey, when 70 percent expected an increase in capital spending and only five percent saw a decrease.
While oil prices have stabilized after extreme volatility in 2008, KPMG found that executives still rank commodity pricing the most significant challenge facing their companies in the coming year. Other key business challenges in order of significance include the economy, access to capital and regulatory concerns.
Also, 63 percent believe eliminating intangible drilling costs (IDC) will result in companies drilling outside the U.S. and unconventional wells not being drilled, a factor that may further slow the race toward energy independence
"There is no question that the economy has had an impact on U.S. energy companies, both in terms of pricing and capital," said Kimble. "However, with the current regulatory and legislative environment, oil and gas executives are also faced with the challenges of an evolving and dynamic industry pushing toward non-traditional energy sources."
