INTEGRATED ANNUAL REPORT 2024 58 59 SECTION 6: STRATEGIC REVIEW www.miscgroup.com MISC BERHAD SHORT TO MEDIUM TERM MEDIUM TO LONG TERM ENERGY TRANSITION Our Operating Environment What Happened in 2024 There has been a notable trend of oil majors adjusting their energy transition strategies to adapt to evolving market conditions and financial considerations. This shift appears to be influenced by factors such as rising costs, supply chain challenges and technological limitations in renewable energy projects, which have impacted overall profitability. Nevertheless, according to the World Energy Investment 2024 Report by the International Energy Agency (IEA), investments in global energy exceeded USD3 trillion for the first time in 2024, with USD2 trillion allocated to renewable, low carbon energy and storage. Investment in renewable, low carbon energy and storage has accelerated since 2020 and is higher than the total spending on fossil fuels. Most of the spending on renewable, low carbon energy and storage are concentrated in major economies, including China, the United States and most European countries, while emerging and developing economies only account for around 15% of the global spend. How We Were Impacted and How We Responded Aligned with the MISC 2030 Ambition, the Group remains committed to the energy transition, actively pursuing opportunities in the renewable energy sector. Leveraging our expertise, we continue to provide sustainable maritime solutions for the evolving energy landscape, ensuring long-term growth and resilience. Additionally, we entered into a Strategic Collaboration Agreement with PETRONAS to explore the development of integrated shipping and floating solutions for ammonia. Marine & Heavy Engineering segment, MHB, also achieved notable progress in renewable energy initiatives, securing a second offshore wind project to build an OSS HVDC platform. What Is the Outlook? Energy demand is forecasted to rise, driven by economic expansion and an increase in the adoption of energy intensive technologies such as Artificial Intelligence (AI) and data centres. However, the energy transition pathway remains uncertain, surrounded by inconsistencies in the overall developments of the energy transition. While global investments in renewable, low carbon energy and storage are expected to rise significantly, oil and gas will continue to play a substantial role in the energy mix for the foreseeable future. It is forecasted that oil demand will peak by 2031 before gradually declining towards 2050. Meanwhile, natural gas, as a relatively lower-carbon energy source, is expected to see robust demand, peaking in 2040 and plateauing towards mid-century. This growth in gas demand will also drive an increase in LNG consumption, which is expected to peak later in 2048. Nevertheless, investment in renewable, low carbon energy and storage is projected to outpace fossil fuel investments, with key focus areas including hydrogen, offshore wind, solar and CCS. However, policy shifts, particularly in the US under President Trump’s second administration, could create further headwinds for the global energy transition efforts by reprioritising fossil fuel expansion, rolling back climate policies and reducing incentives for energy transition. For more information on MISC 2030 Ambition, please refer to page 72. Our Operating Environment SHORT TO MEDIUM TERM MEDIUM TO LONG TERM ADVANCEMENTS IN TECHNOLOGY AND DIGITALISATION IN THE MARITIME INDUSTRY What Happened in 2024 The adoption of technology in the maritime sector continued to accelerate in 2024, driven by evolving commercial demands, regulatory requirements and sustainability commitments. The integration of advanced digital solutions, including AI, predictive analytics and autonomous vessel technologies, is reshaping the industry. Research and development in alternative fuels and lower-emission propulsion systems have gained momentum, with significant advancements in ammonia-powered vessels, wind-assisted propulsion, and hybrid energy solutions. Similarly, the energy sector is rapidly embracing digitalisation, with increasing investments in data-driven technologies and automation. How We Were Impacted and How We Responded In 2024, we successfully commissioned the first deployment of ‘PureMetrics’ technology on selected AET vessels. This innovative solution enables us to capture precise emissions data from our LNG dual-fuel vessels, allowing us to assess methane slip levels and other emissions performance metrics. By leveraging these insights, we aim to optimise vessel operations and further advance our decarbonisation strategy. As we continue to pursue our digital transformation initiatives, the Group has completed Wave 1 of our Finance Transformation Programme (FTP) and commenced Wave 2 in 2024. The primary objective of the FTP is to enable strategic data-driven business decisions through data analytics and process automation. What Is the Outlook? Investments in digitalisation, automation and new energy technologies are expected to continue growing, shaping the future of the maritime industry. The convergence of AI, advanced analytics and smart shipping solutions will drive greater operational efficiency, safety and resilience. Cross-sector collaborations will remain crucial, particularly in alternative fuels, energy-efficient propulsion and emissions reduction technologies, as the industry accelerates its transition towards low-carbon and Net-Zero operations. Digitalisation will play a pivotal role in optimising fleet management, streamlining logistics and improving supply chain connectivity, enabling the sector to meet increasing global trade demands while ensuring sustainability and cost effectiveness. Key Capitals: Material Matters: Risks: Talent Risk Energy Transition and Decarbonisation Risk Cybersecurity Risk Financial Risk Project Delivery Risk Digitalisation Climate Change Sustainable Supply Chain Financial Performance Cybersecurity Energy Management Talent Development and Retention Social & Relationship SR Financial F Human H Intellectual I Key Capitals: Material Matters: Risks: Natural N Social & Relationship SR Human H Financial F Energy Transition and Decarbonisation Risk Talent Risk Financial Risk Project Delivery Risk Energy Management Climate Change Financial Performance Talent Development and Retention Source: IEA (January 2025) Global Energy Investment 4 3 2 1 0 Fossil fuels Renewable, low carbon energy and storage USD trillion 2020 2021 2022 2023 2024
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