This image shows an onshore wind turbine in the Netherlands.
Mischa Keijser | Image source | beautiful pictures
Discuss the energy transition, what it means and whether it’s actually in progresshas become the subject of great talk in recent years.
The transition – which can be seen as the shift from fossil fuels to a system dominated by renewables – remains to be seen.
It depends on a multitude of factors, from technology and finance to international cooperation. While very important, they are all undermined by a great deal of uncertainty and risk.
The above topics were examined in detail during a panel moderated by CNBC’s Dan Murphy at the Atlantic Council’s Global Energy Forum in Dubai on Tuesday.
“At the heart of the energy transition is digitization,” said Leo Simonovich, vice president and global head of industrial digital and cyber security at Siemens Energyspeak.
“In the energy sector, 2 billion devices will be added in the next few years,” he said.
“Each one of those devices could be a potential source of vulnerabilities that could be exploited by the bad guys.”
Expanding on his point, Simonovich explains the potential consequences of the above happening. “In an increasingly connected and digitized system, which includes legacy assets that need digital assets, this can have stratification effects,” he said.
“And what we’re talking about is not just data loss, what we’re really talking about is a safety issue, one that could bring down major parts of the grid or as we’ve see Colonial Pipeline Attacks in the United Statesparts of [the] gas network. “
Simonovich argues that cybersecurity is both important and an “opportunity to accelerate the energy transition if we can get it right because it builds trust, but it’s also a major source of risk we face.” needs to be dealt with quite urgently.”
Political geography
Besides cybersecurity, geopolitics will also play a role if the planet transitions to a low-carbon energy system, a view made by Abdurrahman Khalidi, chief technology officer of GE Gas Power, EMEA.
“It took the world several decades, until 2015, to reach a consensus almost in Paris, that global warming is happening and that it is due to greenhouse gases and the commitments made by them,” Mr. Khalidi said. effective first”. “We had to argue a lot.”
Khalidi’s mention of Paris refers to Paris Agreementaims to limit global warming “to below 2, preferably 1.5 degrees Celsius, above pre-industrial levels” and was adopted in December 2015.
“For decarbonisation to happen – as we saw at COP26 – you need … governments to cooperate and collaborate around the world,” he said. “The risk I see right now [is that] the world is being strongly polarized and the world is being divided according to ‘with’ and ‘against’. “
Khalidi’s comments come at a time when Russia’s invasion of Ukraine has highlighted how dependent some economies are on Russian oil and gas.
While the war in Ukraine has created geopolitical tensions and divisions, it has also led to a number of initiatives defined by cooperation and common goals.
Last week, for example, the United States and the European Commission issue a declaration on energy security in which they announced the creation of a joint task force on the subject.
The parties said the US would “try to secure” at least 15 billion cubic meters of additional liquefied natural gas to the EU this year. They added that this number will increase in the future.
President Joe Biden said the US and EU would also “take concrete steps together to reduce our dependence on natural gas – cyclical – and maximize… the availability and use of renewable energy. create.”
Invest wisely
Given that fossil fuels play such an important role in modern life, any transition to an energy system and economy centered on renewable energy and low-carbon technologies will require ask for a large amount of money.
During Tuesday’s session, the question of where this money should be invested was addressed by Kara Mangone, global head of climate strategy at Goldman Sachs. Among other things, she emphasized the importance of integration and commercial viability.
“Our research estimates that it will take between 100 and 150 trillion [dollars] in the capital, it’s about 3 to 5 trillion a year – just a horrible number, we’re not close to that today – to deliver on the goals set out in the Paris Agreement,” she said.
Mangone explains that about half of this capital will be focused on renewable energy and the technology is already on a commercial scale.
“But the other half, which is very important, will need to go into carbon capture, into hydrogen, direct air capture, into sustainable aviation fuels, e-fuels – technologies that have not been applied at scale yet. commercial scale because they have not yet reached the price point that is possible for many companies.”
The trillion dollar numbers that Mangone refers to are found in a report titled “Climate financial markets and the real economy” published in late 2020. Goldman Sachs said it joined the Global Financial Markets Association’s Climate Finance Working Group to help inform the report.
Mangone continues to outline how the goals can be achieved in a commercially viable manner.
“We can’t get financing from … oil and gas, metals and mining, real estate, agriculture – these are really important for transformation, really need capital, need support to make it possible.”
This view is followed by comments from Anna Shpitsberg, Deputy Assistant Secretary for Energy Transition at the US Department of State.
“We always come out and say [the] Shpitsberg, who spoke on a panel moderated by CNBC’s Hadley Gamble, said the oil and gas industry played an important role in the transition.
“They’re the players in the energy system, they’re the key players,” she said. “They’re the ones that will push the cut options, they’re the people that’s going to push the hydrogen options.”
“And to be honest, they are some of the companies that are making significant investments in clean energy, including renewables.”
If these “key stakeholders” did not participate, Shpitsberg argued that the goals related to methane reduction and efficiency would not be achieved.
“The message has been that oil and gas companies should be part of the conversation. But we want them to also be part of the conversation about transition.”
Things to do
Ensuring a successful energy transition is a huge task, especially when one considers the current state of competition. Fossil fuels are deeply ingrained in the global energy mix, and companies continue to explore and develop oil and gas fields in locations around the world.
Earlier this month, the International Energy Agency reported that 2021 sees Energy-related carbon dioxide emissions rose to historic highs. The IEA found that energy-related global CO2 emissions rose 6% in 2021 to reach a record high of 36.3 billion tonnes.
In its analysis, the world’s leading energy agency identified coal use as a key driver of growth. It said coal was responsible for more than 40% of the overall growth in CO2 emissions worldwide last year, reaching a record 15.3 billion tonnes.
“Natural gas CO2 emissions rebounded higher than 2019 levels to 7.5 billion tonnes,” the IEA said, adding that oil CO2 emissions were 10.7 billion tons.
