Moldova simply cannot afford to delay reforming its gas sector any longer. It is completely dependent on imports to keep itself heated and lit. Landlocked between Ukraine and Romania, 99% of oil is imported, along with 100% of natural gas. That gas fuels heating and the country’s lone power plant, located in Kremlin-controlled separatist region Transnistria.

This alone would be a recipe for energy disaster (and has been). Additionally, the country’s gas sector is almost entirely controlled by a monopoly called Moldovagaz, which is 51% owned by Russia’s gas monopoly Gazprom, with a 36% share owned by the Moldovan government and 13% by Transnistria. Moldovagaz’s wholly owned subsidiaries dominate all of the various subsectors of the energy industry. For example, Moldovatransgaz runs 98% of the distribution network.

This arrangement has afforded Moscow decades of informal control over Moldova. Indeed, allegations of Russia’s manipulation, coercion, and malign influence over the tiny country as exercised through Moldovagaz are too extensive to illuminate in full. A few highlights are the 2006 and 2009 gas shutoffs by Gazprom, which left tens of thousands of Moldovans without heating in the dead of winter. There have also been several rounds of brutal gas supply negotiations that have left Moldova with deeply disadvantageous gas contracts.

The most recent contract was signed in October 2021 and committed Moldova to another five years of Gazprom supplies. At the same time, President Maia Sandu’s new government, its lawyers, and its Western supporters are struggling with the fact that either pro-Russian actors in the former government or Moldovagaz officials appear to have wiped the files necessary to untangle several of the legal instruments that keep the country in its unhappy marriage with Gazprom.

Subscribe to UkraineAlert

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

• Name
  First Last
• Email*
• 
  
  
• Comments
  This field is for validation purposes and should be left unchanged.

Modovagaz also faces various accusations of accounting shenanigans. These include claims that it supplies Transnistria with gas that the breakaway region doesn’t pay for, and then charges the debt to the Moldovan government. Coupled with sometimes dubious debts Moldova has incurred buying gas, Gazprom claims the government now owes it $9 billion. This represents $760 million in purported Moldovan government debt, and $8.24 billion in debt tied to Transnistria. For comparison, Moldova’s GDP is under $14 billion.

Meanwhile, during October 2021 negotiations with Gazprom, Moldovagaz committed “not to carry out a forced reorganization” until this debt is settled. Critics believe this is a further indication that unbundling would be good for Moldova and bad for Russia. Signed in the midst of the mounting energy crisis of late 2021 and with Moldova running entirely out of gas, this agreement has been widely branded as an example of inappropriate Russian influence over the Moldovan energy sector.

Eurasia Center events

Online Event Thu, July 20, 2023 • 8:00 am ET

After Vilnius: What’s next on Ukraine’s path to NATO?

Eastern Europe NATO Security & Defense Ukraine

The obvious solution to break Russia’s energy dominance over Moldova is for the authorities to finally implement the unbundling of the gas sector and vertically de-integrate Moldovagaz. The EU Third Energy Package requires the three tiers of a natural gas market (upstream/production, midstream/transmission, and downstream/distribution) not be controlled by the same entity. In practice, this means separating the gas transmission system operator, Moldovatransgaz. The original deadline for unbundling was in 2016, with extensions then granted until January 2020, and then February 2021. In 2021, EU officials opened infringement proceedings against Moldova for its continued failure to unbundle Moldovagaz. In June 2023, the Ministry of Energy announced it was “determined” to complete Moldovagaz unbundling by September 2023. We shall see.

What form any unbundling will take also remains unclear. The Moldovan government may believe it lacks the capacity to manage Moldovatransgaz and the transmission system and may look for an external company to operate it. This would be a major mistake because giving critical infrastructure assets over to foreign entities would be repeating the same error as with Gazprom and Moldovagaz. It would also preclude Moldova’s learning to be self sufficient, a key aspect of energy independence and security. Another theoretical option is privatization, but that requires finding a buyer. Given Moldova’s history of defaults and disputes with private investors, there’s close to zero chance of that happening.

The best option is almost certainly finding a different government entity other than Moldovagaz to take control of Moldovatransgaz. This would replicate how Ukraine unbundled its gas monopoly, Naftogaz, by spinning off the transmission system operator into a separate entity controlled by a different ministry. There is some tangential precedent: Using a revolving EBRD credit of €300 million, the gas trading team at state agency Energocom, led by Maciej Wozniak, has pushed Gazprom out of the Moldovan market. Along the same lines, another state agency could step into the distribution business. This would have the added benefit of being more efficient because nothing new would need to be created; the unbundling would be a matter of paperwork.

There has probably never been a better time for Moldova to get serious about this; the cessation of gas transit from Gazprom into Europe means Russia has already played its energy trump card and has relatively little leverage left.

At the same time, Western interest and willingness to support Moldova during the transition should help cover any gaps. Politically, Moldova taking control of assets ultimately owned by Russia is good optics for Sandu’s government. And the political turmoil in Moscow coupled with the Kremlin’s distraction from its stalled war in Ukraine could make Moldovan maneuvers less likely to elicit an aggressive response. If everything goes right, becoming the supplier to Transnistria could even forge something of a path to national reconciliation. There’s never been a better moment to try, and there’s no time to waste.

Suriya Evans-Pritchard Jayanti is a nonresident senior fellow at the Atlantic Council’s Eurasia Center.

Further reading

UkraineAlert Jun 12, 2023

Beyond the counteroffensive: 84% of Ukrainians are ready for a long war

By Peter Dickinson

84% of Ukrainians reject any compromise with Russia and are ready for a long war if necessary in order to fully de-occupy their country. Most simply see no middle ground between genocide and national survival, writes Peter Dickinson.

Civil Society Conflict

UkraineAlert Jun 25, 2023

Short-lived Wagner mutiny will undermine Russia’s Ukraine invasion

By Peter Dickinson

The short-lived Wagner mutiny was over in less than two days but it will have a long-lasting consequences for Russia, for a weakened Vladimir Putin, and for the already faltering invasion of Ukraine, writes Peter Dickinson.

Conflict Defense Policy

UkraineAlert Jun 29, 2023

Putin’s Wagner weakness is a signal to support Ukraine’s counteroffensive

By Taras Kuzio

With the short-lived Wagner mutiny exposing Vladimir Putin’s weakness for all to see, the time has come for Ukraine’s Western partners to provide the country with everything it needs to secure victory, writes Taras Kuzio.

Conflict Freedom and Prosperity

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Moldova must seize opportunity to end energy dependence on Russia appeared first on Atlantic Council.

A review of Taiwan’s energy security challenges is urgently needed to assess its specific vulnerabilities and strengths in the face of attempted coercion by the PRC. Beijing appears increasingly capable of launching a quarantine, blockade, siege, or even invasion of the island.

It’s worth defining these terms. In a PRC quarantine of Taiwan, Beijing would employ the People’s Liberation Army Navy, or PLAN, to interdict all shipping under the guise of inspecting for military kit but allow food and some supplies to pass through. It is possible the PRC believes this insidious tactic is its most attractive option in a Taiwan scenario, due to the limited costs and commitments it would require; the ambiguities it would impose on Western policymakers; and the potential that world public opinion, at least in parts of the developing world, would side with Beijing over the West as economic costs mounted.

Other options appear less probable, but much more coercive and potentially violent. In a blockade scenario, the PLAN would prevent all shipments from entering Taiwan, aiming to coerce the island into surrendering. A siege is a subset of both a blockade and invasion. In this scenario, Beijing would degrade the island’s defensive capability for months before launching an invasion. In the invasion scenario, Beijing would attempt a snap assault, hoping to leverage the element of surprise and secure Taiwan with minimal resistance. A snap invasion is extremely unlikely, however. The weeks that Russia built up its forces on its border with Ukraine before its full-scale invasion—in full view of the world—suggest that the PRC will almost certainly be unable to conceal mobilization for an extremely complicated, massive amphibious assault.

The risks of each scenario are real. The PLAN conducted blockade and quarantine trial runs as recently as April, suggesting Beijing is considering disrupting Taipei’s trade, including its maritime energy imports. Military deterrence is the ultimate guarantor of Taiwan’s freedom, but there are additional nonmilitary steps Taiwan can take with the United States and its allies to ensure its energy needs are met in the event of a crisis.

Taiwan’s Middle Eastern oil imports can be replaced, if necessary

The first issue is whether Taiwan can sustain a reliable supply of energy, which means tracing the energy back to its source. The island is highly dependent on maritime crude oil imports. They accounted for 44 percent of Taiwan’s total energy needs in 2022, and most of this oil comes from the Middle East. Last year, it sourced about 72 percent of its crude oil supply from Saudi Arabia (33 percent), Kuwait (21 percent), the United Arab Emirates (9 percent), Oman (7 percent), and Iraq (2 percent).

The PRC’s economic footprint is expanding in the Middle East and exceeds the Taiwanese or even US presence. Beijing’s crude and condensate oil imports have more than quadrupled since 2006 and stood at over 508 million tons in 2022. China, the world’s largest oil importer, is vital for Middle Eastern economies. In 2022, exports to China accounted for 8 percent of Saudi Arabia’s gross domestic product, 15 percent of Kuwait’s, 9 percent of the United Arab Emirates’, and a shocking 33 percent of Oman’s. Gulf Cooperation Council countries exported nearly 8.5 times more crude oil to China than to the United States in 2022; China’s oil imports are projected to rise further even as US imports plateau or recede. Taiwan imported 41 million tons of crude oil and condensates in 2022, just 8 percent of the PRC’s total.

The PRC’s increasing influence in the Middle East is undeniable, but the risks vis-à-vis Taiwan are manageable. Even in a worst-case scenario—Gulf producers abandoning Taiwan under PRC pressure—the island could find alternative suppliers, though not easily. While oil is a globally traded and largely fungible commodity, refineries require different grades of crude oil, as barrels have distinct sulfur content and densities. If the PRC ever successfully pressured Gulf exporters to halt shipments to Taiwan, the United States and Canada could export a mix of heavy and sulfuric grades—notably Western Canada Select—to supply the island’s refineries. If they have not already, US and Canadian energy officials should hold quiet conversations with their counterparts in Taiwan, South Korea, and Japan about how North American crude oil and oil products could manage disruptions in the event of a blockade.

What about coal, LNG, and nuclear energy?

Taiwan also imports coal and liquefied natural gas (LNG). Of the island’s total energy needs in 2022, coal and coal products imports stood at nearly 30 percent, and LNG imports reached 19 percent. Australia accounted for more than half of Taiwan’s total 2022 coal imports; produces more than enough metallurgical and thermal coal to supply the island; and is not vulnerable to Chinese pressure, particularly since Beijing recently imposed an unofficial, two-year ban on Australian coal imports that was walked back only in February. Taiwan’s LNG outlook is also favorable. The island can count on future LNG imports from the United States, Australia, and Canada, while an active LNG fleet is highly dispersed across European and Asian democracies. Taiwan’s coal and LNG import outlook is relatively positive, outside of a physical blockade.

Nuclear energy plays a largely positive role in Taiwan’s energy security. Nuclear imports—that is, imports of nuclear fuel for use in domestic reactors—stood at 5 percent of Taiwan’s total energy needs in 2022. Once nuclear fuel is shipped to Taiwan, the island’s nuclear power plants can continuously produce zero-emission power for approximately eighteen to twenty-four months. Still, there are reasons why Taiwan’s energy planners consider nuclear energy to be an energy import. Russia is deeply embedded in nuclear energy supply chains, while nuclear exports from Kazakhstan could easily be interdicted by the PRC. Kazakhstan accounted for 43 percent of the world’s uranium production from mining in 2022 and Beijing and Moscow, working together, might work to blockade Kazakhstani energy exports.

Taiwan is currently phasing out its nuclear energy use, as the Democratic Progressive Party and the bulk of the island’s voters are opposed to the technology. Nuclear energy is clean and reliable, and it plays a positive role in the island’s energy security. Still, Taiwan’s concerns about its supply chain—especially in the event of a long-duration quarantine or blockade—are not unfounded.

Beware of the PRC’s maritime blockade capabilities

Taiwan’s dependency on seaborne energy imports heightens the risks of maritime disruption. The PRC navy appears increasingly capable of imposing a physical blockade or quarantine of Taiwan. The PLAN had 351 warfighting-capable ships in 2022 and now outnumbers the entire US Navy by more than fifty ships. Moreover, due to the US Navy’s dispersed global responsibilities, the PLAN enjoys an even larger numerical advantage in the Indo-Pacific theater. The PRC also continues to improve its fleet both qualitatively and quantitatively. The latest US Department of Defense China Military Power Report projects that the PLAN’s battle force will grow to four hundred ships by 2025 and 440 ships by 2030. The US Office of Naval Intelligence predicts that PRC blockade-relevant maritime platforms could exceed eight hundred ships by 2030, after units from the Chinese Coast Guard and maritime militia are included.

The PRC does not just enjoy numerical superiority; it also has a home field advantage. Although some ships and subs are permanently forward deployed in Japan and Guam, the United States and allied navies would have to transit hundreds or even thousands of miles to reach the Taiwan theater. Meanwhile, the PRC’s anti-ship missile range extends several thousand kilometers off its coastline, implying that US and coalition ships would be forced to break a blockade while sailing within the PRC’s anti-access/area denial envelope. Finally, since Taiwan’s large ports are on the western side of the island, US and coalition ships would have to sail directly opposite the PRC coastline.

Coalition policymakers and naval strategists need to consider how a potential PRC maritime blockade can be defeated along every level of the escalation ladder. Some steps include enhancing the credibility of the United States’ and the coalition’s conventional military deterrent; holding key PRC economic, energy, and financial nodes liable to severe sanctions in the event of a prolonged blockade; addressing gaps in overcoming a long-duration blockade; expanding the merchant marine and convoy escort fleet; ensuring ships from allied and partner civilian fleets can “re-flag” as US vessels; and back-stopping shipping insurance markets, as insurance risk premiums would surely spike in the event of a confrontation over Taiwan. Fortunately, US allies comprise six of the top ten owners of the world’s civilian fleet, as measured in deadweight tons carrying capacity.

Indigenous clean energy generation: opportunities and constraints

Taiwan can further reduce its energy security vulnerabilities by developing its indigenous renewable energy resources. While solar and wind cannot solve all of Taiwan’s energy challenges, the PRC will find it relatively difficult to disrupt production of local renewables, especially distributed solar.

Distributed solar can be installed on any rooftop and is extremely difficult to disrupt via cyber or kinetic means if microgrids are employed. However, it suffers from low utilization rates and unfavorable bespoke installation costs. Utility-scale solar is more efficient and less expensive but may be more susceptible to cyberattacks, due to its concentration of panels. More broadly, Taiwan’s solar potential is also constrained by frequent cloudy skies and land scarcity.

Onshore wind potential is greatest on the western side of the island but land use tradeoffs constrain development—especially since Taiwan imports about 65 percent of its food. Still, onshore wind should be a higher priority than food production, as the Berlin airlift demonstrated that airborne food supply chains can break non-kinetic blockades. Additionally, since prepackaged Meals Ready-to-Eat have a shelf life of eighteen months even at ninety degrees Fahrenheit, there are relatively few risks of the PRC “starving out the island.” 

Offshore wind is a promising technology for Taiwan. A nine hundred-megawatt wind farm off Taiwan’s west coast first produced electricity in early 2022; once fully complete, the installation could power approximately one million homes. Taiwan aims to install 5,700 megawatts of offshore wind capacity by 2025, which would substantially improve its energy security. Still, the Taiwanese military is concerned about offshore wind farms’ radar profile and the vulnerability of turbines and transmission cables to attack. Offshore wind has great potential, but Taiwan needs to balance its military and energy security needs carefully. 

There are relatively few risks of Taiwan falling prey to sole-supplier dependency in either solar or wind, despite the PRC’s leading role in both technologies. There is limited international trade in wind turbines due to unfavorable weight-to-value ratios. Taiwan’s offshore wind projects have very strict local content requirements, and the island is establishing more wind turbine facilities. The PRC currently dominates solar market supply chains, producing 75 percent of all finished panels, but the United States and its allies and partners are increasing their own manufacturing capacity. Taiwan will be able to procure wind and solar components from non-PRC sources. 

Taiwan’s most effective energy security tool may be to raise electricity tariffs, which would help rationalize demand and incentivize domestic clean energy generation. Raising electricity prices would encourage conservation efforts and make new renewables projects more economically viable, reducing Taiwan’s energy import needs.

Defending Taiwan from a military or energy shock

Taiwan’s energy security challenges are serious, but its chief problems are fundamentally military and naval. If the United States and its allies and partners cannot deter a PRC military invasion or naval blockade of Taiwan, disaster will likely result. US, Taiwanese, and other coalition forces must maintain credible conventional and strategic military deterrents against the PRC. 

The West must walk a diplomatic tightrope to maintain its policy of dual deterrence. While Beijing’s increasingly provocative behavior vis-à-vis Taiwan is worrisome and warrants firm responses, the United States and its allies should also continue to discourage Taipei from undertaking any irresponsible moves toward independence. The West should continue to communicate to Beijing its vital interests in Taiwan while signaling its intent to avoid any unnecessary confrontation or conflict.

Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center, where he leads its Chinese energy security and offshore wind programs; he also edits the China-Russia Report. This article represents his own personal opinion.

The post Does Taiwan’s massive reliance on energy imports put its security at risk? appeared first on Atlantic Council.

Further expanding this nascent industry will require chipping away at a web of challenges facing continent-wide biofuels production and biorefining, including first ensuring crops for food security are not diverted to biofuel manufacturing. To build out the potential of the biofuels industry in Africa, it is imperative that agricultural practices modernize, and adequate infrastructure be developed to enable the storage, transport, and conversion of feedstocks and fuels.

To realize this vision, the value chain for biofuel products will require substantial support from private and public sources of investment, regulators, and local market participants. Across the continent, establishing a biofuels industry will require coordinated efforts to build a supply of feedstocks and to develop adequate market-driven mechanisms for the collection and transport of feedstock to processing or refining facilities. Expanding the industry will also require feedstock-calibrated refining capabilities and distribution systems to transport biofuels to end users. Progressing to this end state will hinge on the presence of public-private partnerships to match suppliers with demand sources, technology-sharing initiatives between African nations and other economies with large biofuel industries, and targeted efforts to de-risk investment in pioneering projects and facilities through the use of concessional finance or innovative blended-finance structures, paired with technical assistance.

While full-scale deployment of biofuels may require the synchronization of several intermediate steps, the benefits are clear. Developing the biofuels industry in African countries can partially incentivize much-needed agricultural modernization across the continent, produce valuable low-carbon fuels to meet growing domestic and worldwide demand, and promote access to clean cooking, provided that food security is addressed as a prerequisite—although such efforts may be mutually reinforcing.

Maia Sparkman is an assistant director with the Atlantic Council Global Energy Center (GEC), where she focuses on energy and climate policy. She supports the GEC’s research on energy access and energy system transformation in Africa; city-level climate action; and industrial decarbonization.

Prior to joining the Council, Sparkman served in the Peace Corps as a sustainable agriculture specialist in Zambia, where she worked closely with small-holder farmers and liaised with Zambia’s Ministry of Agriculture and the US Forest Service to promote climate-smart agriculture practices and diversify household nutrition.

William Tobin is a program assistant at the GEC, where he focuses on energy and climate policy. William’s research efforts center on energy transitions in emerging markets; clean energy supply chains and critical materials; the future of oil and gas; and emerging technologies such as clean hydrogen and advanced batteries.

Tobin served previously for the US Department of State at a Regional Environment, Science & Technology, and Health Office; and for two members of the US House of Representatives. He is a graduate of the University of Florida, where he earned a Bachelor of Science in biology.

Maxwell Zandi is a former young global professional at the GEC. His research interests include the geopolitical dimensions of energy policy and the water-energy-food nexus. Prior to his time at the Atlantic Council, Zandi interned at the Wilson Center and Green Powered Technology. 

Zandi holds a master’s degree in international affairs from George Washington University with a concentration in international security and US foreign policy. He also has a bachelor’s degree in political science from Villanova University. 

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Building a biofuels industry in Africa appeared first on Atlantic Council.

This is the 5th installment of the Unlocking Economic Development in Latin America and the Caribbean report, which explores five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

How does the private sector perceive Latin America and the Caribbean (LAC)? What opportunities do firms find most exciting? And what precisely can companies do to seize on these opportunities and support the region’s journey toward recovery and sustainable development? To answer these questions, the Atlantic Council collaborated with the Inter-American Development Bank (IDB) to glean insights from its robust network of private-sector partners. Through surveys and in-depth interviews, this report identified five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

Meaningfully advancing the green agenda

The private sector identified the green agenda as a major opportunity, with more than half of survey respondents flagging “addressing climate change” as a top sustainable development and business priority to drive full economic recovery from COVID-19.¹ While climate action is critical on a global level, companies recognize that it is particularly pressing in LAC.

LAC is the world’s most economically unequal region and the second-most disaster-prone region in the world, highly vulnerable to climate consequences.² This vulnerability threatens to further entrench inequality and undermine the wellbeing of people and communities. Every year, between one hundred and fifty thousand and two million people in LAC are pushed into poverty or extreme poverty because of natural disasters, while as many as seventeen million people could migrate across LAC by 2050 due to climate change.³ Climate change also threatens food security, which can heavily impact rural communities.⁴ It will generate economic costs of up to $100 billion annually by 2050, which undercut growth and limit the ability of businesses to operate, prosper, and thrive.⁵

Recommendations for the private sector

Advancing the green agenda is not only imperative as a means of addressing the threat of climate change, but also as a means of unlocking massive business opportunities with the potential to drive private-sector-led economic recovery and growth in LAC. In particular, private firms have an important role to play by creating green jobs, promoting the circular economy, and partaking in green finance.

1. Creating green jobs: Firms can help create green jobs by adopting sustainable practices, seizing business opportunities in emerging green sectors, and providing upskilling, reskilling, and other support for workers displaced by the green transition.
2. Promoting the circular economy: Firms can help drive a transition to a circular-economy model by financing circular-economy efforts, supporting multistakeholder initiatives, and adopting and promoting sustainable business practices.
3. Partaking in green finance: The financial sector can help foster a green-finance ecosystem in the region by tightening environmental, social, and governance (ESG) requirements, aligning investments with green objectives, and nurturing green[1]bond markets in LAC.

About the author

Staff

Pepe Zhang

Senior Fellow

Adrienne Arsht Latin America Center

China Coronavirus

Related content

Report Jun 5, 2023

Enhancing market size, scalability, and regional integration in Latin America and the Caribbean

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. The private sector can strengthen the hard and soft infrastructure supporting Latin America and the Caribbean’s economies, while drawing them closer together through trade, regulatory, and other integration.

Americas Economy & Business

Report Jun 16, 2023

Accelerating digitalization and innovation in Latin America and the Caribbean

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. The private sector can improve infrastructure, foster skills, and promote adoption to help the region transform its digital potential into development gains.

Americas Economy & Business

Report Jun 20, 2023

Improving state governance, institutional capacity, and transparency

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. Technological, governance, and other cooperation between the public and private sectors can enhance institutional capacity, integrity, government service delivery, and regulatory quality in LAC.

Americas Inclusive Growth

Report Jun 22, 2023

Addressing multidimensional inequality

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. Private-sector actions to reduce gender inequality, like level the playing field between SMEs and large firms and narrow the urban-rural divide, can enable a more inclusive economy for LAC.

Americas Inclusive Growth

Online Event Thu, February 17, 2022 • 9:00 am ET

#ProactiveLAC: A digital future for regional prosperity

A virtual conversation on the role of public-private partnerships and policy actions in increasing digital connectivity across Latin America and the Caribbean.

Coronavirus Digital Policy Inclusive Growth Latin America

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

Explore more

The post Meaningfully advancing the green agenda appeared first on Atlantic Council.

The post Younus in The News International: News analysis: Why is Shell leaving Pakistan? appeared first on Atlantic Council.

The post Ezrahi quoted in Petroleum Economist on building bridges through energy projects in the Middle East. appeared first on Atlantic Council.

The post Ariel Ezrahi joins ABC National Radio to discuss OPEC+ producers’ surprising decision leading to oil price surge. appeared first on Atlantic Council.

The tiny country of 3.6 million, wedged between Romania and Ukraine, imports 100% of its natural gas, 99% of its oil, and relies on a single power plant in Russian-controlled separatist region Transnistria for 80% of its electricity. Russia’s Gazprom owns 51% of Moldovagaz, the country’s natural gas monopoly. There is almost no foreign investment in the energy sector, and what little there is has found the country unworkable. This was a difficult situation before Russia’s full-scale invasion of Ukraine. It is now untenable.

Ukraine has traditionally supported Moldova, at least commercially if not altruistically, as have other countries, but with the war ongoing to the east and a still unfolding global energy crisis, the need to become self sufficient is paramount. To fortify Chisinau, the international community must get serious about helping Western-educated Moldovan President Maia Sandu and her government achieve energy independence. For its part, Chisinau must reform its commercial and rule of law institutions to become attractive to foreign energy investment, and it must allow investors to function there.

Subscribe to UkraineAlert

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

• Name
  First Last
• Email*
• 
  
  
• Phone
  This field is for validation purposes and should be left unchanged.

The international community has been involved in ongoing efforts to support Moldova’s energy sector. For example, the US government has given a total of $40.5 million in energy-related funding plus $30 million in budget support “to help ameliorate the energy crisis” since the Russian invasion of Ukraine. On February 24, 2023, the US announced an additional $300 million in energy support for Moldova. The EU has been similarly supportive, as have international finance institutions including the EBRD and the World Bank.

So far, this money has gone mostly to “capacity building” and technical assistance instead of structural reform, an approach that has proved ineffective. Critics have likened it to the proverbial pouring water into a leaky bucket. To some extent, it’s a problem of where to start when so much needs reform and restructuring. But the failure is also due to a focus on lower level changes, giving Moldova’s energy sector the equivalent of an oil change when a new engine and transmission system are required.

What is needed is a wholesale restructuring of Moldova’s energy sector to free it from legacy Soviet inefficiencies, and from modern Russian meddling. A few clear priorities should be construction of a power plant that is not within the breakaway region of Transnistria; ending Gazprom’s stranglehold on Moldovagaz, or if that is not reasonably achievable, breaking existing Moldovagaz contracts and establishing an alternative natural gas supplier; building Moldova a power market; and broadly, diversification of the energy mix.

Eurasia Center events

Online Event Thu, July 20, 2023 • 8:00 am ET

After Vilnius: What’s next on Ukraine’s path to NATO?

Eastern Europe NATO Security & Defense Ukraine

Despite political will since Sandu came to power and especially since the new government was seated in February 2023, critically with a new energy minister, Moldova has demonstrated little wherewithal to tackle these tasks. One big obstacle is money. Chisinau is living “paycheck to paycheck,” hence the annual emergency bailouts and budget support from Western governments, and emergency gas supplies from Ukraine. In this constant state of energy emergency, there has proved little capacity to learn to fish versus begging for fish. Structural reforms that, for example, empower an alternative agency to be the vehicle for natural gas contracts at the expense of Moldovagaz, could help break the cycle.

But to do this, Moldova needs money. Rather than being treated like a charity case with annual emergency bailouts from foreign governments which are counted on desperately every year but which are never guaranteed, the country needs to attract foreign investment to fuel its energy overhaul and solidify it. Only once private capital buoys Moldova’s energy sector will the country be able to earn the regular taxes and royalties necessary to build its own energy independence.

This is where Moldova has stood in the way of its own reform. Although under Sandu the perception of Moldova regarding corruption has improved, many barriers to foreign investment remain. The country ranks 48th on ease of doing business, with notably lower scores for contract enforcement and dispute resolution, two issues critically important to potential investors. It ranks 58th for rule of law adherence. A warmer welcome to private energy investors could be conceived.

Meanwhile, most of the few companies who have braved investment in the Moldovan energy sector have paid dearly for it. In 2016 Gas Natural Fenosa, a Spanish company and Moldova’s largest supplier and distributor of electricity, sued the government over “discrepancies” in electricity tariffs that cost it over €20 million. The EU Energy Community eventually brought a dispute against Moldova over the issue. In 2021, the Court of Justice of the European Union issued a final decision in Moldova v. Komstroy, a case arising from a Moldovan state-owned entity default on electricity contracts with a Ukrainian company. The private investor was left empty handed.

Currently, the Moldovan government is being sued by the largest private gas company in the country, Rotalin Gas Trading, the only private competitor to Russian controlled Moldovagaz, for gas tariff irregularities that are forcing it out of business. Rotalin claims to have lost many millions over two decades. These are just a few examples, and a fair warning to potential investors.

The merits of any of these disputes aside, any reasonable investor would understandably hesitate before risking money in the Moldovan energy sector. What amounts to an appearance of hostility to foreign investment and a lack of adherence to contracts must be overcome before private capital will seriously consider Moldova. Furthermore, if Chisinau is going to make a credible argument that it is being manipulated and abused by Gazprom, it must not appear to be doing the same to private energy investors in Moldova.

Until private investors enter the market in force, Moldova will be left at the mercy of generous foreign governments, which in turn will continue providing emergency assistance instead of actual, sustainable reform. Only private capital can break this cycle, and it needs to be able to turn a profit, however meager, before it will.

Suriya Evans-Pritchard Jayanti is a nonresident senior fellow at the Atlantic Council’s Eurasia Center.

Further reading

UkraineAlert Jun 6, 2023

Ukraine’s summer counteroffensive is a key moment but long-term resolve remains crucial

By Tennyson Dearing

Ukraine’s summer counteroffensive is an important moment in the war with Russia but it is critical to maintain a sense of perspective and underline the need for long-term Western backing, writes Tennyson Dearing.

Conflict Freedom and Prosperity

UkraineAlert May 23, 2023

Ukraine’s coming counteroffensive has a good chance of succeeding

By Richard D. Hooker, Jr.

Ukraine’s coming counteroffensive has a great chance of succeeding due to a number of factors including superior leadership, equipment upgrades, and strong morale, writes Richard D. Hooker, Jr.

Conflict Defense Technologies

UkraineAlert Oct 27, 2022

A ceasefire would condemn millions of Ukrainians to Russian occupation

By Mark Temnycky

Recent calls for a ceasefire in the Russo-Ukrainian War ignore the fact that millions of Ukrainians remain under Russian occupation and would face an uncertain fate if abandoned to the Kremlin, writes Mark Temnycky.

Conflict Freedom and Prosperity

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Moldova needs an energy overhaul appeared first on Atlantic Council.

Through the purchase of carbon credits, corporations can immediately reduce their global carbon footprints while also serving their long-term economic interests to expand their market bases. That is in part because, by purchasing high-quality carbon credits in voluntary carbon markets, these companies can support the sustainable growth of low- and middle-income populations in the world’s fastest-growing regions—including across the African continent.

Voluntary carbon markets allow entities like corporations and individuals to buy carbon credits entirely at their discretion to offset their emissions. These markets differ from compliance markets, which feature legally binding emissions-reduction obligations, often under cap-and-trade structures like those in the European Union and California. Carbon credits are not intended to replace corporate emissions-reduction efforts; rather, they can serve as an additional mechanism to accelerate transitions to net zero, offset unavoidable emissions, and direct capital to regions with insufficient local investment.

Although still relatively immature, voluntary carbon markets have grown considerably—in 2022, their overall value surpassed two billion dollars, a fourfold increase from 2020, and African credits have grown 36 percent on average over the last five years. However, this rapid growth coupled with a lack of underlying structure has led to various issues, including concerns about the quality and legitimacy of many carbon credits sold, which cast doubt on the credits’ actual contributions to climate-change mitigation and stall market growth. Additionally, some carbon credits, which are primarily purchased by corporations based in the Global North, have hindered development in the Global South. For example, some governments in the Global South have forced local communities to sell land for the purpose of creating carbon credits. Organizations such as the Integrity Council for the Voluntary Carbon Market are working to solve the various issues related to the voluntary carbon market; in March, it released the first part of its “Core Carbon Principles,” outlining standards around carbon credits to ensure that offset efforts create verifiable impact.

Carbon-credit prices currently lack standardization, with prices being determined by the type or specific characteristics of the credits. They typically range from under four dollars per ton for lower-quality credits, often renewable energy projects, to over one hundred dollars for higher-quality credits, mainly tons removed from the atmosphere through carbon-removal technologies such as direct air capture. However, with large-scale removal technology still in development stages, removal projects accounted for just 3 percent of all projects issuing credits in 2022. In recent years, low-priced or “junk” credits have flooded the market, enabling dozens of companies to claim carbon-neutral status while only making limited environmental impact. At the twenty-seventh United Nations Climate Change Conference of the Parties, Kristalina Georgieva, head of the International Monetary Fund, asserted that unless carbon credits are priced on a trajectory that attains a seventy-five-dollar average price per ton by 2030, climate goals will remain out of reach. While Georgieva’s comments were likely targeted at compliance markets, pricing between the two markets is inherently connected, and there’s interest in formalizing that connection. By adopting thoughtful carbon-credit-purchasing strategies, including by supporting higher-quality credits that accurately reflect the value of a carbon ton, corporations can strengthen the voluntary carbon market and help it integrate it with compliance markets, rather than delegitimize it.

As rating agencies in the industry mature, corporations will need to take it upon themselves to work with these players and do their own due diligence to ensure that the carbon credits they purchase are high quality, as determined by key characteristics. For example, high-quality credits are “additional”: In other words, the emission reduction would not have occurred without the offset financing activity, an increasingly difficult hurdle for renewable energy credits. A high-quality credit is also quantifiable, in that it is produced by a project that can properly track resulting emissions reductions, and brings other environmental benefits such as improving air quality or enhancing biodiversity. Corporations may need to hire teams to analyze and determine the best partners to purchase credits from or work with trusted brokers with shared values. It will require collaborating with governments, banks, and other industry players to help build the necessary infrastructure and integration with compliance markets.

Thoughtful participation comes at a price, leaving open the question of why corporations should, if not mandated, participate sincerely or meaningfully in voluntary carbon markets at all. Engaging cheaply just to claim carbon-neutral status, what many call “greenwashing,” will likely become meaningless to consumers soon. While corporations may be incentivized to invest in credits to get ahead of regulatory risk or to appease investors, another often unmentioned reason is to support and grow their future consumer bases. Many opportunities for high-quality carbon credits are in the Global South, which will be disproportionately affected by climate change—and also host the largest urban centers and burgeoning middle-income populations. By the end of the century, Africa is projected to be the only continent experiencing population growth and will be home to thirteen of the world’s twenty largest urban areas. India’s population just surpassed China’s. If the Global South is not supported in its sustainable growth, achieving climate goals will become nearly impossible, and economic environments will become less prosperous.

Instead, by purchasing high-quality carbon credits, corporations can help build a sustainable future that expands economic opportunity in the Global South. For example, corporations can purchase reduction credits by supporting organizations like KOKO Networks, which developed a bioethanol cooker and fuel dispensary service in the hopes of transitioning the third of the world’s population that currently cooks on charcoal or wood (particularly in Africa and Southeast Asia) to a less carbon-heavy and less pollutive fuel source. By integrating hardware (their cookstove) with software (data collected at their dispensaries) KOKO Networks is able to properly measure its carbon impact and issue carbon credits to account for the reduction in emissions. Other such organizations are LifeStraw, which prevents carbon-dioxide emissions generated from boiling water via wood or charcoal by offering a drinking straw that filters water, and Mauto, which recently closed a five-million-dollar transaction to deploy electric two-wheelers across Africa. While more advanced technologies for carbon removal may prove fruitful in the future, corporations should not overlook the credits available today via initiatives like these that can have an immediate impact on ensuring Africa and other regions’ low- and middle-income populations grow sustainably.

Carbon-reduction credits (in contrast to carbon-removal credits) can help shift high-polluting consumer behaviors to sustainable practices in the world’s fastest-growing markets. When purchasing a bioethanol cookstove or an electric vehicle is not financially feasible in African markets, the sale of carbon credits could effectively subsidize these products and make them available to consumers at competitive prices. On the individual level, a mother in Nairobi can cook cleanly in her home, improving her family’s health, resulting in possibly lower medical costs or fewer days of missed work. On a larger scale, avoiding deforestation can help lessen the local impact of climate change because forests regulate weather conditions and help to avoid massive droughts or monsoons that can destroy crops and livelihoods. It is in corporations’ best interest to ensure African consumers are increasingly economically advantaged, a reality that is only possible through sustainable expansion, and carbon credits serve as one tool to support this growth.

By participating in the voluntary carbon market and purchasing high-quality carbon credits, corporations can contribute to sustainable development in the urban centers of tomorrow, while serving their own business interests. Rather than turning away from carbon credits due to the difficulties involved, corporations should lean in and consider which credits can best support their future customers.

Aubrey Rugo is co-president of the London Business School Tech & Media Club.

Further reading

AfricaSource Dec 2, 2022

The Africa investment imperative: Diversification and resilience amid economic downturns

By Aubrey Hruby and Guillaume Arditti

At a time when investors are faced with high risks due to a global economic downturn, African markets are a viable investment opportunity.

Africa Democratic Transitions

AfricaSource Jul 8, 2022

Europe’s Green Deal plan is Africa’s green finance opportunity

By Emilie Bel

Can natural gas and nuclear power be green? “Sometimes, and for a limited period of time,” said the European Parliament on July 6, as part of an ongoing negotiation over the EU taxonomy, a key component of the European Green Deal (EGD). The EGD is the European Union’s ambitious plan to create the first emissions-neutral […]

Africa Climate Change & Climate Action

AfricaSource Apr 23, 2021

Climate change will not be fixed without Africa

By Rama Yade

When Congolese President Félix Tshisekedi spoke at the virtual Leaders Summit on Climate this week, he had the force of the continent behind him. And his message was that developed countries must do more. As the summit comes to a close, the world still has so much to learn from Africa about how to tackle the climate crisis—if the world would only listen.

Africa Climate Change & Climate Action

The Africa Center works to promote dynamic geopolitical partnerships with African states and to redirect US and European policy priorities toward strengthening security and bolstering economic growth and prosperity on the continent.

Learn more

The post Through carbon markets, corporations have a role to play in Africa’s development. They should take it seriously. appeared first on Atlantic Council.

The event included introductory remarks from the Director of the Iraq Initiative at the Atlantic Council, Dr. Abbas Kadhim, and was moderated by the Senior Director, and Richard L. Morningstar Chair of the Global Energy Security Center at the Atlantic Council, Landon Derentz. The event featured the Chief Executive Officer of Crescent Petroleum, Majid Jafar; the Co-Founder and President of the Iraq Foundation, Ambassador Rend al-Rahim; and Atlantic Council Nonresident Senior Fellow, Ahmed Tabaqchali.

Addressing economic and structural obstacles to foreign investment in Iraq’s energy sector

Kicking off the conversation, Derentz addressed Iraq’s dire economic situation, highlighting the recent devaluation of the dinar and inadequate foreign direct investment (FDI) inflow in the country, particularly from the US and European countries. He also emphasized that despite being the second-largest oil producer in OPEC, Iraq still faces energy security challenges, and the government has been forced to import electricity from neighboring countries such as Iran, Kuwait, and Saudi Arabia. This is noteworthy as oil revenues comprise a considerable proportion of Iraq’s government revenues, GDP, and exports. 

Meanwhile, al-Rahim shared her insights on Iraq’s precarious business environment, citing corruption, infrastructure, and judiciary system, that have contributed to the country’s perilous and unpredictable environment, discouraging both foreign and domestic investors. To begin with, she referred to the rampant corruption in Iraq that is in part due to the Muhasasa system fostering political patronage, resulting in inefficient public services. The system, she said, “is enough to deter anyone from dealing with the government.”. Additionally, she asserted that this risky business environment may pose severe consequences for foreign companies suspected of engaging in corrupt practices in Iraq. Moreover, insufficient infrastructure and political instability yield an unpredictable political environment, deterring FDI. Finally, investors face many obstacles when engaging with the judiciary system due to its complex structure and the political interference that often protects it.

Lastly, Jafar, identified factors such as decades of wars, sanctions, European colonialism, corruption, and poor transparency that have impacted the country’s oil production and levels of FDI. While there has been a significant increase in oil production since the US invasion in 2003, Jafar noted that the country has yet to realize its full potential. He also cited the contract model as the primary reason most Western companies leave the Iraq energy sector, noting that fixed fee-per-barrel agreements are rare for international investment in this field. Although Iraq has revised its contract framework, earlier contracts have yet to be retroactively subjected to the updated model. Regarding policy reforms, Jafar mentioned that the Iraqi government plans to approve a positively impactful three-year budget that includes revenue-sharing principles between the Federal Government and the Kurdistan Regional Government (KRG). Furthermore, Jafar emphasized the importance of Iraq’s electricity needs as the current government of Prime Minister al-Sudani prioritizes gas production to provide power generation. Jafar stated that the exploration and development of Iraq’s undeveloped gas fields should be a critical area of focus for the future. The electricity sector needs comprehensive reforms, including power generation, transmission, and distribution, to reduce losses and develop the necessary infrastructure.

Collaboration for energy security: overcoming geopolitical challenges in gas production in Iraq

When asked about the main geopolitical challenges in gas production, Tabaqchali, referred to the political relationship between Baghdad and Erbil and argued that Iraq should focus on fulfilling its own needs by integrating its economy with the KRG. In terms of Iraq’s growing demand for electricity, he also mentioned that Iran cannot meet Iraq’s demand due to their own power generation needs and lack of investment. Therefore, the KRG and the Iraqi Federal Government should collaborate to resolve these issues and work with their neighbors.

To do so, Tabaqchali stated that Baghdad and Erbil first must reach a consensus on how they interpret the Constitution, whether they view Iraq as a strong centralized state or a federation with everyone contributing to it. Then, a win-win formula needs to be reached in agreements between Iraq and oil companies to benefit from their resources and technology. 

Jafar echoed Tabaqchali’s viewpoint that the main problem affecting Iraq’s electricity generation is the shortage of fuel. He elaborated that Iraq needs to enhance its gas and oil production to meet its actual demand of 4 billion cubic feet per day, which could easily double to 8 billion cubic feet per day by the end of the decade. Jafar predicted that there may still be a 2 billion cubic feet deficit per day, which could require imports unless exploration efforts are increased in Iraq. The goal should be providing 24-hour electricity for Iraqi citizens, which is critical for stability and economic development. Once the power needs are fulfilled, the priority is to use gas for industrial development and job creation, with any surpluses being exported.

Maximizing value for Iraq: balancing contract types and resource nationalism in the energy sector

When asked about contract types and their impact on Iraq’s energy sector, Jafar clarified the difference between product-sharing and service contracts. He also explained that it is a misconception that production-sharing agreements or investment contracts are more profitable for investors. Unlike some of its regional neighbors, such as Iran and Kuwait, Iraq’s Constitution allows private investment in the oil sector if the investment model aligns the interests of investors with those of the host government.

Al-Rahim also highlighted three factors that have impacted Iraq’s oil contracting: a socialist mindset of preventing foreigners from controlling the sector, a lack of technical expertise, and a sense of arrogance that has affected Iraqi decision-making.

The panelists agreed that there is a sense of resource nationalism in the Iraqi mindset, a consequence of Iraq’s colonized history as large Western majors had formerly monopolized the oil sector. However, according to Tabaqchali, a mutually beneficial deal is the only way to ensure success. Jafar added that Iraq should focus on maximizing the value of oil efficiently, rather than interpreting contracts as a zero-sum game with investors.

Opportunity costs in face of high operational costs

Currently, a significant portion of Iraq’s revenues go toward the government’s operating budget. The panelists agreed that while the federal budget should focus on rebuilding destroyed infrastructure and service provision, the Central Government allocates upwards of 76% of the budget to government expenses such as employee salaries, subsidies, pensions, and operating costs. These costs produce no tangible positive impact, such as diversification of the economy and long-term investment in public goods.

Employment opportunities also contribute to the problem: according to Tabaqchali, while approximately 700,000 jobs were added to the payroll this year in Iraq, only 75,000 of those positions were marketed for the 400,000 newly graduated Iraqis seeking to enter the workforce.

A double-edged sword? reforms and accountability measures for the new administration

In line with Iraqi Prime Minister al-Sudani’s idea of establishing a “service government”, al-Rahim claimed that al-Sudani, “is not necessarily concerned with [political reform]; he is concerned with economic reform.” Referencing the White Paper for Economic Reforms, authored in part by Iraq’s former Deputy Prime Minister and Minister of Finance, Dr. Ali Allawi, as an example, al-Rahim suggested that she sees al-Sudani trying to implement elements of this economic roadmap—including reforms in foreign remittance policies and the overall banking sector—without crediting it. On the other hand, al-Sudani’s administration has also introduced unprecedented structural and internal reforms within Iraq’s executive branch, including evaluation processes to measure government performance and confront corruption.

What has motivated these reforms? Twenty years of government nonperformance has created popular discontent. Thus, to secure popular support and maintain future approval of his administration, said al-Rahim, al-Sudani’s reforms resulted from the Iraqi public’s pressure on the new government to meet their needs for improved healthcare, education, and jobs. Jafar echoed this, adding that implementing reforms that keep director generals and ministers accountable for their performance, “is a welcomed first step.”

However, the current politicization of the civil service in Iraq prompted al-Rahim to regard accountability-prioritizing reforms as a double-edged sword. In light of Iraq’s current Muhasasa system, “we’re not holding the political leadership accountable,” she claimed. This is because in cases of a director general or minister’s potential dismissal due to failing performance, the political party to which the official belonged may not necessarily find an improved replacement. Subsequently, a constant overturning of ministry leaders would create a loss in the ministry’s technocratic capabilities while neglecting to hold political parties accountable.

Iraq in the global community: addressing climate change and mobilizing the youth

The panelists also assessed the role of Iraq within the global energy transition and multilateral climate action to face climate change. Jafar commented on the negative impact of climate change on Iraq, citing, “over a third of Iraq’s electricity is generated by burning liquid fuels, which is terrible for the budget and climate.”

According to Jafar, current operations in Iraq, like reducing carbon dioxide emissions and using natural gas to enable renewable sources, are vital to developing energy sustainability and contributing to the global climate agenda. As CEO of Crescent Petroleum, Jafar stated that his company maintains carbon neutrality by nearly eliminating gas flaring and emissions while using carbon credits that support wind power in Asia to offset the remainder.

Regarding mobilizing youth to inspire economic and combatting climate change in Iraq, al-Rahim emphasized that Iraqi youth feel particularly connected to the global community—motivating the population’s collective ambition and entrepreneurial spirit. Having met with young entrepreneurs in the tourism, food production, and information technology industries, al-Rahim stated that the government and international donors would benefit from investing in their activities that currently take place across the country, including enterprise-building and environmental relief efforts.

Closing thoughts: the role of investors, industries, and the global community in unlocking Iraq’s potential

Speaking about the role of international partners in Iraq’s economy, Tabaqchali affirmed that addressing the crux of fundamental economic issues, like declining water levels, is essential to tackling Iraq’s energy crisis.

Jafar added that helping Iraq transition into a private sector-led diversified economy is the only way to reduce youth unemployment and alleviate corruption. Moreover, Iraq’s overall positive relations with regional and global powers reinforce its role in establishing diplomatic channels between those powers. Such a role can be leveraged to enhance regional FDI coming into Iraq.

As the newly elected administration governs over a relatively peaceful era in Iraq, al-Rahim advised that investors face new opportunities that can help meet Iraq’s needs. Both foreign and domestic industries can also encourage modest applications of venture capitalism in Iraq to advance young entrepreneurs’ participation in the economy.

Altogether, the panelists expressed their optimism toward a hopeful future for Iraq. Today, the energy and engagement of the Iraqi public is high, so it is more vital than ever to bolster private citizen participation in the financial and energy sectors, even if that means taking risks. As Derentz summarized, “Every risk is an opportunity. We need to maintain the moment because Iraq’s people are its greatest resource and Iraq’s true energy and hope.”

Mahnaz Vahdati is a Young Global Professional with the Atlantic Council’s Middle East Programs.

Amna Haider is a project assistant with the Atlantic Council’s Middle East programs, where she supports the Center’s work on Iraq.

The post Reimagining a way forward: Iraq’s economy and energy sector in the post-invasion era appeared first on Atlantic Council.

Yet China’s emergence as the world’s leading player in wind has been costly. Beijing’s wind capacity deployment to less-than-ideal locations has been inefficient, while its failure to build corresponding transmission connections stunted growth in some of its windiest provinces. Moreover, Beijing’s acquisition of wind technology—sometimes by outright theft—has increased tensions with the West. China has risen to the top of the global wind industry, but at tremendous financial and diplomatic cost.  China’s successes and failures provide lessons to other countries seeking to use their own wind industrial policies to address climate challenges and strengthen economic growth.   

China’s expansive industrial policy

China’s total industrial policy spend comprised at least 1.73 percent of total GDP in 2019, more than four times that of the United States. China’s wind industry policies included enforcing localization requirements, using a feed-in tariff for initial sectoral development, employing massive direct and indirect subsidies, and obtaining—many would say stealing—foreign intellectual property.  

China’s wind industrial policy began with feed-in-tariffs introduced in 2009 and domestic content requirements to achieve 1 percent of the country’s energy mix by 2010.

In addition to localization requirements and feed-in tariffs, China’s wind industry also benefitted from a range of direct and indirect industrial subsidies.

Chinese provinces often extend their own subsidies for wind energy. In 2021, Guangdong province issued subsidy standards for grid-connected offshore wind projects at 1500 Renminbi per kilowatt. At this scale, a similar program in the United States would yield about $109 million in subsidies for a 500 megawatt turbine, a remarkable level of support from a subnational government.

Chinese wind industrial policy’s supply chain secrets: subsidies for steel, ships—and even coal

The Chinese wind industry has received fillips from “cross-subsidies” for steel, coal, and shipbuilding.

Steel is an important cost driver for wind projects, accounting for about 90 percent of the materials used for an offshore wind turbine, which in turn represents nearly 40 percent of the installation cost for offshore wind projects. Steel is also a key component for onshore wind projects, although those installation costs vary far more dramatically.

In China, steel and coal are inseparable.

China’s steel production primarily employs blast furnace-basic oxygen furnace, which uses coal for 90 percent of the production processes. This reliance on coal makes China’s steel, which is heavily subsidized, highly carbon intensive.

Coal generation has long been subsidized by the Chinese government, with one estimate finding support of at least $37.7 billion in 2014; China’s total electricity sector subsidies stood at $30 billion in 2021, with much of that spending still directed to coal. Beijing also quadrupled the amount of new coal power approvals in 2022 compared to 2021, contradicting China’s climate pledges.

China’s steel-coal nexus has provided significant support for the development of its wind industry, but at significant environmental cost. To be clear: even China’s carbon-intensive wind turbines are orders of magnitude less polluting than coal or natural gas, and China’s wind turbine deployment is unambiguously a positive for the climate. However, these climate benefits are reduced by the Chinese wind industry’s dependence on a carbon-intensive, coal-consuming steel industry.

Finally, China’s steel and coal subsidies complement another industry vital for offshore wind: shipping. Beijing subsidized its shipping and shipbuilding industries to the tune of $132 billion between 2010 and 2018. Its ship manufacturing capabilities ensure it can produce wind turbine installation vessels and other ships for use in offshore wind deployment. China dominates this industry; in 2019, China accounted for about 55 percent of global shipbuilding orders, and employs 33 out of the 49 existing wind turbine installation vessels. Given its low-cost steel and extensive shipbuilding complex, China is extremely well-positioned to continue to deploy offshore wind rapidly.

Forced technology transfer and espionage

The PRC has obtained foreign intellectual property related to the wind industry via forced technology transfers and industrial espionage. In exchange for operating rights within China, Spanish company Gamesa was obligated by the Chinese government to train in-country competitors. As a result, the company’s share of the Chinese market fell from 33 percent in 2005 to just 3 percent by 2010. Many foreign companies saw their intellectual property stolen by Chinese firms, often with the support of Chinese intelligence services. For instance, American Superconductor Corp (ASMC), a computer systems supplier to wind turbines, had its source code hacked and its contracts with Chinese suppliers terminated in the early 2010s. Stories like ASMC’s abound throughout the wind industry. 

China’s wind industrial policy has been, at best, a highly ambiguous success. China is indisputably the leader in wind energy markets, as it historically accounts for about half of all new wind installations by capacity. It is also the world’s leader, by far, in offshore wind deployment by capacity.

However, this progress has come at great and often unnecessary cost. China’s generous and holistic industrial subsides should have been deployed in a technologically agnostic manner, as much of its wind industrial policy spending was wasted. The Chinese wind market’s overall capacity factor has historically lagged other markets, with some research showing real capacity factors below 23 percent as late as 2019, compared to utilization factors of over 34 percent in the US market. This low rate is due in part to the stunted growth in China’s most wind-rich provinces in the early 2010s due to a lack of transmission capacity, leading to significant curtailment. China’s actual wind generation is much less impressive than its deployment of wind capacity.

Moreover, Beijing’s aggressive—often illegal—actions to secure wind energy intellectual property has alienated the West and provoked political distrust. Chinese leaders may now complain about economic de-risking, but their arguments ring hollow, as Chinese firms aggressively pushed Western companies out of their domestic wind market.

China’s wind energy industrial policy has ensured it is the world’s largest and most important wind producer, but it remains to be seen if the benefits will outweigh the considerable costs. Other countries considering their own wind industrial policies should apply lessons from China’s experience. To accelerate decarbonization, countries must be mindful of the unintended consequences of subsidies; nimbly adjust transmission networks to accommodate onshore and offshore wind generation; respect fundamental intellectual property rights; and use market mechanisms, such as a pollution fee on carbon. Otherwise, they risk misallocating resources and alienating vital partners, as China has done.

Joseph Webster is a Senior Fellow at the Atlantic Council’s Global Energy Center and edits the China-Russia Report. The opinions expressed in this article are those of the author.

Meet the author

Staff

Joseph Webster

Senior Fellow

Global Energy Center

Central Asia China

Related content

EnergySource Mar 31, 2023

Green investment takes the lead: Japan’s revamped approach in Africa

By Emi Yasukawa

Japan’s approach to Africa is becoming more investment-based, instead of relying just on aid. Japanese companies and banks have recalibrated their strategies and are looking to advance continent-wide development.

Africa Energy & Environment

EnergySource Mar 30, 2023

The US clean energy transformation can’t happen at the expense of national security

By Francis R. Fannon

The pace of the energy transition has, to this point, depended on low-cost Chinese production. But the supply chains that have driven clean tech deployment jeopardize US national security and must be remade.

Energy & Environment Energy Transitions

EnergySource Mar 28, 2023

Country spotlight: Unlocking a high-energy future for Zambia

By Maia Sparkman, William Tobin

Smart private sector investment in Zambia could drive a high-energy, high-growth future as the country reforms. This could make Zambia a model for neighboring countries looking to advance their own energy transformations.

Energy & Environment Energy Transitions

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post China’s wind industrial policy “succeeded” – but at what cost? appeared first on Atlantic Council.

In the April 2023 Issue of Longitude, Forward Defense Nonresident Senior Fellow Marco Tantardini published an article on the evolution of energy markets in the past decades and how they have reshaped global politics.

Fellow

Marco Tantardini

Nonresident Senior Fellow

Forward Defense Scowcroft Center for Strategy and Security

Italy Space

Forward Defense, housed within the Scowcroft Center for Strategy and Security, generates ideas and connects stakeholders in the defense ecosystem to promote an enduring military advantage for the United States, its allies, and partners. Our work identifies the defense strategies, capabilities, and resources the United States needs to deter and, if necessary, prevail in future conflict.

Learn more

The post Tantardini in Longitude on the geopolitics of energy. appeared first on Atlantic Council.

Distinguished guests at the workshop included H.E Laurence Boone, Minister of State for Europe for the French Foreign Ministry; Ms. Kerstin Jorna, Director General of the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW); Mr. Olivier Guersent, Director-General of the Directorate General for Competition; Mr. Emmanuel Moulin, Director General at the French Treasury; and Mr. Benoît Potier, Chief Executive Officer of Air Liquide, among others. In addition to these guests, the Atlantic Council, DGAP and GEG were honored to host other key policymakers, analysts, and private sector representatives.  

One year on from the Russian invasion of Ukraine, Europe has managed to mitigate the worst effects of the energy crisis and maintain its support for Ukrainians’ defense of their homeland. Participants noted the significant number of initiatives taken at the European level on a vast array of subjects, including diversifying imports, deploying clean energy, and building supply chain capacity. The conversation in Paris ranged from how to meet basic energy needs now to building a resilient net zero economy in the future, with a focus placed on industrial strategy, infrastructure needs, and scaling up public and private funding, and infrastructure needs.

Whereas participants at the first workshop in Berlin highlighted the successful cooperation between European member states in the face of the energy crisis, discussants in Paris underscored increasing tensions between member states on several vital issues. Attendees emphasized the crisis of trust between member states, evidenced by disagreements on electricity market reform, divergences on the role of nuclear and natural gas in the energy transition, state aid rules, and even the lack of progress made towards a Capital Markets Union. Some panelists argued that Franco-German disagreements on nuclear energy inhibit Europe’s ability to make progress in its energy transition, while others expressed concerns around the necessity of nuclear support schemes at the EU level. There were also diverging perspectives around how loosening the state aid rules would impact market unity.  

Participants also emphasized the need for European cooperation, especially in building common energy infrastructure. Indeed, renewable energy deployment must go hand in hand with infrastructure investments, such as electricity grids, hydrogen pipelines, and electric vehicle charging stations. Panelists shared the view that, to meet these many goals, Europe would need to strengthen its infrastructure planning capacities, accelerate reforms in project permitting, and scale up access to funding if it is to meet its ambitious decarbonization objectives. Increasing and diversifying the number of long-term energy contracts signed with producers, such as contracts for difference and power purchase agreements, could help incentivize investments in clean power.  

Looking beyond the continent, European participants described the United States’ Inflation Reduction Act (IRA) as a welcomed shift in US climate policy and positive shock for Europe’s own decarbonization efforts. Several participants argued that the IRA would encourage Europe to build its own resiliency in clean industry supply chains and open potential avenues of cooperation with the United States. But European panelists also expressed concerns regarding its impact on European industry due to the law’s national preference rules, seen as discriminatory against European manufacturers, even though the EU offers comparable, but perhaps harder to navigate incentives. This highlighted a remarkable shift in focus from the workshop in Berlin a few months prior, where policymakers and analysts had debated Europe’s capacity to meet energy demand. In Paris, however, the conversation focused not on energy supply, but on low-cost, low-carbon energy as a prerequisite for a competitive industry.  

The Atlantic Council looks forward to continuing this workshop series throughout 2023.  

Transform Europe Initiative

The Atlantic Council’s Transform Europe Initiative (TEI) is a critical element of the Europe Center’s drive towards structural reforms in Europe.

TEI leverages a robust body of work in strategic decarbonization.

Explore the program

Europe Center

Providing expertise and building communities to promote transatlantic leadership and a strong Europe in turbulent times.

The Europe Center promotes the transatlantic leadership and strategies required to ensure a strong Europe.

Explore the program

The Global Energy Center promotes energy security by working alongside government, industry, civil society, and public stakeholders to devise pragmatic solutions to the geopolitical, sustainability, and economic challenges of the changing global energy landscape.

learn more

The post <strong>Decarbonization solutions for addressing Europe’s green industrial policy challenge</strong>  appeared first on Atlantic Council.

The post Blakemore quoted in E&E News on the future of LNG with the G7 appeared first on Atlantic Council.

With Putin’s invasion failing to make progress in the second half of 2022, Russia began systematically targeting Ukraine’s power and heating infrastructure in October with regular barrages of rockets, missiles, and drones. The impact of these airstrikes has been devastating. Every single Ukrainian thermal power plant (TPP) has suffered damage, along with most of the country’s hydroelectric plants.

In total, over 60% of Ukraine’s electricity generation capacity has been hit during the bombing campaign. A full 21 GW of generation capacity was offline as of March 2023. The Ukrainian electricity grid itself has been damaged repeatedly, with hundreds of transformers and transmission lines targeted.

Russia’s relentless infrastructure attacks have created challenging living conditions, with rolling blackouts regularly plunging much of Ukraine into darkness throughout the winter season. During the height of the airstrikes in December and January, Ukraine’s electricity deficit rose as high as 30%. Ukraine’s grid operator, Ukrenergo, imported emergency electricity from neighboring Slovakia, Poland, and Moldova. Shortages peaked in early February, when imports reached record highs.

Subscribe to UkraineAlert

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

• Name
  First Last
• Email*
• 
  
  
• Comments
  This field is for validation purposes and should be left unchanged.

In March 2023, the United Nations Development Program (UNDP) estimated damage from Russia’s energy sector attacks at $10 billion and counting, of which $6.5 billion is damage suffered specifically by the Ukrainian power sector. As many as 12 million Ukrainians have been without power, water, or heating at any given moment throughout the bombing campaign.

Given the crisis conditions in the country amid the ongoing Russian invasion, the fact that Ukraine appears to have stabilized its power sector is astonishing. Even while Russia continues its energy infrastructure strikes, Ukraine’s power deficit has vanished, with a surplus of electricity reported in March 2023.

In part, this remarkable recovery is thanks to Ukrainian electricity consumption levels still being roughly 30-35% lower than before the war. This drop in demand is due to a combination of factors including the Russian occupation of entire regions of the country, damage to industrial activity, and a sharp drop in population as millions have fled for the safety of the EU.

However, Ukraine’s ability to stabilize the energy sector and restart nominal power exports of up to 400 MW is thanks to the country’s power sector workers. Ukrenergo has had over 1500 employees in the field at any given time over the past six months. Together with the company’s leadership, they have been performing grid acrobatics while implementing innovations and workarounds to keep the lights on across Ukraine.

Eurasia Center events

Online Event Thu, July 20, 2023 • 8:00 am ET

After Vilnius: What’s next on Ukraine’s path to NATO?

Eastern Europe NATO Security & Defense Ukraine

The private sector has also made a major contribution to Ukraine’s energy sector survival. DTEK, Ukraine’s largest private power company, has repaired over 700 energy facilities and 126 km of power lines during the past half year, with almost 200 teams of engineers working day and night. This has often meant taking risks and operating in extremely dangerous conditions. Three DTEK employees have died as a result of Russian airstrikes, while a further 28 have been wounded.

Ukrenergo, DTEK, and their energy industry colleagues have outperformed all expectations to prevent the collapse of the Ukrainian energy sector, but a huge amount of Ukrainian power infrastructure still requires repair before it can be used again. UNDP officials estimate that $1.2 billion is needed merely for emergency power infrastructure and equipment repairs.

Ukrenergo has been struggling especially to replace the large autotransformers that allow voltage transitions from transmission lines, with foreign partners failing to provide sufficient replacement equipment despite efforts. Repairing Ukraine’s energy sector is also considerably complicated by Russia’s precise repeat targeting of infrastructure already hit by drones and missiles. This makes reconstruction and maintenance a dangerous and continuing challenge.

Nonetheless, against the backdrop of an ongoing military conflict and a very difficult economic situation, Ukraine’s ability to reauthorize electricity exports, however nominal they may be, is deeply symbolic. In a war that has seen Ukrainian morale play a key role in keeping the country alive and fighting in defiance of Russia’s larger army and manpower, each victory such as this is crucial.

Suriya Evans-Pritchard Jayanti is a nonresident senior fellow at the Atlantic Council.

Further reading

UkraineAlert Apr 8, 2023

Human wave tactics are demoralizing the Russian army in Ukraine

By Olivia Yanchik

Vladimir Putin’s invasion of Ukraine has not gone according to plan but he still hopes to win a long war of attrition. However, Russia’s reliance on human wave tactics risks undermining morale within his invading army, writes Olivia Yanchik.

Conflict Defense Policy

UkraineAlert Apr 6, 2023

NATO poses a threat to Russian imperialism not Russian security

By Peter Dickinson

Russia’s passive acceptance of neighboring Finland’s NATO membership raises serious questions over the Kremlin’s efforts to portray the invasion of Ukraine as a response to NATO expansion, writes Peter Dickinson.

Conflict Disinformation

UkraineAlert Mar 8, 2023

Ukrainians will never surrender. How long can they count on the West?

By Serhiy Prytula

Ukraine’s remarkable resistance during the first days of the Russian invasion convinced the democratic world to back the country but with Putin now preparing for a long war, continued Western resolve is vital writes Serhiy Prytula.

Civil Society Conflict

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Ukraine’s energy sector survives winter appeared first on Atlantic Council.

The post Wald in The Hill: Stopping America’s LNG exports would hurt producers and send Beijing to Russia’s doorstep appeared first on Atlantic Council.

The post Webster in The Diplomat: Could the US block Russian oil exports to China? Yes, but it’s a bad idea appeared first on Atlantic Council.

The post Wald joins NPR to discuss the cut in oil production and what it means for US-Saudi relations appeared first on Atlantic Council.

The post Khakova joins BBC World to discuss the US-EU Energy Council appeared first on Atlantic Council.

The post Ellinas in Cyprus Mail: Fears of an energy price surge are real appeared first on Atlantic Council.

The post Ellinas in Energia: Impact of global development on the European natural gas market appeared first on Atlantic Council.

The post Pavia in Foreign Policy in Focus: What’s behind Spain’s about-face on Western Sahara appeared first on Atlantic Council.

The post Brown quoted in the Wall Street Journal on European gas appeared first on Atlantic Council.

The post Wald joins Bloomberg Surveillance to discuss global oil demand appeared first on Atlantic Council.

The Atlantic Council, the German Council on Foreign Relations (DGAP), and Groupe d’études géopolitiques (GEG) were honored to host “Decarbonization solutions for addressing Europe’s green industrial policy challenge,” a high-level workshop on decarbonization in Paris on March 20. The event promoted an open discussion between policymakers, analysts, and the private sector on Europe’s energy challenges, and to discuss what could be a common approach to on Europe’s energy security and climate challenges, and to discuss what could be a common approach to resolving threats to US-EU solidarity as well as Europe’s internal fissures.

Featuring

H.E. Laurence Boone

Secretary of State for European Affairs

Ministry for Europe and Foreign Affairs of the French Republic

Kerstin Jorna

Director General, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (GROW)

European Commission

Fellow

Ben Judah

Director

Europe Center Transform Europe Initiative

Economy & Business European Union

Sena Latif

Acting Chief of Mission

Embassy of Romania in Paris

Benoît Potier

Chief Executive Officer

Air Liquide

Laurence Tubiana

Chief Executive Officer

European Climate Foundation

In conversation with

Board director

Ambassador Paula J. Dobriansky

Vice Chair, Scowcroft Center for Strategy and Security

Scowcroft Center for Strategy and Security

Latin America China

Guntram Wolff

Chief Executive Officer

German Council on Foreign Relations

Transform Europe Initiative

The Atlantic Council’s Transform Europe Initiative (TEI) is a critical element of the Europe Center’s drive towards structural reforms in Europe.

TEI leverages a robust body of work in strategic decarbonization.

Explore the program

Europe Center

Providing expertise and building communities to promote transatlantic leadership and a strong Europe in turbulent times.

The Europe Center promotes the transatlantic leadership and strategies required to ensure a strong Europe.

Explore the program

The Global Energy Center promotes energy security by working alongside government, industry, civil society, and public stakeholders to devise pragmatic solutions to the geopolitical, sustainability, and economic challenges of the changing global energy landscape.

learn more

The post Decarbonization solutions for addressing Europe’s green industrial policy challenge appeared first on Atlantic Council.

The post Ellinas in Cyprus Mail: The gas needs of Cyprus appeared first on Atlantic Council.

The post Ellinas in Financial Mirror: US-EU ties on edge, as oil demand stays firm appeared first on Atlantic Council.

The post Sullivan quoted in VOA News on the impact of the war in Ukraine on Egypt appeared first on Atlantic Council.

Europe faced a perfect storm in 2022, following the Russian invasion of Ukraine. Russia cut off gas supplies at a vulnerable time for Europe: a combination of low European gas storage levels and hindered domestic production capacities in nuclear and hydropower from climate change-related extreme heat and drought. Participants noted the war has challenged Europe’s prevailing energy and security policies, as well as the continent’s climate prestige and green industrial ambitions. It is also a challenge to achieving Europe’s climate change ambitions and green industrial growth. Several participants argued that Europe now faces a new impossible trilemma: to reduce greenhouse gas emissions, maintain continuity in its energy supply, and ensure the survival of industry and affordable energy prices for households. The last issue is especially difficult to navigate, as Europe’s industry is threatened by high energy prices, rendering it uncompetitive against US and Chinese counterparts with access to cheaper fossil fuel energy.

Participants agreed that while the energy crisis has affected individual member states in different ways, the response must be found at the European level. This requires increased coordination within Europe, notably on emergency measures to address the crisis,  simplification of regulatory frameworks, enhanced energy interconnections, and agreements on how various clean energy and low-carbon energy sources can enhance security and decarbonization. In particular, while nuclear energy remained a point of contention, all participants stressed the need to move forward in a constructive and cooperative manner. Panelists widely shared the view that Russian aggression in Ukraine must “shift attention, not the priorities”, meaning that Europe’s climate objectives, in terms of renewable energy generation, energy efficiency and electrification, remain more relevant than ever.

Participants argued that, while Europe now looks to Africa as an alternative supplier of fossil fuels to replace Russian imports, Europe should increase cooperation with the African continent for clean energy imports, green hydrogen, and critical raw materials, all key components of Europe’s decarbonization trajectory. Looking eastwards, participants noted the importance of China in renewable energy supply chains, and warned against the threat that European industry faces in several key sectors including wind, noting China’s long-established near-monopoly in the solar industry as an example.

In 2022, Europe responded to Russia in a decisive manner, ensuring its domestic energy needs were largely met by attracting LNG cargoes (albeit at high prices) and reducing demand. Participants agreed that this was a result of critical policy decisions, combined with beneficial external factors: low demand in COVID-stricken China, and record-breaking warm weather over the European winter. Discussants acknowledged that Europe had narrowly avoided a catastrophe, but that coming winters would provide new challenges and opportunities due to resurgent demand from China and uncertainty over whether future winters will be so mild. In short, the energy crisis of 2022 has offered key lessons for Europe to continue its decarbonization journey.

Transform Europe Initiative

The Atlantic Council’s Transform Europe Initiative (TEI) is a critical element of the Europe Center’s drive towards structural reforms in Europe.

TEI leverages a robust body of work in strategic decarbonization.

Explore the program

Europe Center

Providing expertise and building communities to promote transatlantic leadership and a strong Europe in turbulent times.

The Europe Center promotes the transatlantic leadership and strategies required to ensure a strong Europe.

Explore the program

The Global Energy Center promotes energy security by working alongside government, industry, civil society, and public stakeholders to devise pragmatic solutions to the geopolitical, sustainability, and economic challenges of the changing global energy landscape.

learn more

The post The energy and climate challenge: How Europe can achieve decarbonization appeared first on Atlantic Council.

The post Sullivan quoted in Arab News on Saudi Arabia’s carbon capture appeared first on Atlantic Council.

The post Banks quoted in Español News: Why does the fossil fuel industry praise the Inflation Reduction Act? appeared first on Atlantic Council.

In response, the European Commission unveiled its own green industrial policy: “a Green Industrial Plan (GIP) for the Net-Zero Age,” followed by a newly announced subsidy scheme for the solar panel, battery, wind turbine, electrolyzer, and heat pump industries. Although the GIP and subsidy scheme were drafted in reaction to the IRA, future EU green industrial plans should use the IRA as an opportunity for the European Union and the United States to collaborate in specific segments of clean industrial value chains: batteries and their critical raw materials, as well as electrolyzers. Challenging China’s historical dominance across clean industries will be difficult and costly, and as tensions mount, Europeans and Americans have everything to gain from working together.

The IRA: A massive shift in clean global value chains

The IRA was itself meant to address decades of Chinese, and to a lesser extent, European, domination in five industries: electric vehicles (EVs), batteries, wind, solar, and emerging technologies like green hydrogen production and carbon capture. China grew its influence through heavy government investments, protectionist policies, an increasingly integrated internal market, and low labor costs. In September 2020, Xi Jinping announced a new net-zero plan designed to give Beijing an insurmountable lead in clean industries. Since then, Chinese investments in clean manufacturing have accelerated dramatically, reaching 91 percent of global clean manufacturing investments in 2022. Meanwhile, European clean industries developed from a set of policies incentivizing the decarbonization of industries (notably via the Emissions Trading System, or EU ETS), an environmentally minded internal market, and a skilled labor force.

But through $369 billion worth of tax credits and funding support (and potentially much more), the IRA will dramatically shift the economics of clean energy technologies and EVs in the United States and the rest of the world. Among the policies that have caused friction with US trade partners, the IRA could provide upfront investment tax credits for up to 70 percent of investment costs for renewable energy technologies, and halve the generation costs of onshore wind and solar. The federal government will also provide $7,500 for any American wishing to purchase a new EV, including incentives with domestic content requirements. Already, there are numerous industrial actors responding to these requirements by pledging new or expanded US-based production, such as Enel in solar, Hyundai in EVs, and Panasonic in batteries.

Given the economic disruption the IRA may cause for Europe’s EV and green industries, the GIP was designed to mimic some IRA provisions and play on the EU’s existing comparative strengths in response. This includes simplifying regulation and loosening state aid rules, as well as investing in skills training and securing critical raw material sources. The plan also plays to the European Union’s primary strengths in its highly skilled workforce and existing regulatory incentives—such as the EU ETS and the upcoming Carbon Border Adjustment Mechanism (CBAM)—to ensure existing decarbonization plans remain on track. The new EU subsidy scheme for green industries was similarly meant to match the IRA’s own subsidies, but make it comparatively easier for European companies to acquire aid.

However, where Europe faces greater challenges in implementing its industrial plan is its lack of fiscal firepower compared to the United States, as well as a deficit in administrative capacity due to the EU’s supranational structure to accelerate and simplify regulation. Furthermore, the new subsidy rules are not meant to apply beyond 2025, as European Commissioner for Competition Margrethe Vestager earlier insisted that such measures would be “targeted, temporary and proportionate.” The transitoriness of the subsidy scheme, which was meant to prevent states like France and Germany from benefitting disproportionately compared to other EU member states, likewise reflects more broadly how the European Union still lacks a cohesive, sweeping energy strategy that is integrated between member states, reducing its own internal market strengths.

The IRA will impact different industries in different ways. For some, such as wind, Europeans will retain their lead. In other industries, like battery production and emerging technologies like green hydrogen generation, localizing what would have been European production in the United States will be a no-brainer. Understanding how the IRA will reshuffle US, Chinese, and European positions in these global value chains will be critical to finding where it makes sense for the transatlantic alliance to collaborate closely.

Solar and wind: Lessons from history

In the solar photovoltaic (PV) market, even if the US and Europe coordinated more, China’s outright dominance would be hard to challenge on the international stage. But whereas European policymakers seem to have generally given up any hope of reviving domestic PV production following the collapse of solar PV in Germany, US policymakers have taken a more assertive role in encouraging the growth of its own PV production. The IRA tax credits will make domestic module production competitive, but not exports. For US PV producers, this relative barrier to exporting is somewhat mitigated by exponential growth in domestic demand. For Europeans, it means continued reliance on Chinese manufacturing in the near future, even with the ongoing implementation of the GIP and subsidy scheme.

In contrast, European producers have maintained their lead in wind energy production and will likely continue to do so. The region remains a leader in patents for wind technologies, and has the largest pool of start-ups. While the IRA emphasized investments in offshore wind energy, Europe would have retained its own strong lead in its existing base of offshore windfarms and the installation of offshore wind turbines even without the introduction of the subsidy scheme, which directly impacts wind energy technologies. As well as that, wind is traditionally harder to displace as an industry due to its high transportation costs. By supporting the training of skilled workers, simplifying the regulatory environment, and accelerating permitting processes, the GIP will provide a welcomed boost to the European wind industry, at a time when China increases its export capacities.

Electric vehicles: a long awaited catch-up in the United States

The United States has lagged behind its peers in EV market share, with EVs making up 20 percent of car markets in Europe compared to 6.5 percent in the United States. This leaves room for greater uptake in the latter. Moreover, there are extraordinary growth prospects for EVs around the globe, reinforced by the recent European Parliament vote to ban sales of combustion engine cars by 2035—likely meaning that there will be “enough [EVs] to go around.” But it remains to be seen whether knowledge, engineering and R&D capacities will move away from Europe and China to the United States. For now, and despite calls from France and Germany to ramp up support for European EV producers, Europe’s green industrial plan and subsidy scheme do not clearly define their support for the industry. Instead, the GIP and scheme have focused mainly on the key component of EVs: batteries. 

A new arms race? Batteries and electrolyzers

The battery sector, an essential component of the energy transition, will be the key area of US and European competition with China. Given its strategic importance, the United States and Europe have both placed local battery production high on their wish lists, with the latter creating a European Battery Alliance in 2017. Yet China dominates the critical raw material supply chains required for batteries, producing fifteen times as much lithium as the United States and refining and exporting 80 percent of the world’s cobalt in 2020. The IRA’s strict domestic content and sourcing requirements limit supply chains to free trade partners and exclude “foreign countries of concern” (primarily China and Russia). This would place European carmakers, overly dependent on offtake agreements with Chinese suppliers, in a difficult position.

Dramatically reducing dependence on China for battery ecosystems will be costly. Due to vertical integration, economies of scale, and long learning curves, China’s battery industry is now competitive even without national policy support. The IRA would essentially duplicate existing (but Chinese dominated) battery supply chains at huge costs, and the EU subsidy scheme would likely run into similar issues.

For electrolyzers, vital to producing clean hydrogen and decarbonizing heavy industries, Europe and the United States are keen to develop their own domestic production capabilities in the face of cheaper Chinese products. In this race, the GIP will add another string to Europe’s bow. An upcoming Critical Raw Materials Act will seek to secure the supply of minerals, while additional funding and faster permitting will accelerate the deployment of battery and electrolyzer manufacturing in Europe. The subsidy scheme will further incentivize European battery and electrolyzer producers to retain and ramp up their investments in the region as well.

For Europe and the United States, a “join or die” moment

Given the large investment needs, US policymakers and their European counterparts have everything to gain from joining forces and designing new win-win partnerships. Building domestic capabilities in electrolyzers, battery manufacturing and their supply chains, and reducing their dependencies on China will be extremely costly.

In fact, China is ramping up its own investments. In 2022, China invested over 500 billion dollars on clean industries (about 3 percent of its GDP). In comparison, Europe spent 4 percent of its GDP on measures to shield its consumers from rising energy costs, a much higher proportion than the share of spending implied by the IRA with respect to US GDP (likely around 1-2 percent). Consequently, the European Union has demonstrated a capacity to make large-scale investment decisions, but it is running out of momentum to continue doing so (even with its newly announced subsidy scheme) due to how much it has already spent in response to the energy crisis.

Instead of igniting undue competition, the IRA should be used as a platform to build new mutually beneficial agreements. Policymakers on both sides of the Atlantic should build on the success of the low-carbon steel and aluminum agreement and anticipate tensions around the CBAM. A recent proposal to design a transatlantic “buyers club” for critical raw materials in battery production is a step in the right direction. The United States and European Union could also use the discussions sparked by the IRA, GIP, and EU subsidy scheme for green industries to work closer together to agree on common global norms, reducing Chinese influence over international standards.

Without transatlantic coordination, the United States and European Union may become mired in a trade war over the EV and green industries, which would render them both vulnerable to climate change and growing authoritarian control over the global decarbonization consensus. It is crucial for the United States and Europe to agree on collaborative industrial policies that would at least challenge Chinese dominance in green industries to ensure existing decarbonization efforts are not derailed by trade disputes and Europe’s economic anxieties do not come to pass.

Théophile Pouget-Abadie is a nonresident fellow at the Atlantic Council’s Transform Europe Initiative and policy fellow at the Jain Family Institute.

Francis Shin is a research assistant at the Atlantic Council’s Europe Center.

Jonah James Allen is a nonresident fellow at the Atlantic Council’s Transform Europe Initiative and research fellow at the Jain Family Institute.

Meet the authors

Fellow

Théophile Pouget-Abadie

Nonresident Fellow

Europe Center Transform Europe Initiative

Civil Society Climate Change & Climate Action

Staff

Francis Shin

Research Assistant

Europe Center

Economic Sanctions Europe & Eurasia

Fellow

Jonah Allen

Nonresident Fellow

Europe Center Transform Europe Initiative

Civil Society Climate Change & Climate Action

Related content

EnergySource Mar 6, 2023

Beauty and the beast: Implications of the US-China tech war on climate and energy

By Jennifer Lee

US-China tech tensions could have ripple effects on decarbonization efforts. Tech competition could provide benefits, but if left unmitigated, it could also hinder both countries’ energy transitions.

China Energy & Environment

EnergySource Dec 12, 2022

Europe and the Caspian: The gas supply conundrum

By John Roberts and Julian Bowden

The Caspian has emerged as a major player in Europe’s effort to move away from Russian gas. But logistical and political difficulties could prevent crucial Caspian projects from getting off the ground.

Central Asia Energy & Environment

EnergySource Dec 5, 2022

A nascent US offshore wind strategy? Permitting reform and the Inflation Reduction Act

By Joseph Webster

US strategy on offshore wind is steadily evolving. The attendant changes could lay the groundwork for emergence as an offshore wind powerhouse.

Energy & Environment Energy Markets & Governance

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Clean industrial policies: A space for EU-US collaboration appeared first on Atlantic Council.

Beijing has had a complicated history with its refiners: it attempted to shutter excess capacity at independent refiners (so-called “teapots”) in the 2000s and early 2010s, only to be largely thwarted by provincial and even county-level governments determined to retain the tax base and employment associated with the facilities. Beijing then acquiesced—to a degree—as it relaxed restrictions on import quotas for independent refineries while continuing to consolidate some of the smaller players. While the Chinese Communist Party (CCP) has not always achieved its objectives in China’s domestic oil market, it is nevertheless a very active manager, something Western policymakers should consider amid high volumes of Russian crude exports to China.

A brief history of contemporary Chinese refining markets

In 2022, China became the world’s largest refining market by capacity, at 18.8 million barrels per day (MMBPD) in 2022. This represents an astonishing increase from 2005, when capacity stood at only 8.5 MMBPD. And the surge is unlikely to stop any time soon, as capacity could grow to 20 MMBPD by 2025, although some analysts see a pullback in domestic refining capacity this year as several outdated facilities are phased out.

Chinese refinery throughput, or crude oil intake used to produce refined products such as gasoline, diesel, and jet fuel, and more, has expanded along with capacity. While Chinese refinery throughput still lagged the United States in 2021, China is very likely to become the world’s largest refining market within the next two to three years, if it is not already. Chinese refinery throughput stood at just under 6 MMBPD in 2005, but in 2021 reached 14.5 MMBPD, a level just shy of the US throughput of 15.1 MMBPD in the same year.

China appears well on its way to becoming the world’s largest and most important refining market, but its journey has been a bumpy one. China’s refineries have traditionally suffered from extremely low utilization rates and poor margins, especially among independent refiners. These refiners are often referred to as “teapot refiners,” due to their limited capacity and basic equipment, especially when compared to refineries run by Chinese national oil companies (NOCs).

These teapot refineries, which are generally privately owned and concentrated in central China’s Shandong province, have historically suffered from extremely low reported utilization rates—often as low as 35 to 40 percent. Extreme overcapacity ensured China historically suffered from ultra-low refinery utilization rates, especially when compared to its peers.

Dragged down by teapot refineries, from 2005-2014, Chinese refineries’ reported collective imputed capacity factors, or “run rates,” hovered at or around 65 percent, the threshold below which most individual US plants tend to shut down, at least temporarily, for economic and safety reasons. Since the entire Chinese refinery sector suffered from low refinery run rates for over a decade, the sector’s overcapacity issues were highly problematic.

Still, it is worth noting that Chinese refineries, especially the independents, are notorious for misclassifying production. There are also recent instances of refineries outright underreporting production to evade taxes. As with all Chinese economic data, one should take presented statistics with a grain of salt.

For much of the 2000s, Beijing struggled to reduce overcapacity. Erica Downs’ The Rise of China’s Independent Refineries traces how Beijing’s attempts to restrain or even constrict Chinese refineries often backfired. For example, in 2009, China’s National Development and Reform Commission (NDRC) ordered that all refineries with capacity under 40,000 barrels per day (bpd) be closed, merged, or upgraded, depending on their size. While the policy sought to shutter capacity, refineries, typically with the support of provincial or county-level governments dependent on their employment and revenue, responded by expanding capacity to avoid closure. Between 2005 and 2015, teapots’ refining capacity grew from 832,000 bpd to 4,175,000 bpd, according to Downs, suppressing China’s overall refinery utilization rates.

China’s refining overcapacity problems have abated in recent years due to stabilizing refinery capacity and, more importantly, greater crude imports. The Shandong-based teapots saw some closures and consolidations, including the September 2017 merger of the Shandong Refining Energy Group. Moreover, China allowed independent refiners to import more crude oil—and, typically, export refined products. While China’s four state-owned oil giants—Sinopec, PetroChina, CNOOC and Sinochem—have always enjoyed direct access to crude oil imports, other players, including the independents, are forced to secure import quotas from the central government. Luckily for the teapots (and China’s refinery utilization rates), Shandong’s crude import quotas nearly tripled from 2015 to 2019, while China’s overall crude imports rose from 6.7 MMBPD in 2015 to over 10 MMBPD in 2019. Despite a slight decline in domestic crude production and additional refinery capacity expansions, rising crude imports sent refinery utilization rates higher.

Chinese domestic politics and the oil sector

Chinese domestic also politics played an important role in the evolution of China’s refinery markets. Zhou Yongkang, a former member of the extremely-powerful Politburo Standing Committee, China’s former security czar, and former head of state-run China National Petroleum Company (CNPC, also the parent company of PetroChina), was purged in a Communist Party power struggle amidst the 18^th party congress in 2012. Immediately after ascending to General Secretary, Xi Jinping began consolidating power and eliminating rivals, such as Bo Xilai and Bo-affiliated figures, including Zhou Yongkang. The purges ultimately ensnared at least six senior CNPC executives linked to Zhou.

Interestingly, PetroChina’s refinery run rates continue to lag those of Beijing’s other state-run oil companies. Indeed, Shandong independents have occasionally outperformed PetroChina’s refinery utilization rates in recent years. The reasons for PetroChina’s lackluster performance are unclear. While PetroChina’s refining assets are concentrated in less-economically-dynamic north China, constraining its refining economics, the company’s association with Zhou Yongkang could also subject it to additional scrutiny and Beijing’s disfavor. Notably, PetroChina and three independent producers were penalized in early 2022 for “irregular trading.”

The CCP leadership follows oil markets closely

General Secretary Xi Jinping is not nearly as personally engaged with energy markets as his counterpart in Moscow, who has over two decades of experience interacting with Russia’s most important industry and (supposedly) wrote a doctoral thesis on Russia’s natural resources. Still, Beijing’s actions demonstrate is a highly active manager of its refining markets, as its recent decision to lift crude oil import quotas demonstrates. Moreover, Xi is familiar with the sector due to its economic centrality, as well as its role in the Zhou Yongkang affair. The CCP pays close attention to oil markets, something Western policymakers should keep in mind as they examine Sino-Russian energy ties.

Joseph Webster is a senior fellow at the Atlantic Council Global Energy Center.

Meet the author

Staff

Joseph Webster

Senior Fellow

Global Energy Center

Central Asia China

Related content

EnergySource Mar 6, 2023

Beauty and the beast: Implications of the US-China tech war on climate and energy

By Jennifer Lee

US-China tech tensions could have ripple effects on decarbonization efforts. Tech competition could provide benefits, but if left unmitigated, it could also hinder both countries’ energy transitions.

China Energy & Environment

EnergySource Feb 24, 2023

Lula is back. Are Brazil’s climate credentials?

By Lizi Bowen, Maia Sparkman, William Tobin

Lula’s return to office in Brazil heralded a renewed commitment to environmental stewardship. But steps must be taken to ensure that renewal becomes as concrete and effective as possible.

Brazil Climate Change & Climate Action

EnergySource Feb 21, 2023

The power of renewables: Productive use appliances as climate change solutions in sub-Saharan Africa

By Sharmila Bellur

Productive use appliances can mitigate emissions while encouraging climate adaptation and resilience in sub-Saharan Africa. They can push households up the energy ladder and stimulate economic development, if managed correctly.

Africa Energy & Environment

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Chinese refining markets 101—and their implications for price caps on Russian oil appeared first on Atlantic Council.

The post Pappalardo quoted in Houston Public Media on COP28 appeared first on Atlantic Council.

The post Ellinas in Cyprus Mail: Aphrodite low on list of Chevron’s gas plans for East Med appeared first on Atlantic Council.

The post Wald joins Bloomberg Surveillance to discuss tightness in the oil market appeared first on Atlantic Council.

The post Webster in The China-Russia Report: Will China’s emergence from COVID lockdowns send European gas prices soaring? appeared first on Atlantic Council.

The post Webster in Eurasianet: China wants the Line D pipeline. Can Central Asia deliver? appeared first on Atlantic Council.

The post Goldwyn joins NPR to discuss the impact of the war in Ukraine on global oil markets appeared first on Atlantic Council.

The post Goldwyn in Hellenic Shipping News: Biden faces ‘no good options’ to keep gasoline prices in check appeared first on Atlantic Council.

The post Ellinas in Cyprus Mail: Energy hot potatoes the new president will face appeared first on Atlantic Council.

The post Webster in the China-Russia Report: Beijing backed Moscow in oil markets in 2022, at seemingly great cost appeared first on Atlantic Council.

“It’s a good incentive… to invest in all these green infrastructures,” Pouyanné said at an Atlantic Council Front Page event on Thursday.

Pouyanné agreed with many Europeans that the IRA is protectionist and undermines the transatlantic relationship, saying that this is part of a “trend” in which the United States, by creating its own rules, seems to be believing less and less in the multilateral trading system built on World Trade Organization agreements. But he also said that the law is a “clear political decision by the United States” made because “they want that green industries will take place on their territory.” For example, he noted, nearly 90 percent of solar panels are manufactured in China, creating “another problem of dependency” for both Europe and the United States in the future.

According to Pouyanné, the United States took advantage of an “opportunity” in the energy transition by passing the IRA, so “let’s do the same in Europe.” To avoid a future in which Europe relies heavily on imports, he said, the continent “must take decisions” to guarantee “that green industries [will] be located in Europe.”

Below are more highlights from the event, moderated by Atlantic Council President and CEO Frederick Kempe, where Pouyanné discussed the role of oil and gas in the energy transition and the energy impacts of Russia’s war in Ukraine.

“No way to escape” natural gas

• Pouyanné said that because this year’s United Nations Climate Change Conference of the Parties (COP28) in the United Arab Emirates is being hosted by a major oil-producing country, “it raises the bar for the whole oil and gas industry… [We have] to engage, as a lot of stakeholders are expecting us to do.”
• At COP26 in Glasgow, US President Joe Biden released a plan to tackle methane emissions from the oil and gas industry; Pouyanné said that TotalEnergies can lower methane emissions by 80 percent by 2030, while keeping an eye on lowering all other emissions from the production process. “If I can produce oil and gas with no emissions, I’ve done my job in production” to cut emissions, he argued.
• “Natural gas is a fundamental energy for the transition” because it emits half the methane that coal does, Pouyanné explained. Natural gas, he added, will also help provide a consistent source of energy to fill the gaps of intermittent wind and solar power while new infrastructure to support energy storage and transmission is brought up to scale.
• This year, with Russia’s war in Ukraine raising questions about the global energy supply, Pouyanné said that the world discovered how important energy reliability, affordability, and sustainability are—and how much reliability depends on gas. “On one side, the Biden administration [said] one year ago, ‘you need to diminish your emissions,’ and then we hear ‘you need to drill more.’” That, Pouyanné said, shows how the world will “need gas for very long.”

The global divide

• While TotalEnergies had invested fifteen billion dollars in Russia, it has begun withdrawing from its Russian investments. “We have impaired almost all of our Russian assets,” Pouyanné explained. “We have step-by-step progressively retracted from almost all of our business in Russia.”
• As Russia’s war in Ukraine continues, Pouyanné warned, the West must “be careful” to avoid believing that the rest of the world sees the conflict as a fight between democracy and autocracy. “It’s not the dominant [narrative] today in the Middle East, in Asia, [or] in Africa,” he said, explaining that leaders in the Global South are more focused on developing their economies than the war. He recalled how there have been mixed responses from countries to imposing sanctions on Russia and to voting on condemning Russia in the United Nations.
• Pouyanné noted that he sees a similar division between the West and the rest in the climate debate with each passing COP. “It should not be” so divided, he said, “Let’s avoid antagonism. Let’s keep humility. Let’s listen to these [Global South] leaders.”

Investing in renewables—and fossil fuels

• A day after TotalEnergies posted a record yearly net profit, Pouyanné talked about the French oil major’s plan to spend the increased profits. The company plans to invest sixteen to eighteen billion dollars of its capital, with around five billion going toward low-carbon energies and about twelve billion going toward hydrocarbons. “With twelve billion dollars,” Pouyanné explained, the “objective is to continue to maintain… stable production for this decade and continue to grow our liquefied natural gas business.”
• But, he noted, it will be “very important” to “continue to invest in oil and gas” to keep profits and investments high across the energy sector: “If I can invest five billion dollars in low-carbon energy in 2023, it is because I have made money from oil and gas,” he explained.
• Pouyanné said that the biggest investment opportunities lie in emerging economies such as Brazil, India, and African countries. TotalEnergies, he explained, has invested in new oil fields in Brazil and new projects, including a $3.5-billion pipeline, in Uganda.
• While people in the West “complain about the Chinese influence in Africa,” he said, that influence is growing because of China’s more long-term approach to investing in the continent—rather than exporting natural resources right away.
• The TotalEnergies head said the company will take some of the profits made in Uganda, Mozambique, and elsewhere to “invest in Africa.” That includes the electric grid. “When you don’t have electricity in the country, it is difficult to [improve] economic growth,” he said.
• Pouyanné explained that with technologies such as electric vehicles gaining in popularity, “the oil market at a certain point will begin to decline… this is why we invest in electricity, because this is a growing market.”

Katherine Walla is an associate director of editorial at the Atlantic Council.

Watch the full event

The post TotalEnergies’ CEO: Europe should pass its own green subsidies to compete with the US appeared first on Atlantic Council.

How does the Western price cap on oil work?

As the G7 and European Union implement their new restrictions on Russian oil and gas exports, Ben Judah spoke with Eddie Fishman, Senior Policy Scholar at the Center on Global Energy Policy at Columbia University and nonresident senior fellow at the Atlantic Council’s Eurasia Center, to discuss the price cap.

Has the price cap already had an impact on Russian oil exports at this early stage? Is the price cap a new tool of economic statecraft? And can the price cap be used in a way to accelerate ongoing efforts to improve renewable energy infrastructure?

You can watch #BritainDebrief on YouTube and as a podcast on Apple Podcasts and Spotify.

Fellow

Ben Judah

Director

Europe Center Transform Europe Initiative

Economy & Business European Union

Fellow

Edward Fishman

Nonresident Senior Fellow

Eurasia Center

Russia Economic Sanctions

Europe Center

Providing expertise and building communities to promote transatlantic leadership and a strong Europe in turbulent times.

The Europe Center promotes the transatlantic leadership and strategies required to ensure a strong Europe.

Explore the program

The post #BritainDebrief – How does the Western price cap on oil work? | A Debrief from Eddie Fishman appeared first on Atlantic Council.

The post Derentz quoted in Development Aid on renewable energy investments in Southeast Asia appeared first on Atlantic Council.

With the support of European investment, North Africa could become the world’s foremost producer of green hydrogen, capitalizing on vast swaths of uninhabited land, solar radiation intensity, offshore wind capacity, and existing pipeline networks. In October, Morocco hosted the Executive Vice President of the European Commission for the European Green Deal to sign a Memorandum of Understanding (MoU) on the establishment of a Green Partnership between the signatories. The Moroccan MoU preceded an agreement signed in November between the EU and Egypt creating a strategic partnership on green hydrogen.

Developing hydrogen infrastructure at scale will be costly and come with a range of challenges—particularly regarding regional water scarcity—but long-term investments utilizing existing resources could spur clean manufacturing and industrial development for hydrogen producing states while also generating export revenues for decades to come. Already, African states are organizing resources to invest in the requisite technologies. The African Green Hydrogen Alliance—comprised of Morocco, Mauritania, Namibia, Egypt, South Africa, and Kenya—was launched in May, and hopes to expand its membership on the continent. 

Among the alliance’s members, Morocco is well positioned to be a regional leader in a green hydrogen economy, ranking alongside the United States, Saudi Arabia, Australia, and Chile as the five countries most likely to produce cost competitive green hydrogen. In 2019, the Moroccan Ministry of Energy established the National Hydrogen Commission, which released a hydrogen roadmap aiming to mobilize a $10-billion investment for 14 terawatt-hours of new renewable energy capacity required to generate green hydrogen for both domestic consumption and export.

To accommodate a rise in green hydrogen production and support other net-zero goals, Morocco aims to increase renewables’ share of power generation to 52 percent by 2030, 70 percent by 2040, and 80 percent by 2050. The Ministry of Energy projects that an additional 14 gigawatts (GW) of renewable energy will be added to the grid by 2027, mainly from solar and wind sources, although interest in nuclear energy has picked up. The Moroccan Agency for Solar Energy is leading the country’s effort to expand domestic solar energy capacity with the multi-stage Noor Solar Project, a massive project expected to invest $2.6 billion by 2030. Noor’s multiple concentrated solar power (CSP) sites—located in the Ouarzazate municipality, which boasts the highest level of solar radiation in the world—include the largest CSP plant currently in operation which produces 500 megawatts (MW) daily and is slated for expansion later this year. The fourth phase of Noor projects is currently under development and is expected to generate 950 MW upon completion. 

While early investment in renewable capacity placed Morocco in the spotlight of North African green hydrogen development, other regional actors share similar potential. Algeria has the largest wind energy potential on the continent—approximately 7,700 GW if fully developed—and released plans to expand renewable energy production to 15 GW by 2035, with an annual growth rate of 1 GW. Mauritania’s combined solar and wind potential exceeds 500 GW if fully developed. 

New renewable energy projects in the region should first and foremost focus on providing access to electricity and non-biomass fuels to the entire population. Fortunately, North African electricity grids are relatively well developed, with 97.6 percent of the population having access to electricity, and recent grid expansions into rural communities have greatly expanded energy access since 2000. 

North Africa should begin to focus on green hydrogen as a driver of industry, transportation, and infrastructure development as energy networks continue to expand. Already, North Africa is a powerful exporting bloc of ammonia and fertilizers, and using green hydrogen to transition away from the capital- and emissions-intensive Haber-Bosch process which uses methane or coal as feedstocks for ammonia production—towards green ammonia could support the region’s export potential and energy storage capacity. Green hydrogen’s use case for transportation is strong, especially as production costs decrease, making North Africa a prime location to scale medium- and light-duty vehicles for automakers like Volkswagen, Hyundai, and Toyota, which already possess manufacturing capability in the region. 

As domestic use cases for green hydrogen develop and attract capital investments, attention should shift to creating the infrastructure needed to transport hydrogen around the continent and overseas. Pipeline infrastructure designed for natural gas and liquefied petroleum gas (LPG) exists across the region with multiple new lines under development including the Trans-Saharan pipeline which would span over 4,000 kilometers connecting Nigeria and Algeria. Early implementation of hydrogen blending could make North African nations global leaders in hydrogen transportation, allowing for increased say in regulatory frameworks moving forward. 

Supporting green hydrogen development in North Africa through targeted investment in renewable energy and infrastructure projects would be of mutual benefit for both sides of the Mediterranean. Recognizing the region’s unique potential for the development of green hydrogen would incentivize North African nations to pursue a pragmatic course of sustainable development and provide Europe with new energy import options that better align with the bloc’s emissions reduction goals. Following COP27 in Egypt, North Africa’s hydrogen future should continue to be encouraged and supported by international capital. As an emerging source of sustainable fuel and electricity generation—with large global demand potential and a myriad of end use cases—hydrogen can act as a catalyst of development in North Africa, an opportunity which should not be overlooked.

Daniel Helmeci was a Summer 2022 Young Global Professional at the Atlantic Council Global Energy Center.

Related content

EnergySource Jan 31, 2023

Africa and the global LNG crunch: Balancing energy security, development, and decarbonization

By Robert F. Ichord, Jr.

As Europe looks to replace Russian gas and Asia looks to switch off coal, African LNG could play a central role. Gas development in Africa could unlock new revenues and, in turn, drive development across the continent.

Africa Energy & Environment

EnergySource Jan 30, 2023

Unlocking a sustainable future by making cybersecurity more accessible

By Leo Simonovich and Reed Blakemore

Cybersecurity will be a key feature of the energy transition. Decision-makers will need to be diligent as they look to secure an increasingly digital and interconnected global energy system.

Cybersecurity Energy & Environment

EnergySource Dec 20, 2022

India’s opportunity for steel decarbonization

By Matthew Piotrowski and George Frampton

India is a global steel heavyweight. Domestic and international forces are ratcheting up the pressure to decarbonize. Doing so would ensure long-term market access for Indian producers.

Energy & Environment Energy Markets & Governance

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Realizing North Africa’s green hydrogen potential appeared first on Atlantic Council.

Flagship Event Sat, January 14, 2023 • 12:01 am ET

2023 Global Energy Forum

The 2023 Forum will have a special focus on the challenge of managing energy security priorities and decarbonization efforts in tandem, including the continuing impact of the crisis in Ukraine on the energy transition. This two-day conference starts at 9:00 AM in Abu Dhabi and virtually at 12:00 AM ET (midnight).

Africa Americas Energy & Environment Energy Markets & Governance

Event transcript

Uncorrected transcript: Check against delivery

Speakers

H.E Arifin Tasrif
Minister of Energy and Mineral Resources, Republic of Indonesia

Introducer

Reed Blakemore
Deputy Director, Global Energy Center, Atlantic Council

REED BLAKEMORE: I think as we’ve seen throughout the past two days of our agenda, the energy trilemma is a key theme that we’re all working through, defining not just the energy space this year but will certainly define the energy space looking out to 2050 and likely beyond. The move to a minerals-intensive clean-energy system creates enormous demand for new resource capacity, new challenges for environmental stewardship, and of course more broadly a new paradigm for global energy security. It’s absolutely imperative that we address these emerging issues head-on and [that] we do so quickly.

So, to that end, we’re honored to be joined by a leader in this space, a key global actor in the critical mineral supply chain, to say a few words on this important topic. So please put your hands together and welcome the minister of energy and mineral resources of the Republic of Indonesia, His Excellency Arifin Tasrif.

MINISTER ARIFIN TASRIF: Good afternoon. I think this time is quite heavy time for us—after lunch, and I have to move from the previous place to this place. Thank you. Thank you for the opportunity.

Honorable Mr. Frederick Kempe, president and CEO of the Atlantic Council, thank you for inviting me to stand at this podium… Distinguished ladies and gentlemen: Critical minerals and their supply chains [have] become a bristling issue among economists. In this light, every country has various definitions and categorizations [for] critical minerals, including their criticalities, parameters, and analytical levels. Critical minerals are fairly limited and very much needed to support clean energy. Geographically, they are in several countries, and refineries [are] also in several countries. Therefore, global collaboration is needed to be able to produce the minerals [that are] needed to support [the] clean energy transition.

Indonesia has a policy to increase mineral-added value. Besides that, we have also to secure supply chains to fulfill our demand in order to reach our target [of] net-zero emissions by 2060. This policy is our noble intention so that our 207 million Indonesians could… benefit from mineral sources so that they may get much better living conditions than [before].

In the context of [the] global supply chain, Indonesia hopes not only to provide raw materials but to cooperate with other parties to develop large-scale downstream industries to create competitive outputs. We appreciate global players who have recently [invested] in Indonesia, such as… Freeport Indonesia [which invested] to build a copper smelter. So the smelting and the processing itself will be completed by—hopefully, within end of this year­. PT Vale, Whitford, and Huayou [are] to build an electric vehicle battery raw-materials factory; Eramet and BASF [are] to build an electric vehicle battery raw-material factory; [and] Contemporary Amperex Technology and LG [are] to build an electric vehicle battery raw material factory.

[Batteries are] very important for Indonesia, especially for transportation. We have about 140 million vehicles in land transportation, [and] 120 million of these are two-wheeled vehicles, [a number equal to] almost half of our population. So if we calculate one liter [of] consumption per motorcycle, [and] multiply by 120 million, it [equals] eight hundred thousand barrels [of] oil per day. So you can imagine how we burn. We subsidize the fuel but we are in the process to reduce, minimize, or even to be released from the subsidy. Besides that, we also have another advantage. Reduced [emissions] reduce the noise, which will also improve our health condition.

[It’s] not only in land transportation; we also consider marine transport. Indonesia is [an] archipelagic [country]. We have about sixteen thousand islands. So I make a joke that we—by the process, this island will be reduced automatically. If we don’t care about climate change, it will sink.

So [with] this significance, Indonesia forces several steps to enhance governance on clean energy. We implement policy on mineral exploration, especially critical minerals, through enhancing exploration, indexing rare-earth-elements inventories, [and supervising] mineral governance while maintaining environmental sustainability; and, second, [we] try to integrate [the] supply chain between mining and smelter facilities, as well as integrate the industrial users of mineral-processed products.

We would like to reiterate that Indonesia is ready to cooperate with partner countries to develop manufacturing facilities on critical minerals to support the energy transition. So [I] look forward to [cooperating] with you all.

Watch the full event

The post ‘Global collaboration is needed’ on critical minerals to support the energy transition, says Indonesian energy minister appeared first on Atlantic Council.

Flagship Event Sat, January 14, 2023 • 12:01 am ET

2023 Global Energy Forum

The 2023 Forum will have a special focus on the challenge of managing energy security priorities and decarbonization efforts in tandem, including the continuing impact of the crisis in Ukraine on the energy transition. This two-day conference starts at 9:00 AM in Abu Dhabi and virtually at 12:00 AM ET (midnight).

Africa Americas Energy & Environment Energy Markets & Governance

Event transcript

Uncorrected transcript: Check against delivery

Speakers

Amos Hochstein
Special Presidential Coordinator for Global Infrastructure and Energy Security, US Department of State

Moderator

Helima Croft
Managing Director, Global Commodity Strategy, RBC Capital Markets

HELIMA CROFT: There’s been so much discussion at this conference about the challenges of critical minerals—how we need to source more supply, how we need—the unique security challenges of critical minerals. Walk us through, sort of level set for us, what’s the scale of the challenge as we think about meeting Paris climate goals?

AMOS HOCHSTEIN: First, it is always great to be back at the Energy Forum. Last year I tested positive in the airport on the way, so I ended up in a—

HELIMA CROFT: We didn’t tell anybody that, yes.

AMOS HOCHSTEIN: We did not say that at the time, but that’s really why I appeared on a screen from my hotel room in Brussels. But it’s great to be back here in person for many, many reasons.

Look, I actually believe that this is the greatest challenge not just for our ability to meet net-zero goals, but it’s actually one of those things that crosses over to being one of the most important challenges and national security risks overall—not just energy, but a national security risk for the United States and for large parts of the world. And the reason for that is because if we don’t—if we just continue as things are today, as they’ve been developing for the last ten years, we’ll be in a place where we have full control or significant control of critical minerals in the hands of very few and that’s a great challenge.

HELIMA CROFT: You know, Amos, how does this differ from the security challenges of traditional hydrocarbons? And you mentioned concentration risk, but there’s also this issue around China, which is it’s in the hydrocarbon challenge but it also seems to be very, very pronounced when it comes to critical minerals.

AMOS HOCHSTEIN: Well, my view is that if we’re—everybody always thinks about the hydrocarbon world of the twentieth century—

HELIMA CROFT: Yes.

AMOS HOCHSTEIN:—and that we’re now moving to this great new world of the green energy world, which is a better world in many ways, but that somehow that’s going to solve the geopolitical challenges of the energy world.

The way we’re going right now we’re actually creating a carbon copy of the twentieth century geopolitics of energy architecture and just putting it into the twenty-first century. Instead of having a small group of countries that control oil supply and, perhaps, refining, we’re now going to create a one or maybe a couple of countries that will control the entire supply chain for wind, solar, electric vehicles’ chips, and if we do that then the geopolitics of energy of the 1970s will be repeated in the 2030s and 2040s.

HELIMA CROFT: So, Amos, can you just walk us through? I mean, where does it rank? When you think of national security priorities for this administration, you know, where does it rank in terms of, you know, when you go in to see President Biden how concerned is he about critical minerals?

AMOS HOCHSTEIN: I think people don’t always believe me but he actually can talk more about critical minerals and the challenges of the critical minerals than almost—than many in our own government. He understands this challenge very personally. I have had many conversations with him about this.

It’s because if we want to create—and look, we’re at a place we talk about this all the time in this conference, right? Dr. Sultan talked about it yesterday. We have to accelerate the investment in clean energy technology and in renewable energy. That creates a challenge because as you accelerate something more rapidly than the market would normally have developed you have to make sure that you have the raw materials and the supply chain behind it. Right now, we may not.

So, to do that, suddenly there is a rush to buy and to acquire, from mining to processing and refining and assembly, and if you look at where that is right now it’s not in a good place for a diverse—well-diversified energy system.

HELIMA CROFT: Are there particular aspects of it that are especially acute? I think we’ve discussed graphite before as a particular challenge.

AMOS HOCHSTEIN: So if you look at what is the materials that are necessary for batteries or materials that are necessary for wind and you break it down and you look item by item, and suddenly you realize that graphite is mined in many different countries but it’s processed only in one country, and we’re going to have two new processing facilities in the United States likely over the next couple of years. But that will supply a very small percentage of what even just a small percentage of what the United States needs.

And then look at lithium and who’s owning the assets. Who owns the mining? Who owns the processing? Who owns cobalt? Who owns the mining? Where is it going? Nickel, copper. Copper we need not just for batteries. We need it across—if you want to electrify everything copper is really important.

So all of that is right now concentrated in one country: in China. China controls somewhere between 60 [percent] and 100 percent of all the items that I just mentioned. So we have to—as we talk about accelerating the investment, it’s not just about deployment of cells or of turbines and building the grid.

We actually have to accelerate the investment that the rest of the world—this is not just about US versus China. It’s about making sure that we have a diversified energy system and if—I’m not looking to have all the processing in the United States.

HELIMA CROFT: Right. Right.

AMOS HOCHSTEIN: The IRA is definitely intended to build up our own capacities. But we need that around the world.

HELIMA CROFT: So let’s dig into the IRA right now. Can we, basically—you know, we’ve had the IRA, this, you know, groundbreaking legislative, you know, success for the Biden administration. How do you think about the IRA sort of delivering on, you know, the development of this industry in the United States?

AMOS HOCHSTEIN: Well, you have—Piedmont is an American company that’s going to have lithium mining in South Carolina and processing in Tennessee. Same company has assets in Ghana to get—for the mining of lithium. We have multiple examples. Jervois from Australia is just—is going to just announce that they’re opening the first in many decades primary cobalt mine in the United States—not as big as [the Democratic Republic of the Congo (DRC)], but it is a mine. But what I don’t want is all of that cobalt’s right now destined to leave the country, so—because we don’t have processing. So what IRA is doing is creating—if you look at a carrot and a stick to get companies to do things, this is—IRA is all about the carrots. It’s about what are the tax incentives and the grants and other financial incentives for companies to build the capacity that we need.

But Helima, we can’t—

HELIMA CROFT: Right.

AMOS HOCHSTEIN: IRA is about the United States. This is a global issue. We want this to be built, whether it’s lithium in Serbia or projects in Chile, in Argentina, and in Australia. But it’s not enough that they’re built in those countries. Who owns them and where are they going? And you have to look at the next level of the—of the problem. If one country owns all the raw material and one country owns—or all the processed material, then eventually they get to decide where the battery’s going to be built.

HELIMA CROFT: OPEC—

AMOS HOCHSTEIN: And if they get to decide where the battery’s built, then they get to decide perhaps where the car is built. And all of a sudden you have a real challenge where the auto industry—and we know the auto industry moves where the costs are, right? That’s how the United States became a hub for—European and Asian car manufacturers make their cars in the United States when it became cheaper to make them in the United States for the US market. So that’s the real challenge that we’re facing.

HELIMA CROFT: Well, you’ve laid out an enormous challenge. What is the role of getting, you know, obviously, more financing? Like, how do you de-risk financing for this?

AMOS HOCHSTEIN: So that’s—so we launched, together with the—at the G7 we launched something called the Partnership for Global Infrastructure and Investment, which the idea behind it is how do we pool resources from the United States and the G7 members plus others and the MDBs to de-risk investment in these areas. And this is an extraordinarily difficult challenge because you have country risk, commodity risk, currency risk, and ESG risk, and that makes it very difficult.

We’re having initial successes now in—after several months of starting to be able to put together these kinds of packages that allow us to use the financial instruments that we have as governments, whether it’s Ex-Im and DFC in the United States or it’s KFW in Germany or in the United Kingdom, et cetera, the EU, and of course Japan with JBIC. So that—but how do you figure out how to blend where they’re used to de-risk it by taking the first loss or taking and putting that capital where it fits in the capital stack of the investment to make sure that we can incentivize the others? I’m not very optimistic that we’re going to have significant Western financing of mining projects in certain countries around the world where they’re not comfortable, but I think we’re starting to see a success where we can find buyers into the mining side and incentivize processing and refining of those products in a number of those countries, and Serbia is a very good example of that.

HELIMA CROFT: Do you have others you could talk about?

AMOS HOCHSTEIN: I have others that I will be able to talk about.

HELIMA CROFT: You’ll be able to talk about.

So we just attended the Future Minerals Forum in Riyadh, and one of the big issues that was brought up there was the challenge of getting financing in a rising rate environment. I mean, how much does that give you concern?

AMOS HOCHSTEIN: That’s what I lose sleep about every night: How do I solve that problem? And we’ve had conversations. We’ve, you know, spent some time—the US national security adviser and myself spent some time with some of the fund managers to understand their perspective of what does it take. We’ve traveled around to see how do we structure—what do we need to do—in other words, what can the US government or the G7 governments in combination do that would change the outlook of financial institutions, whether it’s banks or it’s private equity? What do we need to do that gets you over that hump?

I think we have a—we have more information today. We’re putting those deals together. We have some transactions that are in their final stages that will demonstrate that we can do this. But the challenge is enormous, and I think part of the challenge is that there’s not enough attention to this challenge.

So what I would say on the financial institutions, I think we have to find a different way to look at not just de-risk the investment, but we have to put in the risk to the final product. If I’m going to say I’m not going to invest in financing the mining or the processing but I will invest in the final product, well, you’re going to have to put a risk now on that final product because you’re going to have to ask them: How are you going to guarantee your supply chain? What if you don’t have it? And suddenly I think if you have that outlook, then perhaps you say, OK, if I’m going to secure my investment in the final product, whether it’s the car or the product itself—or other products—I have to now invest in the supply chain to make sure that it’s there. And I think that’s a mindset change that is slow, and I—because of the lack of understanding of the basic data of where the supply chain actually lives, everybody I give the numbers to always reacts with surprise even if they are people who are heavily invested in the sector.

HELIMA CROFT: So, Amos, I want to ask you, you recently took a trip to the DRC. When you think about, you know, you have been in the seat for energy security for how many decades? I mean, you were at the State Department under President Obama. You were head of the Bureau of Energy and National Resources. And sort of in your career, how much has the energy security portfolio that you’ve had, how much has it changed because of the critical minerals imperative? Like, does it change where you’re spending your time? Like, how does your day-to-day job change because of this?

AMOS HOCHSTEIN: I think, remarkably, it’s the same job with a different set of countries. And I started working on energy security in the 1990s. That ages me a little bit. I turned fifty last week. So in—when I was on the Foreign Affairs Committee actually working on completely other issues, and all of a sudden realizing that we in the United States didn’t talk about energy in foreign policy but every other country did, whether they were consumers and it affected their—how much they subsidized energy and therefore a percentage of their GDP or if they were the providers of energy and therefore it was a big portion of their income.

And today, I see it as exactly the same thing when—OK, so I’m in the DRC because they have 80 percent of cobalt in the world, they have significant copper resources, and they have really great lithium—very high-quality lithium there as well. So they said to me—some folks there without naming names said: We’re the Saudi Arabia of cobalt. That was the statement that was made to me by this individual. And I said: I wish you were, because the Saudi Arabia of cobalt or the Saudi Arabia of actual Saudi Arabia has that resource, and look at what it’s done for the country.

HELIMA CROFT: Right.

AMOS HOCHSTEIN: It’s been able to turn the country around, develop it into a—the major powerhouse, an economic powerhouse that it has—that it is today with institutions and roads and bridges and hospitals and everything else. You’ve had cobalt for all these years. It’s time to think about how do you manage these resources so that the more you put an effort on getting at—rooting out corruption, and putting an emphasis on who are the workers and what their rights are, and the taking care of the country and investing it back, that’s part of the opportunity that all of a sudden, after ten years, the world is really paying attention. We want these products for all these things that we want. This is the opportunity for a whole new set of countries if they—if they decide that they want to be part of this economy, they have an opportunity to become the Saudi Arabia of cobalt or of lithium or of copper, of nickel or graphite, whatever it is.

But if we keep a concentrated market where all these countries are essentially production facilities on a highway to one country, they won’t get that opportunity to develop and to expand their economies and to do what’s right for their people. And the rest of the world will end up with a single supplier for the products that we need the most in order to create this net-zero world that we’re trying to advance.

HELIMA CROFT: Amos, I want to drill a little bit deeper on this because, I mean, clearly the DRC has had, you know, enormous challenges. I mean, think about it was the world’s worst war at one time. Five million people reportedly died in that war. I mean, how do you solve for these enormous governance problems? I mean, the track record in terms of oil countries in sub-Saharan Africa, you know, wasn’t particularly great in the 1990s in early 2000s. You know, think about Nigeria. I mean, how does Congo sort of break the sort of resource curse?

AMOS HOCHSTEIN: So I don’t want to pick on Congo, but I—

HELIMA CROFT: No, no, I know, but it’s an enormous opportunity if they could—this resource. I mean—

AMOS HOCHSTEIN: Right. So I think it’s exactly what you just said: Don’t look at it as a challenge and a problem; look at it as an opportunity. And I think that as—look, we as a world, we want to have—we want to have a net-zero world. We want to all—many of us in this room want to have—drive electric vehicles. But we also want to know that it was built in a certain way and coming from a certain—that the supply chain into it was, first of all, clean so that we actually don’t defeat the purpose, and that worker rights were respected while building these cars and the materials in it. So this is not between—as we are suddenly paying attention to what we drive and what we’re going to consume and what kind of electricity we’re going to have, now we can come and say we want to make sure the countries that are producing it get their fair share, too. And so don’t allow companies that are going to come and bid in your—when you put out a tender that are not going to respect those basic principles.

And it’s remarkable. If you don’t—if you tell them you can’t hire children and you have to have an actual living wage and you have to do all the things that the successful oil and gas countries have done that have developed their economies in a sustainable way, if we take those lessons learned and say—you have the opportunity. You can look at it two ways. You could look at the resource curse countries who failed the resource curse test or the ones that succeeded. And that’s—and that’s what I—I’m sitting here in the UAE.

HELIMA CROFT: Right.

AMOS HOCHSTEIN: This is the example that you can draw from. But I think it’s incumbent upon us to say we’ll help you get there, but you have to want to. And the opportunity really is that while just a few years ago—three, four years ago Western companies were leaving the mining of lithium and copper and so on, and now they all want back in. So require them to live by those standards. And don’t feel like you have to take the one company that’s going to give you perhaps what sounds like a sweetheart deal at the beginning and that doesn’t allow for development of your own economy.

HELIMA CROFT: How much—I mean, China, you could say, has a—had a head start on the United States in sub-Saharan Africa, did not put the same emphasis on governance, labor rights, environmental rights. How do you see—I mean, you’ve brought up the whole issue of China on processing. You’ve talked about the OPEC of one. How do we think about China’s, you know, relationship with these key sources of supply?

AMOS HOCHSTEIN: I’ll say about China and this issue the same exact thing I said in Europe in 2013, 2014, 2015 about Russia and gas. We are not here to say Russia should not supply gas to Europe. It should play in a competitive, diversified market according to basic transparent rules of the game. If we had done that then, we probably would be in a different place today in Europe.

That’s the same message on China. We’re not saying China shouldn’t be part of this market. It should. It could. It is. And they’re not leading the United States; they’re leading the world. This is not an America versus China. It is not. This is about the rest of the world should not want to rely on one supplier. I don’t know a single business that ever wants to rely on one supplier for all its products. So I think this is not about who’s ahead, the United States or China; this is about saying to the Chinese: We want to do—we want what you want, which is to be in the business of accelerating investment into a renewable energy net-zero world. But nobody should end up wanting to dominate that market and to—to the exclusion of everybody else.

We will be in a healthier place if I—if there are multiple locations around the world that build batteries or that do the refining and the processing. Not every country should have a whole ecosystem in that country, but we should have centers that can do this. And to do that, that’s why the G7 took this initiative to pool our resources to do that through the [Partnership for Global Infrastructure and Investment (PGII)]. That’s what I think we’re going to try to mobilize as much as possible. But there has to be a buy in, and the buy in has to be governments that are not necessarily what I’ve just said now would still be like, yeah, we get it, but I have bigger challenges to think about. I actually think this is the clear and present danger, because if you don’t do something in the next twelve, twenty-four months the fate will be sealed for the next twenty years.

HELIMA CROFT: So we really have a very, very small window.

AMOS HOCHSTEIN: It’s a very small window.

HELIMA CROFT: You see the urgency. You said President Biden sees the urgency of this. So if we—when we meet back here at this time next year, how do you think our conversation’s going to look? I hope I get to do the interview, Fred, looking at you.

AMOS HOCHSTEIN: My hope is that the conversation that we have at this event next year, just as we come out of COP28, will be about reviewing the change in the direction of the supply chain. And I think we are going to be. I think we’re going to be in a place where we’re going to be able to discuss transactions that have taken place, both in the mining side and in the processing.

And I think people sometimes think only about the mining side. The mining side is less important. The processing and the assembly and so on are critical. And I think we’re going to be in a place to say we’ve made a dent and we’ve put ourselves in a trajectory—not that we’ve made a meaningful—if you took up our percentages and, you know, 80 percent went down to only 78 [percent]—Amos, we failed—but, rather, what’s the trajectory? What are we FIDing for these facilities? And I think that we’ll be in a much better place next year. That’s my hope and that’s my—I hate saying hope because hope is, like, well, I hope so.

HELIMA CROFT: Yeah. That’s the goal.

AMOS HOCHSTEIN: It’s the goal. That’s what we’re working towards.

HELIMA CROFT: We have one minute left, and you brought something up when I saw you at breakfast this morning I thought was such an important point in terms of talking about this issue of, like, just transition, equity, the sort of what happens with the digital development divide. I just think if you could sort of talk that through for us, because I was so struck by the sort of real issues around what could happen if you don’t close it.

AMOS HOCHSTEIN: So I think the digital—the critical minerals and the digital divide, to me, are two parallels. They are remarkably similar and the same challenge exists in both. If we don’t do something about the—about it on the energy side then we are going really fast on this—on electrification and moving everything so quickly that if we—how do—if all these companies are saying I’m not going to build a car that is an [internal combustion engine (ICE)] car past 2035, and you have large parts of the world that don’t have a sustainable grid for the baseload they have today, how do you end up with—how do you suddenly convert all the cars? You don’t, and all of a sudden you’re isolating countries out of the rest of the world’s economy.

So the divide between developed and developing suddenly widens significantly as a result of our own success. It goes back to what we talked about yesterday about how much money is going into clean energy implementation in developing countries—I think 27 percent today, declining—expected to decline to 22 percent.

The same thing is happening on the digital side. If you’re still in—today, we’re going from 3G to 4G and kind of skipping [4G] and going into 5G while already the research and development on to 6G, which will be [expected to deploy around 2027 to 2028].

But [3G to 4G] is different than [4G to 5G]. So 5G is a sea change of technological change. If we don’t—if we don’t upgrade systems across sub-Saharan Africa and Southeast Asia, South Asia, Central Asia, where we get to 5G quickly, we are going to condemn countries that are still in 3G. It’s no longer, OK, it’s a little bit slower. But, rather, you’re no longer able to connect to what the commercial world would look like and that—suddenly mobile banking and e-commerce becomes extremely difficult if you can’t actually connect into the rest of the world.

So we’re on a path, both on digital connectivity as well as on the critical minerals and investment in renewable energy that if we don’t start spending the dollars more equally it’s not only that it’s not fair to people with—who are born into countries that are lower income but we’re actually going to create a divide that is no longer bridgeable.

And that’s why we’re starting to look at investments and there I can tell you we’ve done some significant investments on 5G through Africell in DFC and Ex-Im Bank have done this, and we’re working with our European counterparts so that, again, we don’t have just one supplier.

So it’s not just one Huawei ZTE but, rather, we have all the—we have a healthy ecosystem that can invest in to upgrade these systems from 3G to 5G and then making sure that those are reliable vendors that provide not only fast connectivity but secure connectivity as well.

HELIMA CROFT: Amos, the time’s up. I want to thank you for another extraordinary conversation. What I always like when we have these conversations is, I mean, you have been incredibly prescient. You’ve told us we’ve got a twelve- to fourteen-month window. I think we should take that incredibly seriously. Your track record on warning about Europe’s dependence on Russian gas—I remember in September of 2020, right, you were the one, basically, I almost felt like, a lone voice out there talking about the need to get as much gas as possible into Europe.

We should have taken you more seriously then. I think—I hope everyone—this sort of twelve- to fourteen-month window I hope we all understand the urgency of the challenge you’ve laid out.

So thank you so much, Amos.

AMOS HOCHSTEIN: Thank you, Helima.

Watch the full event

The post Amos Hochstein on how critical minerals impact net-zero progress—and US national security appeared first on Atlantic Council.

Flagship Event Sat, January 14, 2023 • 12:01 am ET

2023 Global Energy Forum

The 2023 Forum will have a special focus on the challenge of managing energy security priorities and decarbonization efforts in tandem, including the continuing impact of the crisis in Ukraine on the energy transition. This two-day conference starts at 9:00 AM in Abu Dhabi and virtually at 12:00 AM ET (midnight).

Africa Americas Energy & Environment Energy Markets & Governance

Event transcript

Uncorrected transcript: Check against delivery

Speakers

Yasmine Fouad
Minister of Environment and Ministerial Coordinator and Climate Envoy for COP27, Arab Republic of Egypt

Mahmoud Mohieldin
Climate Change High-Level Champion for COP27, Egypt; Special Envoy on Financing 2030 Agenda for Sustainable Development, United Nations

Damilola Ogunbiyi
Special Representative of the UN Secretary-General; CEO, Sustainable Energy for All

Moderator

Dan Murphy
Anchor and Correspondent, CNBC

DAN MURPHY: Thank you so much for being here today and thank you to the Atlantic Council for hosting us. Minister, thank you so much for the opening remarks as well. And thank you to the director-general for also setting the scene for our next conversation.

And as we take the stage, I’d like to introduce our panel for our first conversation today. Of course, Dr. Yasmine, minister in Egypt, is joining us. But we also have Mahmoud Mohieldin, the climate change high-level champion for COP27 in Egypt, joining us; and Damilola Ogunbiyi, the CEO of Sustainable Energy for All and also a special representative to the UN secretary-general. So please make our panel feel welcome on this Sunday morning, and thank you again for being here. [Applause.]

Minister, just to begin, I think the best way to summarize the overall sentiment at the conference so far was from Dr. Sultan Al Jaber in his opening remarks at the conference. And he said: The world is still way off when it comes to achieving the goals of the 2015 Paris climate agreement. So, in your view, how can COP in the Emirates address some of those challenges and build on the progress that was made in Egypt?

YASMINE FOUAD: Thank you very much for that question.

First of all, you know that the COPs were designed that one build upon one another, so it’s not in isolation of the multilateralism process.

Secondly, I think that there are three parts that I’ve just mentioned in the opening remarks quickly that would be very sectional.

First of all, that if we don’t want to be far away from the Paris agreement in 2015, we have a good opportunity to seize, which is the Paris rulebook, the Sharm El Sheikh plan of implementation but much more, which is the global goal on adaptation that should be adopted in COP28. And that’s very important to look at because the world is looking at that part very importantly, and there are million and trillions of finance that would go for adaptation just if the target is being set.

Secondly, the global stock-take is also one important part that we can seize in order to put further implementation to the Paris agreement.

Last but not least, the loss and damage, also the fund that was dedicated in COP27 and the governance of that fund, on how can we further look into the implementation and the actual disbursement of that fund.

These are three important issues because they have to work parallel with the mitigation actions, with the NDCs. And looking further on how countries are implementing NDCs because the first reporting will take place in 2024, so we have a very good opportunity in COP28 in November to see how countries will be able to finalize and report back on their updated NDCs. Thank you.

DAN MURPHY: And achieving progress is particularly challenging at the moment because what we’ve seen coming into COP28 and all through COP27 is this chorus of criticism being leveled towards the oil and gas industry, and I want your reaction to this as well. What do you say to those critics who claim that the COP process is basically a bloated expedition of oil and gas executives, photoshoots for politicians, and all being run by special interests and lobbies? How do you react to that?

YASMINE FOUAD: I react simply that they are—oil and gas is part of the problem, like any other industry, and they have to be present in that part in order to present what they can do into that. If we are always saying that the COPs should be inclusive because the crisis affects us all then everyone has to be around the table.

Let me give you a good example aside from the oil and gas. The heavy industries, the cement industry, or the fertilizers industry—why they shouldn’t also be criticized that they are around the table.

In Egypt, there was a day for the decarbonization and that was the first time that we have that day. We know that there were some—and a lot of criticism on why are we including that in the discussion. They should be part of that discussion in order to be faced with the reality that you, as emitter, as part of the pollution, you need to come up and step in and say whether you’re credible, whether you will be able to be committed, and how you’re going to do that and how you’re going to make that transition.

Starting that dialogue in COP27 it was really essential not to exclude but to include and face the fact that what you’re going to do in that part and how you’re going, really, to make a difference if you are going to make a difference and the world will be watching and will be evaluating and assessing that.

DAN MURPHY: And just one more question before I open it up to the panel.

But do you—do you also think that there is a public perception gap here? Because I also get the sense that it’s quite hard for the general public to square the fact that you can have a major fossil fuel producer like the UAE also being a global leader in climate. How do you address that public perception gap and sell this to the general public, who may not understand that those two things can be directly correlated?

YASMINE FOUAD: I think that the only way that you can do that is to present an actual commitment and plans that you would be able to fulfill.

Sustainability is—cannot be divided. Sustainability would mean a one-fledged package that you are looking at the environmental and the economic and add the social aspects. Once that—that’s even away from the climate—once that is being very clear and you’re committed to do that and, yet, also you need to look at how best will you be able to make that transition.

The transition is not only for a country rather than the other. The transition would mean a just transition, that those who need the transition should be availed the time, the technology, and the finance, and those who have the finance should be availed the time and showed the targets and respect those targets on making that kind of the transition because the fact says for sustainability the regular oil and gas and the regular fossil fuel cannot live longer and will not be able to ensure the demands of our future generation.

So the shift to the renewables is a must and, in fact, is not an option.

DAN MURPHY: Mmm hmm. Thank you, Minister.

Mahmoud, I’ll take it over to you now, and through the COP27 process we did see great progress on mitigation, adaption, things like loss and damage and financing, in particular. How do you think the UAE can build on the COP27 agenda and what would you be focusing on here?

MAHMOUD MOHIELDIN: Right. Thank you so much. It’s great to be in Abu Dhabi and it’s great as well to start the year with an event with the Atlantic Council, as I ended last year with an event with the Atlantic Council. It was different. It was an insurance and adaptation. They were focusing more on energy.

But we take that all from a holistic perspective. That’s why I liked the introductory remarks by Francesco and, of course, by Her Excellency, the minister.

So on this issue of process and accumulation over time, and it was from the very beginning when Egypt and the UAE were announced in Glasgow to host COP27 and COP28, it was very much an understanding that the outcomes and the conclusions of COP27 are going to pave the way for a successful COP in the United Arab Emirates.

And I would really—you put them nicely in the order of the Paris agreement. I think Sharm El Sheikh managed to protect the Paris agreement and protect the ambitions of Glasgow, including the 1.5 degrees. It made, really, a breakthrough when it comes to the adaptation agenda with very practical suggestions in partnership with the private sector in areas related to the work and the adaptation from water management to agriculture to coastal areas to food security and other areas of work. And then, the great achievement, and that is really—quoting the secretary-general of the UN—he said that this was a huge political achievement, you know, the loss and damage, because those who are experts—and many of them are in this room—days before reaching the agreement they were really in doubt that this was ever going to happen, but I think the great work conceptions, the great leadership of the Egyptian diplomacy, the great work by Germany, Chile, and everybody on the parties and non-parties alike had realized that we cannot really escape from the loss and damage and dilute it under different notions including adaptation.

What’s common between the three? It’s all of the elephant in the room: it’s finance. Without finance you cannot really have any progress in mitigation. Adaptation will be an interesting academic notion, and loss and damage is all about finance. So how can we deal with that is basically going to be the discussion that we’ll be having here in Abu Dhabi today and during the sustainability week as well.

It’s easy to talk about the one hundred billion [dollars], but we know now it’s a drop in the ocean when it comes to the requirements of finance. It’s no more than 3 percent of the requirements of total finance for when it comes to developing economies and emerging market even if you put advanced economies and China aside. So we need really to have serious money.

How is this money going to be coming from? There are some suggestions here. One, this could be coming out of generosity, and this could be very much a call of optimism in this regard. Others say, well, it could be out of fairness. Those who have been polluting the world for almost two hundred years may realize today it’s about time to contribute. The third aspect could be—which is more relevant—could be about efficiency gains; the mutual benefits of investments in mitigation and adaptation, but in a new way to make adaptation with reward to those who are investing in it, including from the private sector.

And then if you are not really going to be convinced of any of the three arguments, there are the fear factor, and it’s either fear about the planet or fear about your livelihoods; that it’s a very serious argument that if we are not going to get our act together—not just about the impact of global warming and what will happen in 2030, 2050 and beyond, but immediately we see the threats of forced migration. Immediately we see the fear of new phenomena with climate refugees.

And there is an interesting book on this by a good author. It’s called The Nomad Century, with a heat map that we know now that it happened that low-income countries, poorer countries are in warmer areas of the planet. They will be forced to leave their villages and towns, and there will be nothing to stop them unless there is something that we can do today to prevent that from happening. So the loss and damage, the kind of—the prevention act that this definitely will be costly, but the cost of it will be much less than if we wait and wait for the outcomes of doing nothing.

DAN MURPHY: It’s a perfect setup for my question to Damilola, as well, and good morning to you, Damilola, because what we also know is that equity and inclusivity are critical tenets here, too, and of course the concept of a just transition was also principal in the Paris Climate Accords.

So explain to us a bit more about your role and why this concept of a just transition is also critical in this climate conversation.

DAMILOLA OGUNBIYI: Well, good morning to you, and thank you for having me here at the Atlantic Council.

Why the notion of a just transition is so important is because when we’re talking about transitioning, we forget that a lot of people don’t even have sufficient energy. So when we talk about the developing world and my continent, Africa, we’re talking—the just transition to them is getting enough energy to survive, getting enough energy to live a dignified life. We’re starting at a scenario where the, you know, per capita the average African with the installed capacity has barely 404 kilowatt hours in Sub-Saharan Africa. That is kind of twenty times less than the average American.

So the just is really important. For the first time in history, we actually truly have the chance for when people are getting energy, it to be clean, it to be renewable. But you can’t forget the fact that a lot of economies, they want to industrialize. There’s a lot of things people want to do with energy. So we shouldn’t just look at, you know, one side of the world and forget another side. There’s no way in our climate promises where you can—you can go ahead and hit net zero and leave a billion people in energy poverty. It just doesn’t happen that way.

So as we’re talking about the just, as we’re talking about equity, as we’re talking about just the right thing to do, we also have to talk about the reality that this will mean more energy for a certain region in the world, and it means that the developed world had to use less. Energy efficiency is the best fuel source to try and, you know, mitigate. You have to use less to make sure other people have more and they—and they can come up again.

So in our work at Sustainable Energy for All, we really, really focus on that. And we have different partners, and some are here today—Global Energy Alliance for People and Planet—to say what is the best way of making sure people are truly not left behind. And it’s not about, you know—no offense to people in the solar systems space, but it’s not about giving a solar lantern and ticking a box that you’ve electrified somebody. It’s giving enough energy for people to live dignified lives.

DAN MURPHY: Damilola went viral just recently. Was it—was it a Vox documentary that landed on Netflix?

DAMILOLA OGUNBIYI: Yeah.

DAN MURPHY: You were speaking inside this documentary—which is incredible, by the way, and you can find it on the internet and watch it. It’s very, very good. But within the documentary it was revealed that by 2030 climate change is expected to push an additional 132 million people into extreme poverty, and many of them are going to be women, girls, and marginalized communities. So, Damilola, just how serious is that challenge and the issue that policymakers are facing today in addressing it?

DAMILOLA OGUNBIYI: I think sometimes when we are in these forums or we are in countries like this we sometimes forget that the people that we are really trying to help, at least in my role, are people who it’s the difference between life and death. So, for example, a woman cutting down trees, using fuel wood could die prematurely because of this. It does happen. About a million women, you know, already die because they’re using fuel every day—fuel wood, sorry, every day instead of using other, cleaner sources of energy.

For me, it’s quite upsetting because that’s not seen as an emergency. And everything has to be seen as an emergency. Apart from the deforestation it causes, it’s actually affecting human life. Before we talk about all the insurgencies or all the refugees that are actually leaving because of climate, there are key emergencies happening now. And these are solvable problems, right? We always talk about technology breakthroughs, which are so important, but everything we need to provide power to the people who don’t have it—electricity and clean cooking—exists today. What doesn’t exist, which Mahmoud was talking about, is the financing to do it.

And even the political will exists. In my continent, I never thought I would see presidents coming and saying: We want to do the energy transition. Tell us how to do it. So we’re sitting down with them. We’re planning with them. But honestly, we don’t know how it’s going to be financed, which isn’t a good place to be.

So that’s why we’re looking for different, innovative ways of financing. And one is what we’re also presenting at the Abu Dhabi Sustainability Week, which is the African Carbon Market[s] Initiative. How do we massively scale up the use of high-integrity carbon markets that people can buy from Africa as a way to fund the transition, of which energy access and provision of energy is at the heart of it?

DAN MURPHY: Minister, this is an issue that you know all too well in Egypt and across the continent. How did COP27 move the needle on inclusion and equity, if at all?

YASMINE FOUAD: OK. Thank you very much. Egypt was actually very keen since we started the process of preparation to make sure that it is an inclusive COP.

So, first of all, when we—every year we have what’s called the World Youth Forum, and that took place in January and we made different sessions to include the youth. We worked even together with the UAE in the last year Sustainability Week in order to engage a group of the Arab youth working for climate. That was one part.

Another part is that we worked together with the Secretariat to include a number of African NGOs that were not usually part of the UNFCCC process because we wanted to make sure that they were represented.

And our famous story of the green zone. The green zone is a part that usually it’s the responsibility of the hosting government to do it to present its cases and so forth. Our president was very keen that our green zone would be walking distance from the blue zone, that’s number one. Number two, that it does not only include the national—[inaudible]—so it’s not telling the story of Egypt but it included parts where we invited different international organizations such as universities from the academic and international NGOs, and even indigenous people and local communities from around the world, to present their cases if they are not allowed through the regular UNFCCC process. And last but not least, as we designed the blue zone on different thematic days, the same thematic days were taking place in the green zone to ensure that their voices are discussing the same issues that we would like to discuss as part of the presidency program. So all that was efforts that were done over eleven months to ensure that an inclusive COP is meaningful, is implementable, and comes out with tangible results.

DAN MURPHY: Mahmoud, can you add to that as well?

MAHMOUD MOHIELDIN: Right. In terms of the actionable measures and the levels of action that you want all of that to be translated in—how to get finance, investment into the right direction—these are with three levels.

First, I would say the local level. And there have been a great deal of localization of efforts of climate action, not just to raise awareness but there are opportunities. And the final impact will be where people live—in their townships, in their cities, in their urban areas or rural areas. And we had a very good initiative called the Green Smart Projects in which we managed to mobilize the interests of the private sector and all of the businesses, from the microenterprises to the megaprojects, with two notions, green and smart, as the main transformation for the future. And that is basically an area of work that’s going to be a permanent feature of the work, and Egypt with an idea as well through the partnership with the UN that we want to scale that up as well.

At the regional level, I’m happy I see my good friend the director for the Africa region of the—of the champions, Bogolo, here—that we had five regions of the UN, including Africa. And in partnership with GFANZ, with consultancy firms, we have a pipeline of projects because that was always a big question by investors. We have the money. You remember the GFANZ promise of asset-backed entities ready to direct funding, but they say, well, we have the money but we don’t have the pipeline of projects. So we worked hard for, like, five, six months in order to have pipeline of projects, and they are available in compendium on the UNFCCC and on the five regions of the UN And you’ll—you will see good mix of projects. Many of them, as you may expect, could be more on the mitigation front than energy, including renewables. But we saw growing interest with better packaging and incentives in areas related to adaptation as well.

On the work on the regions, I’m happy as well to see debt-reduction mechanism being tested, including investments that are required to link—to be linked to debt reduction and get the investments into nature and into climate. Good examples came from Seychelles, from Belize. A fantastic project as well from Barbados, which is basically having KPIs linked to the NDCs of, in the case of Barbados, that could be really replicated elsewhere. And here we can really see the beauty of partnerships between governments, private sector, and credit enhancers.

Then the big—the big work, which was basically about the global level. Here, of course, we’ll talk about the future of financing the one hundred billion dollars. The COP26 with COP27 have produced this piece about a good costing exercise for what’s required. What we need as a minimum is one trillion dollars from now until the end of 2025. This figure will be no less than $2.4 trillion after 2025 until 2030. And here, the idea of getting more efficient long-term finance with improved terms of funding, I’m arguing for no more than 1 percent to be spent on climate-related activities. Maturities shouldn’t be—no less than ten years, grace period ten years, and maturity for no less than twenty years. And there are some models in different multilateral development banks that already have something similar to that like IDA, like the IMF with the Resilience and Sustainability Trust Fund, and of course the good example of the carbon-credit market.

This is a very big area of work that requires global standards with good capturing of the value, good regulations. And I’m happy that Egypt just a couple of days ago issued the regulations for the carbon-credit market. And again, with the initiative on Africa and capturing the value, we have something similar with GFANZ Africa.

So I see the movements at the three levels—the local, the regional, and the global. But basically, what we need, quoting a prominent economist, Esther Duflo, she says, well, the solutions are not very different from what the minister and my good friend Damilola just mentioned. It’s about finance, technology as you mentioned. But there is something missing, which is leadership. It’s not just the political leadership; leadership in sectors, leadership in the civil society. And we hope through this process and the world that we’ll be seeing in the road to COP28 we can really get this kind of leadership more and more materialized into action, because without that we wouldn’t have got some of the main achievement[s] that we had during the previous COPs.

DAN MURPHY: Just on this issue of financing, clearly a major challenge. And to go back to what Dr. Sultan was saying, in his speech he said, and I quote: “To achieve the Paris goal, global emissions must fall 43 percent by 2030 at a time of continued economic uncertainty, heightened geopolitical tensions, and increasing pressure on energy security, that so-called energy trilemma.” So certainly not an easy backdrop. How do you de-risk this for investors? And how do you incentivize governments to be moving money in the right direction here?

MAHMOUD MOHIELDIN: I was very pleased to see in the conclusion of this survey conducted by the Atlantic Council that there is a great interest in investing in renewables. As we know, roughly speaking between 2021 and 2022 the investments were ranging between [$]365 billion to $400 billion in the renewables. This figure needs to be multiplied. The factors are between six to seven. The good thing is that the reward for such investments are realized.

The issue of risk mitigation is the main issue of concern. And here, the multilateral development banks—the like of the African Development Bank; the World Bank, my former employer—and many others, including for the private sector, can do a great job in this area. But for that to work, I’m worried about a drift in terms of action. That holistic approach that was emphasized by Francesco, by the minister, by Damilola. You cannot really say: Well, we are going to be taking only energy and renewables and leave the rest of the story. In this time of crises—multiple crises—you need to have inclusive growth for jobs to deal with the poverty reduction. Now we are at levels much worse than what we started with the SDGs in 2015. It’s not the expected 130 million added that Damilola mentioned because of problems related to energy. We already had lost almost a decade of work in that front.

So the private-sector work is very much realized in mitigation. What we need, some sort of nudging help and some sort of packaging of the projects, especially in the frontier markets.

When it comes to adaptation, here I would really argue that the very able and competent ministers from developing economies should ask for more funding for adaptation and give the way to the private sector and don’t crowd out the private sector because the private sector need just to be leveraged in that front. And then we’ll see in the coming weeks through the replenishment of the Green Climate Fund, through the work of the loss and damage fund how the good ideas floating around the importance of finance and technology are going to be materialized in the world. That would be a great test by the time we are here again in the UAE in November to discuss these issues.

DAN MURPHY: And Damilola, I think to tie all of this together, the ultimate question that we’re trying to answer here is: How is this move away from fossil fuels ultimately going to impact socioeconomic development? And how do we ensure that that move away doesn’t cause a backsliding in socioeconomic development? Your view?

DAMILOLA OGUNBIYI: I mean, it’s important to understand the energy needs and what the energy is used for. That is very fundamental. So just from my engineering background, it’s really important to understand how energy systems work—what it means for baseload, what types of energy you need—and then to understand how people want to develop. There’s no scenario where you can actually achieve without having energy development and climate together.

And that’s what we’ve been trying to do in saying that, you know, when you’re telling countries—because this is a whole shift of an economic change in countries. You have to go and say: What exactly is your energy-transition pathway?

So if we take my country, Nigeria, Nigeria made it very clear we needed to uplift one hundred million people out of poverty and we needed to uplift our industrial base. And if you can do it clean, that’s your problem but figure it out.

So we need to take in consideration what the country wants. What we do a lot of time is take these regional approaches to a very localized problem. There’s a vast difference from the energy transition plan in Nigeria to our neighbors in Ghana, to Kenya. You know, but you say, oh, Africa as a whole. Africa is full of different countries and different nuances. Even in my country what happens in northern Nigeria is different from what happens in southern Nigeria.

So you have to understand that. That’s the just and the energy part of it. And you also understand this takes a long time. The Nigerian president at COP26 announced they will get to net zero at 2060, not 2050, because when you looked at the transport sector, the industrial sector, the oil and gas sector, it was—it just wasn’t possible. So being realistic about what a country has to do is important.

And, lastly, I have to touch on the finance again because for a country like Nigeria to get to net zero with perfect policies, perfect political stability, between now and 2060 will cost in the region of $1.9 trillion.

So we need to really be realistic when we talk about the numbers of what you’re asking countries that are easily spending 80 percent of their revenue on debt servicing—on interest-only debt servicing—how exactly they’re going to do it.

So I don’t know the solutions but I’m excited to find how we’re going to crack this. But this financing issue is really at the heart of the entire energy transition.

DAN MURPHY: We have about ten minutes left on stage here. But if anyone has a question for the minister or our other panelists, please raise your hand and we can get a microphone over to you.

It’s also your opportunity to ask some questions as well. So, by all means, if you do have a question, please raise your hand.

But to continue the conversation, I think we can also look at this other issue of just energy access as well. Eight hundred million people around the world still don’t have access to energy. As I understand it, the global population will probably reach around 9.7 billion, ten billion, people by 2050. We’re going to need 30 percent more energy than what we currently have today.

So what would be your view, Damilola first, on the biggest transition risk right now? What do you see it as?

DAMILOLA OGUNBIYI: I mean, like I said, it’s eight hundred million without access but it’s actually one billion people in energy poverty, because because you have electricity doesn’t mean you have it constantly, and what those figures don’t talk about is the 2.4 billion people that don’t have access to clean cooking as well. So when we talk about energy we have to talk about both.

I mean, the greatest risk is leaving those people behind. It’s continuing with growing demands of energy elsewhere and leaving those people behind, and that’s why energy efficiency is just so important.

And we’ve seen it around Europe. When people got high energy bills they started using less, and that’s the thinking. You know, in developing countries there’s hardly any waste because people don’t have enough to use in the first place.

So we really need to come together and look at what is the social return on investment. By giving power to these people affects GDP, affects jobs. It creates whole industries if we do focus as well with our effort for places that don’t have it.

It’s also important because if those people get electricity the way the rest of the world has, using very dirty fuels, we’re going to go back in about two decades again saying we want to transition again, and we don’t have to do that.

DAN MURPHY: Mahmoud, can you speak to that?

MAHMOUD MOHIELDIN: If I can build on that. There are two things, one at the global level. If we’re not going to be dealing with the problem that is very much upon us, it is going to derail all efforts related to finance and investment because what we see on the recession, fears of stagflation, low growth in developing economies and advanced economies, investments prospects in ’23 and ’24 are, on average, less than where they were in 2020 by 5 percent to 8 percent.

So, here, we need to see what kind of investment effort that we need to push in order to deal with the problems related to climate action as it is part of sustainable development, not an isolated one.

The second thing, that we have more than 60 percent of developing economies and emerging markets are in some form of debt distress. If you are a developing economy you are either at a debt challenge or a debt crisis or a debt catastrophe, and that cannot really be left for time to be solved. And there could be some relaxed folks around there because they say, well, advanced economies and their financial systems are protected. It’s not the global financial crisis.

Now, but that may have triggering effect as part of the supply chain and if we are going to be seeing these scattered fires that will catch the rest of the economy. So we need to have through G7, G20, it is good that both Egypt and India and the United Arab Emirates are invited as guests for the G20. So, hopefully, the issues related to priorities for climate action are going to be reflected in the discussion in India.

And then at the project level what made the news in Glasgow, what made the news when it comes to projects in Sharm El Sheikh, are the projects related to what’s called JET P projects—just energy transition initiatives—and South Africa was first. Then we heard about Indonesia. Then another project in Vietnam. And all of these projects are ranging between eight billion dollars to more than fifteen billion dollars.

What we need to see is some serious actions in these country platforms that are going to be transformational. The way that they are designed are fantastic—phasing out from fossil, investing in renewables, dealing with the impact on community. This is really nice when it comes to design.

What is missing so far is, basically, the kind of action that we need to see not just in these three countries but in the rest of the countries, including in Africa, Latin America, and Asia.

DAN MURPHY: Minister, would you like to add to that as well and, perhaps, offer a view on what you see is the biggest transition risk from here?

YASMINE FOUAD: Thank you.

I think the transition risk is that not only as Dr. Mahmoud has mentioned on the part related to the finance or the projects but also one important part on the transition risk is very much related to the culture and the mindset.

Even when you started earlier discussing the public perception, the just transition—as we need to invest in technology, we need to invest in finance, and we need to invest on plans and time and give countries that part. We need to invest in changing the mindset of the public of how can that be done.

For example, Egypt, as a country, has been facing for quite a long time the waste—the municipal solid waste—and every time we started engaging in that discussion we fail on that part on different fronts—on tackling the informal sector, on putting the laws in place, in including the private sector, in even collecting and doing more infrastructure work.

Part of the change that we have been trying to do is investing in the way people looking at the garbage and how that can be dealt with. The first part that we have done beside the law is the way we have been addressing the young people and school children in order to change the mindset and how can that be done.

Two things that we have been trying to do, first, working on what kind of green jobs could be done within the waste sector, what are they offering, and how can that be included. Secondly, working with the youth and the young children. Even we have in Egypt a very famous group of young people who clean up the Nile and they are called the VeryNile, and the moment we went down with them everyone—by the way, and that’s part of the public perception—was getting ironic and sarcastic, saying, why are you cleaning the Nile when your streets are still full of garbage. But that is taking a lot of courage and being bold to do that kind of work.

So one thing that I would recommend for a just transition is to invest in the human resources, changing the mindset and the culture, and doing that kind of and alternative jobs that could be provided and how could those jobs come at the very local level, and here I talk about the rural areas.

For an example, part of what we’ve been facing is the burning of the rice straw that comes up with the methane and with the increase in greenhouse gases and air pollution, and all Cairo would be a black cloud over two and a half month[s].

Part of what we’ve been providing is a job opportunity of the recycle of the rice straw, getting compost, getting fertilizer, but including also the women in the rural area for providing clean energy.

So that’s, I think, is very important and key because finance and technology will not solve if we keep the same mindset within the same reach.

DAN MURPHY: It’s a very good point and very important to add. Thank you, Minister.

And we have a few minutes left. Does anyone in the room have a question for the minister or any of our other panelists? I thought I’d open the floor, give you the opportunity to have your say.

All right. I think we’re OK. Oh, in the front. Sir? We’ll try and get a microphone over to you if we can.

[Pause.]

Thank you.

Q: Thank you. I would like to ask Dr. Mahmoud, how does he see the energy transition contributing to economic diversification in the MENA Region?

MAHMOUD MOHIELDIN: Well, this is a very good question that has been raised before the time of COVID and before the war in the Ukraine. And there was a very important piece that came out from the IMF about where the demand for fossil fuel in the GCC will be reaching its peak. There was some similar work as well that was conducted for Norway. And here the discussions were basically about the peak will be some year like 2027 or 2029, based on different models. And then we got this piece by Daniel Yergin on The New Map. And then, of course, the idea there is not a factor of time; it’s a factor of technology.

We are where we are today in energy and diversification of the sources of energy because the huge investments in invention in countries like the US and Europe, and development—research and development at scale in China. That’s why you see some projects, including here in Masdar, in Egypt in Benban, in Ouarzazate in Morocco with a fraction of their cost only nine or ten years ago.

But diversification here is not just about diversifying the sources of energy, but being in Abu Dhabi I’d just like to emphasize this point, that this country have been prepared for that. When Masdar was established in 2006, I listened carefully to His Excellency Sheikh Mohamed bin Zayed when he said that the day that the UAE will be exporting the last barrel of oil will be a day of celebration because we are going to be prepared for it. We are going to be with diversified sources of energy and diversified economy that’s not going to be mourning the day that we lost this source of energy. So it’s good to have this kind of mid-term, long-term planning.

The first part of the investments that are required for the GCC countries have been all those—the investments in skills. When the discussions, especially with the—we have talks about the fourth industrial revolution, about the investments in the fourth industrial revolution-related kind of investments, skilling up the population, and how to do the digitalization better, this was a source of interest here.

And then investments in areas related to the services sector and manufacturing that could be with high value-added component. There are many good examples that we can get from countries especially, from Latin America that were very much dependent on commodities and they were hit by the ups and downs of the cycles.

So it’s all, I think, there is a great deal of learning by doing in this region, and we have seen the prices of oil in the one hundreds-plus, and we saw the in the negatives during the—in the futures market in COVID, so I think it’s basically about how to diversify better. I’m not worried about the areas related to investments in fiscal and on the finance, but more are needed definitely on matters related to the skills and the human—the human capital.

But I would borrow from my good friend, Damilola, here—is basically when you talk about the region at large, there could be these kind of generic kind of suggestions. But what could be good for Bahrain may not be necessarily good for the UAE or Qatar or Saudi Arabia. So some sort of granularity on the design as we see it. In the vision for 2030, for instance, in the UAE and Saudi Arabia, the first and last line in those reports were basically starting with diversification and the last point was basically gaining the momentum from the diversification investments.

So it’s in the mind of the policymakers, and we’ll see some sort of a good pace in that direction. But that needs to be done in a faster pace and not to be misled by sudden prices in fossil fuel because we know that they don’t last forever.

DAN MURPHY: Excellent question. Does anyone else in the room—over here, sir. We’ll try and get a microphone to you. There it is over there.

Q: Hi, good morning. Thank you very much.

I’d like to ask a question to Damilola with reference to the point you astutely made that it’s very easy to talk about the urgency of things like the refugee crisis, but there is an urgency obviously that’s preexisting and is, as indicated by you, to do with how many people are living currently, whether or not they are moving across into different countries.

What would you like to see—what would you think would be an impactful way to approach this year’s COP in order to land that understanding so that action could be more effective?

DAMILOLA OGUNBIYI: Thank you. I think I’ve mentioned it a few times. It’s all about money right now. You know, there has to be a concerted effort on funding the transition in developing countries knowing that energy access is at the heart of that transition and, you know, developing industry and jobs. People don’t like to live where they are—leave where they are because they just want to. They leave because they don’t feel that they can get, you know, what they need from their locality.

And we see that, you know, the climate issue has caused lots of conflicts—of course, lakes drying up. There’s a lot of things happening, you know, on continent in developing countries that can be avoided if there was just this effort. And this effort isn’t just going to come from the private sector. It’s hard for the private sector sometimes to even fund emerging economies, not to talk about developing countries. So sometimes a public-private partnership is an understanding that you do have to fund government. And developed countries that have caused a lot of these problems do have to put money on the table because there is a social return on investment which will keep people hopefully in their localities and bring the economic growth that we want for everybody.

DAN MURPHY: Fantastic. Is there—perhaps time for one more question. Yes, sir, in the front here.

Q: Just in relation to finance, should we not be talking about the value created—so, you know, that’s a huge opportunity—rather than how much it’s going to cost.

The other aspect is—to put it to the panel—you know, we also might need to make the link between energy and health care because, from an air pollution, that’s a huge cost. And also our health system—you know, we’ve seen from COVID huge pressure. So there’s a huge opportunity to make a link between global energy and health care. So I put that to the panel. How do we deal with that?

YASMINE FOUAD: Thank you. Let me touch base on that because one part that we have been doing in COP27, two parallel global initiatives: one that was talking about the nutritions—and the nutrition and what kind of food that you need to change in the practices of the sustainable food, and what kind of emissions that are related to that; and another part on the gender as we are very much—not only interested, but believing also on the parts related to the woman is the energy, water, and food nexus. One part related to that is the more you are using your energy in making that just transition, even at the local level and at the level of the small and medium household, and using that renewable energy for irrigation and for food systems, that would make a very good package. It’s a package that will be at the heart of the human development process, but it’s a package that would strengthen the resilience of the woman, provide the food you are using the renewable energy, you are making access to water, you are working on the nutrition and the food practices. The whole package that I’m talking about is making us more resilient to the diseases. We’re making us more strength and more power. And we are making the kind of a shift in the energy transition and using it properly in a circular way.

MAHMOUD MOHIELDIN: If I can, in just a couple of seconds, the issues related to health, the impact on nature are not adequately factored in the decision making. So you—[inaudible]—the cost, but when we do the counting of—the accounting for the returns, we do only the accounting for the financial returns of the projects. If we are putting into consideration the cost to the health system, as you mentioned, to the nature at large, and many—very few even OCD countries are doing that in their natural accounting. That needs to change. The regulatory structure and the incentives need to be changed. And that would be the way in order to provide the proper incentives in addition to the nexus up road the minister mentioned, but there is an issue related to regulations.

And one very final thing: the issues about—I don’t like to leave it in a worrying part, but the issues related to forced migrants because of climate, issues related to refugees are not an issues of far distant kind of a problem. These are imminent problems. If we check what happened in this region in Yemen and Syria before the developments that we all know in 2011, it had something to do with the climate. And I refer you to the Ian Bremmer book on the—on the crises. And while I wouldn’t—[inaudible]—to the estimates of 1.2 billion refugees in 2050 by Zurich and others, but basically look now and how many millions in Pakistan, for instance, are displaced within their country, and how many of them are looking for opportunities outside Pakistan because of what they are in today.

So it’s basically we have the solutions, finance, technology. What is missing? Leadership. And basically, hopefully, through COP28 we can get some better solutions into that action.

DAMILOLA OGUNBIYI: So just very quickly, totally agree on health care. We actually launched a Powering Healthcare guide yesterday with IRENA, which is looking at how to provide power to ten thousand health facilities across the African and part of Asia as well. These are easy, deployable, renewable solutions that can be used to actually treat people, because it is estimated about a billion-point-two people, I believe, go to health-care centers and have no access to electricity, so they have no access to health care. Thanks.

DAN MURPHY: Well, this has been a fantastic conversation. I want you to thank my panelists.

MAHMOUD MOHIELDIN: Oh, thank you.

DAMILOLA OGUNBIYI: Thank you.

DAN MURPHY: Minister, Mahmoud, and Damilola, thank you so much.

MAHMOUD MOHIELDIN: Yeah. Thank you.

DAN MURPHY: Appreciate it.

MAHMOUD MOHIELDIN: Thank you. [Applause.]

DAN MURPHY: Thank you for listening. Enjoy the rest of your Sunday. And thanks again to the Atlantic Council.

Joining us up onstage next is going to be the Atlantic Council CEO, Fred Kempe, alongside John Kerry, Elizabeth Yee, and Andrew Steer. Please make them feel welcome. Ladies and gentlemen, thanks again and good morning. [Applause.]

The post The lessons of COP27 and how they can apply to COP28 appeared first on Atlantic Council.

Flagship Event Sat, January 14, 2023 • 12:01 am ET

2023 Global Energy Forum

The 2023 Forum will have a special focus on the challenge of managing energy security priorities and decarbonization efforts in tandem, including the continuing impact of the crisis in Ukraine on the energy transition. This two-day conference starts at 9:00 AM in Abu Dhabi and virtually at 12:00 AM ET (midnight).

Africa Americas Energy & Environment Energy Markets & Governance

Event transcript

Uncorrected transcript: Check against delivery

Speakers

John Kerry
Special Presidential Envoy for Climate, US Department of State

Andrew Steer
President and CEO, Bezos Earth Fund

Elizabeth Yee
Executive Vice President of Programs, The Rockefeller Foundation

Moderator

Frederick Kempe
President and CEO, Atlantic Council

FREDERICK KEMPE: So during the UN climate conference in Egypt this past November, COP27, your three organizations—so the US government, Rockefeller Foundation, Bezos Earth Fund—announced the establishment of a new tool in the global effort to keep [the] 1.5 [degree limit] alive, the Energy Transition Accelerator. Now, there’s no doubt about the scale of the challenge to limit global warming to 1.5 degrees. There’s no doubt that that challenge is immense. And as we’ve witnessed the effects of climate change permeating, a constant drumbeat of other challenges elbows out this with—when world leaders have to give more attention to the coronavirus pandemic, Putin’s criminal war in Ukraine, you know, recession, inflation.

Inaction, however, is not an option. That’s what makes the launch of the Energy Transition Accelerator at COP27 so exciting. That’s the reason we wanted to have a panel dedicated to that here at our seventh Atlantic Council Global Energy Forum. This new policy platform—which was announced as a collaboration among the US government, Rockefeller Foundation, and Bezos Earth Fund—aims to overcome one of the largest, if not THE largest, inhibitors to meeting global net-zero targets, and that’s access to finance and particularly in emerging markets.

So at the Atlantic Council, we pride ourselves on having tough, but necessary conversations—you heard that yesterday, as well—which enable us to resolve the globe’s most fundamental challenges. And the question of how to unlock that funding certainly ranks among them. So for that reason, I hope our conversation today with these distinguished individuals will illuminate a path forward and provide us with their vision for removing the barriers.

So I’ve known Secretary Kerry as Senator Kerry, now Special Envoy Kerry, but you’ll be Secretary Kerry because I—this will—this is the title that I like to connect with you most. You’ve been such a leader in all three of those realms. Everything you touch you take enormously seriously, and that’s the kickoff for this question.

When you and your partners introduced the idea of the Energy Transition Accelerator at COP27—and it might even be interesting to know how it came about—you said your aim was to put the carbon market to work to deploy capital to speed the transition from dirty to clean power. So how did this come about? Why do you feel—why did you feel that such an initiative like this one is so vital? And then maybe you can put it a little bit into the context of the COP28 we have coming at us. You heard Dr. Sultan tomorrow morning—yesterday morning. By the way, thank you for being there, Mr. Secretary. So let me turn to you to kick off this discussion.

JOHN KERRY: Well, Fred, thank you very, very much. And thanks for the Atlantic Council’s leadership and your leadership personally for a long period of time. You and I have known each other for many, many years now. And I’m delighted to be here with Elizabeth and with Andrew, and I thank them—both of them and Raj Shah in absentia—for the Rockefeller Foundation and Bezos Earth Fund daring and willingness to push the curve here, which is what we need to do.

You’re all leaders of either a business or a nongovernmental organization or some interest in this issue, and in that capacity there isn’t one of you who doesn’t have the skillset of standing back and looking at a problem when you see it and say, OK, how are we going to solve this. We are—we are here because we are problem-solvers and people who want to get things done. And I am particularly disposed to avoid situations where you’re just spinning wheels and pretending, and there’s an awful lot of pretense around this particular issue in many quarters.

We have to be more than deadly serious. I think all of you know that. This is life and death. It is existential. We have folks around the world, some of whom think they can be indifferent to it. But we’re seeing the consequences of that indifference. And if you’re content in your business or otherwise to spend literally billions of dollars, hundreds of billions of dollars to clean up after storms or to, you know, build a dike after the flood has come or whatever it is, you’re on the wrong side of this issue if that’s where you are.

You know, we have a lot of challenges around the world right now. The world is surprisingly discordant and at odds with itself in too many places, and that’s a tragedy. But it’s human-induced and it is human-solvable, and what we need to do is be more focused on the ways in which we’re going to address these kinds of issues, and none more so than on the climate crisis.

So this really came about because of reality. I was traveling last year around the world and having many, many different meetings to try to gin up ambition, which we did, by the way. We succeeded in ginning up ambition significantly in Glasgow, building on what we did in Paris, and we are now—and we have built up some ambition out of Sharm El Sheikh and now we need to meet the reality that this is the year of a stock take in which everybody’s going to be looked at pretty carefully and it is the year also during which we have coming at us the question of loss and damage and how do you begin to manage that more effectively, and so there’s a lot at stake.

So what I found in my travels everywhere, [universally], around the planet, is not enough money is being put on the table to solve this problem. We’re either not trying to do it or we’re trying to do it on the cheap, and the result is that we’re not doing it. We’ve never had the full measure of the one hundred billion [dollars] that was promised in Paris and I—you know, I’m sorry that our political process is such that that hasn’t been possible.

But we’ve put a lot of money on the table. We put $94 billion last year out of the Pittsburgh energy meeting—$94 billion mobilized within three weeks put on the table as real money to go to less developed country initiatives. We don’t get credit for that, no credit in our system which says you’ve got to put a hundred billion [dollars]. So we have 94 billion [dollars] but it doesn’t count towards a hundred [billion dollars.]

So what I’m trying to say is, folks, the system is broken in terms of how we’re trying to fix this and we need to respond more effectively. When I met with Macky Sall, the president of Senegal, or I met with Tshishekedi, the president of DRC, and I met with President Buhari in Nigeria, to a person they said, you know, we’d love to be able to not have to exploit our gas. We understand the challenge. But I’ve got people who don’t have electricity. I need to be able to grow my economy. I need to be able to have my country share in what the rest of the world has and to build out community and to build out capacity. And that was to a person, and they would say, you know, can you help us with the build-out of our renewable energy structure or new grid or whatever it is.

The answer is no, we can’t, because we don’t have the money. Very few people—no government in the world has enough money to deal with what everybody is telling us we must do in order to deal with this crisis. What is that?

Well, the UN finance report, the other individual finance reports, all say that to have this transition effected adequately to meet the challenge of keeping 1.5 degrees as the limit of warming on the planet we’re going to have to invest a minimum of about four trillion dollars a year for the next thirty years in order to build out the grids, deploy the renewables, transition from gas turbine, whatever it is, and be virtuous in the way we are providing power to our businesses and homes, in the way that we are propelling our vehicles, et cetera.

Energy. Energy is the single, you know, summary of how you cure this problem. Why? What is the problem? The problem is emissions—methane emissions, [carbon dioxide] emissions, the other greenhouse gas emissions. Emissions. Emissions is pollution, and for some reason we’ve kind of turned our backs on the responsibility that we fought for in the 1970s and 1960s to hold people accountable for pollution.

So the science is clear on this. There’s no debate. I don’t care where you come from in the political spectrum. There is no debate that emissions that come from the way we power our societies and propel our societies, those emissions are damaging and we do not cure this problem if we do not meet what the scientists have said, which is reduce the emissions at a rate that allows us to minimize the damage.

And the science said that—in 2018, the scientists said to us not that we could eliminate the crisis but that by moving to hold 1.5 degrees we can avoid the worst consequences of the crisis. Read it carefully. The worst consequences, not the crisis completely.

So how do we do that? Well, if we don’t have money, we’re not willing to invest, we don’t do it. It’s that simple.

So the money part we’ve been working on with Rockefeller and Bezos Fund to figure out how could we de-risk the deals that are out there to provide energy, to deploy renewables, to do this transition. But how do we de-risk it and create bankable deals? Because the trillions that are in the background waiting to be invested by the largest financial institutions—in fact, all financial institutions in the world—would love to be able to invest. But there are hurdles—political hurdles, currency hurdles, various natural disaster hurdles, and risks. We have to eliminate those.

So what we did was sit there and say, OK, how are we going to get the cash to be able to grease the skids to make the bankable deal come together so we can get a [[power purchase agreement (PPA)]. That’s a twenty-five-, thirty-year PPA, and you can actually go to the market and finance what you’re trying to do. That’s the key.

And what I landed on with the encouragement of a number of people, one of them, many of you know, is Anne Finucane, who wrote about this two or three years ago, talking about how there is a distinction between some of the exploited credits or offsets that have existed versus virtuous ones.

And what we’ve done is sit down and put together a set of guiding principles, which we’re releasing today, and we’re pulling together a group of people, some of which are announced today but it’s not a complete list—there are more people that are going to be added to that—to have a broad cross-section of input so that we are putting together, according to our principles, a mechanism that can attract some cash that will be used for limited purposes, and I will come to that in a moment.

But what this is trying to do is make sure that we do this in the near term, we do it in an inclusive way, which is, you know, high—that we’re delivering on the broader sustainable development goals, that we’re including people who are affected, sometimes left behind in this process, that we’re protecting their interests, that it’s comprehensive, that we are supporting ambitious power sector-wide transition, that it has high integrity.

Some offsets and some credits were not high integrity and they’ve given a bad name to the idea that there might be a way in which you can attract some capital and still reduce emissions and avoid the worst of, you know, some avaricious practices out there.

And we also want this to be supplemental. This is not in place of any obligation to put public money or fulfill the commitments that we have asked for, and it is to be transitional, meaning it’s not forever. It’s not a fifteen-, twenty-year bonanza that somebody’s going to say, well, I can buy a credit and then I don’t have to do X, Y, and Z. No. Sorry, that’s not the way it is.

Everybody is going to be responsible for living up to net zero and meeting the measurements. But we believe you can have high integrity, accountable transparent credit, which will help us to be able to put some money on the table and the money is used in the following way.

When we put together the deal with Indonesia, which we negotiated for a year and a half or so, we had to figure out how do we close some coal plants, how do we now accelerate the transition to the renewables that we want deployed, and how do we do this in a way that’s transparent and virtuous and so forth.

Well, we found that way and we made an agreement with X amount of renewables that are going to be deployed with the pace of closing of coal and transitioning, and not just closing excess capacity but really getting at the problem of emissions.

And that’s our goal here, folks, and I’m convinced for the following reason. It is accountable to the naked eye. There are only two purposes for which we will allow someone to be able to buy a credit: one, to be closing down or transitioning existing fossil fuel facility that is providing power, and two, for the actual deployment of renewables that will replace current dirty sourcing.

That’s it. So you can see it built. You can see it coming online. You can measure what is happening here. And if you do this correctly, which we are determined to do, we can get a certain amount of cash now because some companies have tried hard—not enough yet—to begin to implement their programs for net zero by 2050, correct? And so you may have a company—a large tech company or somebody—that has gotten to 80 percent of their scope-one reductions, but then they get stuck. Why are they stuck? Not their fault; they’re stuck because there aren’t enough electric vehicles to be able to buy to get your fleet to be electric so you’re reducing emissions and living up to your goal, or because they’re—you know, there isn’t a grid, you don’t have a smart grid and you can’t tap into the smart grid, therefore you don’t have a physical way of using your power the way that meets the standard.

So we have to be smart. We can’t sit there and say, well, tough, you know we’re going to hold you accountable anyway. Nobody is living by a law to reduce—to hit 2050 net zero. There’s no law. People are doing it because they’re exercising a sense of public responsibility. And if we turn around and say to them we’re not going to listen to your problem or we’re not going to try to address your problem or we’re not going to give you an opportunity to be able to get where you’re trying to go, they’re going to say: Well, the hell with you. Why the hell do I try to do this? It’s easier for me to avoid the crisis of an NGO criticizing me because they say what I’m doing is violative of green principles when I’m trying to be a good citizen. I might as well opt out, and I don’t get my board of directors all wound up in what’s going on.

So, long story short here, folks—sorry about this—but we need to find a virtuous way of getting money into the system so that we can transition faster. That is exactly what this is for. And if we can get—and here’s why. In Egypt, we cut a deal with the Egyptians called—it’s the NWFE program, where they are going to shut down five gigawatts of gas-provided power, transition that gas to Europe to help them in the context of Ukraine and the problem they have, but they’re going to shut down eleven gas turbines that are polluting and deploy ten gigawatts of renewables. Wow, fifteen net transition of power and emissions. And the way we made it happen was we put up money. We did find some concessionary funding. Very hard. It was very hard, but we got about 500 million total in the end. We put thirty-five million in cash, some lending. The EBRD put in some money from a trust fund. We got money from Germany. Germany really stepped up—thank you, Germany—and put major funding on the line in terms of a very concessional loan. And so, in the end, that money facilitated the de-risking and allowed us to be able to get the deal, which is a ten-billion-dollar expenditure to be able to deploy new energy.

Now, we can’t take a year and a half to do this one by one by one. So what we want is to create a means by which we’re attracting capital to the table which will be concessionary. They’re buying the credit. They get a certain period of time where that credit is going to help them meet their goal, but it helps us meet our goal. It actually results in a reduction of emissions. And I don’t see how anybody can be critical of real reductions in emissions because that is our challenge right now. That’s how we win this battle.

So as I say, it’s temporary. We don’t know yet this consultative group which is going to be coming together, and some were announced today. More will be announced in the next days. But it’s going to be broad-based, jurisdictional, and help us to be able to put this together in a way that has true environmental integrity but works. So SBTi, VCMI, these different players will be at the table, but so will business. So will other people who need to make it work.

So thank you. I know I went on a little long, but I—

FREDERICK KEMPE: Mr. Secretary, I’m just so glad this audience got to hear that. Ladies and gentlemen, excellencies, you just heard one of the most powerful advocates and executors for creating a better world. So thank you so much for that opening statement laying out this really, really exciting plan.

Let me—and you know, four-trillion-dollar need next thirty years. Question of how to de-risk, how to create bankable deals. You laid out some of the guiding principles. We’re going to be looking forward to seeing the rest and the people who are engaged.

Let me turn to Liz. So, as all things, these things become acronyms, so it’s already become ETA, so the Energy Transition Accelerator. How can it be designed to promote a just transition from fossil fuels to clean energy? And so that’s, ultimately, the goal. And then so that fossil fuel workers and vulnerable communities are protected.

Also, just listening to Secretary Kerry, you know, Sharm El Sheikh wasn’t that long ago. You know, it seems like you’ve made quite a bit of progress. Can you talk about the progress you’ve made since then and the progress you want to make, like, going up to COP28 as well? Yeah.

JOHN KERRY: Liz, why don’t you talk about it a bit and then I’ll add.

FREDERICK KEMPE: Yeah. Yeah. Yeah.

ELIZABETH YEE: So I think, you know, what—and thank you for those inspiring and good, excellent framing comments. I mean, I think from a foundation perspective we draw a lot of inspiration and leadership from your vision, and are very, very supportive of it because—you know, I mentioned this yesterday in my remarks—I think for the foundation one of the things that we care so much about is making sure that we put humanity at the center of all of our efforts. That is the core business that we are in. And this, to me, when we were looking at this opportunity with you, enabled us to do that because it enabled us to solve the challenge that we saw around project development, a critical need on decommissioning and reducing emissions, as well as putting people at the center of what we need to do.

And as we work on this together, I think we really want to make sure that the ETA does three things. And I just wanted to share that.

So, first, the first order of work is really around how we actually do these country-driven energy-transition strategies and making sure that we do it in a very high-integrity, jurisdictional way. And I mentioned those critical words because I think that is also a key differentiator in what other frameworks have been out there. And so, for us, what we’re trying to do is just make sure that we design a really good high-integrity process and make sure that we actually put the guardrails in place to make sure that workers, in particular, are front and center in the design of it.

And we can do a lot by looking at existing projects and programs that have done this. You know, one of the things that I know we’ve been working on with the Global Energy Alliance for People and Planet, which includes Andrew and the IKEA Foundation—and Joseph is here, as well, today—is working on the Komati power plant in South Africa. And one of the things that GEAPP and the foundations and we have done is work with them—the local electric utility, the local university there—to provide training and upscaling of existing workers that are at that plant, but also communities so that we’re building capacity around new green jobs for those communities. And that is a critical part. I think Her Excellency and Damilola and several people on the prior panel mentioned that, and that is a key part of the energy transition and it will be a key part of the ETA.

I’d say second is just making sure that we allocate a certain percentage of the carbon credit towards adaptation purposes. Not enough money goes to adaptation. That is a critical area that we know needs to happen. And we’ve seen that as an effective mechanism in other similar programs.

And then the last—and to your point, Secretary Kerry—is that we have a process that’s transparent and, most importantly, inclusive. And so that is why I think—and if you’d like to speak about it more, perhaps we can talk about the high-level group that we’ve pulled together to make sure that we’re getting a cross-section of people from around the planet—the best minds private sector, government, public sector—to help us develop and design this in a way that has the integrity that we are seeking to be able to deliver.

FREDERICK KEMPE: So let me come back to you in a minute, Secretary Kerry, on that question of how much has been achieved and what should be achieved. Let me go to Andrew first for the point of view from the Earth Fund—the Bezos Earth Fund.

You know, this is an interesting three groups to come together. So why did you decide to join this initiative? Why do you see it as vital? And how do you actually make sure that the ETA delivers the high-quality emission reductions, and that they contribute rather than distract companies from genuine climate action if that’s a danger at all?

ANDREW STEER: Well, look, first, Fred, thank you so much for this event. I think the Atlantic Council’s Global Energy Forum each year has become a really central driving, agenda-setting place to come. So thank you very much.

Why did we join? Well, when Secretary Kerry gives you a call and says, for heaven’s sake let’s get on with it, you don’t say, well, let me think about it. You say, absolutely we are going to jump right in.

We’ve all seen the—and thank you for your inspiring words, Secretary Kerry. I can be brief because I think you’ve said it so much better than we would.

We’ve all seen the numbers: 4.2 trillion per year has to be spent on the future of energy, so to speak. That’s a tripling of what we need. We’re incredibly excited when we see coal-powered electricity-generating plants closing, aren’t we, because that’s going to be necessary. We need to see 925 closing every single year. So when you hear, oh, here’s one, yeah, now you’ve got another 924 to do each year between now and 2030.

Now, some people would say: Well, why do you need—why do you need carbon credits? I mean, isn’t it attractive already to invest in renewable energy? Well, yes, it is. Plain fact of the matter is it’s not happening at anywhere near the pace that’s required. And if you’re a country that’s really willing to show leadership—as South Africa has, Indonesia has, Vietnam is, various other ones—you actually need some help. And Secretary Kerry and other political leaders have played an amazing role with the leaders of these countries actually taking bold measures. Now we need to, if you like, empower those bold measures. And so you do need carbon markets.

Now, why [are] carbon credit markets not working at the moment for energy? Because there’s something puzzling going on because there’s been far more work done on the nature side of carbon markets with regard to developing/emerging countries than energy. And actually, energy is more intuitive, isn’t it, because actually doing forest protection and restoration is actually more complicated. But far more work has been done on that. Far more money is flowing on that than to energy. So we’ve got to address that, and that’s what this is all about.

Why are private companies not investing at the moment? It’s because it’s too complicated and they say: Look, there are so many pitfalls. Quite frankly, we put some money in, someone’s going to grumble there’s leakage or it’s low quality. What’s the point? We’ll be accused of greenwashing. And what we’re trying to do is say: Actually, there is a sensible path forward. There is that sweet spot between, you know, on the one hand, you know, making sure you get the standards right; on the other hand, making sure you get the volumes of money right.

And so what we’re trying to do is, I think, terribly exciting. This is not just us working on our own; this is bringing in the entire global architecture, if you like.

At the moment, as you know, greenhouse-gas protocol; that’s how you measure greenhouse gases. Then there is CDP; that’s where you register what your greenhouse gases are. Then there’s SBTi, Science Based Targets Initiative; that’s how you set your targets. Then there are various standards-setting—like, you mentioned it yourself, Secretary Kerry—VCMI. That’s looking at the demand side. That basically says: If you’re a private company and you want to get credit, you’ve got to be already on a good downward path. You’ve got to be signed up to science-based targets.

Then there’s something called ICVCM. I hope you’re keeping up with all of this. That’s on the supply side. And that basically says: Look, if you’re going to invest in an investment that’s going to actually have some credibility, it better be high quality. And Liz mentioned the issue of what’s called the jurisdictional approach, which is very big on the—on the nature side. That means you can’t just do a little project here because someone might cut down the forest there; you’ve got to look at the whole jurisdiction. Same thing applies [to] energy. No point decommissioning one coal plant and investing in renewable energy if someone else builds another coal plant over here. So governments need to be part of it. We need a jurisdictional approach.

So what we’re going to do, every single one of those alphabet soups I just mentioned, every single one of them is on the advisory council, the consultative group, together with many more—the sort of Brian Moynihans, head of Bank of America; Catherine McKenna, who wrote the report, you know, for the secretary-general; many leaders from the developing world are on that. At 9:15 this morning our time, a press release came out with some of those names already. Do look at it.

It’s great to see Fred Krupp in the audience here because he’s the president of EDF, the Environmental Defense Fund. They, together with the Center for Energy—Center for Climate and Energy Solutions, will be providing, if you like, the intellectual driving force and managing this.

So this is an incredibly exciting venture. We would urge you to sort of join with us. Particularly if you’re on the investment side; particularly if you’re a company that’s thinking, my goodness me, I wouldn’t—I would really like to get engaged in this; we’d love to talk to you.

So we’re going to be very tough on the—if you like, the standards side. We’ve got best nongovernmental organizations in the world, best developing-country leaders that are demanding all of the kinds of safeguards that Liz talked about. But at the same time, we need ambitious providers of funding that are not going to be providing the funding through this as an alternative to doing what they need to do in their own scope one, two, and three, but as a complement to that. Because even if you’re on that wonderful trajectory coming down to net zero in your own company, you’re still emitting in the meantime some carbon, and this can actually help compensate for that.

FREDERICK KEMPE: Thank you for that, Andrew.

And, Mr. Secretary, what’s very exciting about this, obviously, is what you’ve underscored, which is the measurable results side of it. So let me go back to the question that I posed to Liz about it’s been a short time since Sharm, what have you achieved? It’s not that long of a time before COP28. What do you want to achieve by then?

And I guess there’s a third question within that, which is this is a really promising strategy to scale climate finance, but 4.2 trillion, how much of it do you want to do there? So in other words, what are the—how does this fit into other promising strategies?

JOHN KERRY: Well, it’s an integral part of it, Fred. And let me describe part of the challenge here, folks, because it’s not simple.

We’ve been wrestling with development, I mean, for as long as all of us have been alive, and there are special challenges in development. I mean, when you go to an African country where only 17 percent of the nation has power, you don’t have a particularly large pool of paying customers to be able to support a long-term PPA at market rates. I mean, it just doesn’t work because you don’t have enough—in some places, they don’t even collect revenue for the electricity that’s being used. And so you have to build structure in certain places.

Now, that’s not our central problem. That’s a moral and political challenge in the sense that, you know, you can’t be asking these countries to defer their future completely. They want to [be] able to develop. They have a right to be able to develop. We need them to develop. It’s important [for] stability on the planet, relationships, and so forth. But we’re going to have to be able to provide a concessionary structure for a period of time so that you can then get enough of a revenue stream that you’re able to support something in the marketplace. That’s one grouping.

Fortunately, that is not the grouping that is most important to the solving of the climate crisis. Why? Because they are an infinitesimal amount of the problem currently. What we want to do is avoid them becoming more of a part of the problem, because if you add up all the developing world and it goes crazy on gas, for instance, in the next ten years, we’re in trouble. We’re just negating everything else we’re doing out there.

So the way we’re looking at it is—and I’ve said this many times; many of you may get tired of me saying it, but to me, it’s the fundamental organizational principle. It’s the reality around which we have to organize ourselves, as I said earlier. That is, twenty countries, twenty economies, equal 80 percent of all the emissions. If those twenty countries will get their act together, we win the battle. We can win the battle. And that’s why we focused on Indonesia, because it’s one of those twenty. That’s why we’re focusing on Brazil, one of the twenty. That’s why we—Vietnam’s not yet one of the twenty, but it’s in the next ten, so we’re focused on Vietnam because there’s too much coal and we’ve got to begin to transition them.

And in each of those cases—and we focused on Mexico, which is in those twenty. And President AMLO, thanks to, I think, the good meetings we had over the last year and a half, has really changed and come around and said we’re going to deploy renewables. It wasn’t in their lexicon a year-and-a-half ago, and now they’re talking about thirty gigawatts of renewables deployed, increased hydro, and for the first time really beginning to try to exploit their geothermal—which, by the way, they have active volcanoes. This is a place that has extraordinary capacity in geothermal. So there’s money on the—you know, being left off the table here—left on the table—that people could make if you would begin to get all of that moving in the right direction.

So that’s what we’re trying to do now, is get the larger economies in a place where they are actually reducing emissions. And as I said earlier, folks, this is not a forever program. This is not a sort of you can buy your way out for the long term. This is sort of a delay—ten years, wherever we land. This is the kind of decision that this consultative group has to help us make. Is it—is it till 2030 or is it till 2035 or something? But you’re still going to have to be responsible to meet net zero by 2050, and that’s going to require every company to still do scope one, scope two, scope three, et cetera. So what we’re trying to do is get as far as we can, Fred, in the next few months so that, hopefully, we could have a few pilot efforts that are actually out there working—we’ve arrived at pricing and at the mechanism and so forth—and we could come to the UAE at COP28 and have an implementable program that goes forward.

Now, this is not the only thing we’re doing. Of high priority for President Biden is MDB reform, multilateral development bank reform. We must find the way to be interpreting the charters correctly so that we could have a significant amount of additional money that is available for concessionary lending, which would make an enormous difference. And both of you—your foundations, the Rockefeller and the Bezos, are invested and interested in helping to get that kind of reform. And then whatever else we can find as a way of getting into the trillions that need to be deployed.

But those twenty countries do have the ability to provide revenue for these transactions and they can get market-based deals going. I mean, we’re looking at PPAs that can be struck with Indonesia that will help in this transition. And I think that the market is really critical to this, which is why we’re looking at a market-based component of how you’re going to solve this problem.

The trillions of dollars that were assembled—you know, Mark Carney did a lot of really hard work assembling the GFANZ and so forth, but that money is investment money. It’s not giveaway money. And investment money means you’re going to have to be able to get a return on that investment because you’re accountable to clients. You have fiduciary responsibilities and you can’t just ignore them. So we have to harness the combined efforts of the regulatory structures which look at disclosure, for instance. I mean, it’s very hard for me to understand how anybody could be fulfilling their fiduciary responsibility by ignoring [the] climate crisis and allowing your supply chain and your entire business to be disrupted by damage and by future interventions of mother nature. That doesn’t fit, in my judgment.

So I think we’re due for a real reckoning here with how the marketplace is looking at these challenges and this reality. We can’t solve the climate crisis without—and I want to—don’t ever edit me at that word, “we can’t solve the climate crisis”— without being able to marshal these sums of money, and we can marshal them. This is the largest market the world has ever known, folks, the clean-energy market, the transitional market. The building out of smart grids, new transmission lines, putting in place the infrastructure to support electric vehicles, building out the hydrogen network, I mean, all of this is money-making. It’s how we built our nations. It’s how we have employed millions of people. We’re just transitioning again as we transitioned, frankly, in the original industrial revolution.

And we have to be excited about this because it is millions of jobs. Fastest-growing job in the United States of America two years ago, three years ago for several years was wind turbine technician. Second-fastest-growing job was, unfortunately, nurse practitioner because of COVID. Third-fastest-growing job was solar panel installer. There are extraordinary opportunities here if we will get our act together. And many, many, many companies have now come to that conclusion and recognize that, you know, you can marry the future here. You can do this in a way that provides a planet that is cleaner, healthier, and safer.

FREDERICK KEMPE: Thank you, Mr. Secretary.

So, Liz, I’ve got a signal—I’ll get a signal from somebody whether we’re wrapping up. We have some time. But I think I’d like to be able to ask you a quick question and Andrew a quick question, then close out.

But I want to go back to what Secretary Kerry talked about at the very beginning about how to de-risk it and how to create bankable deals. That’s the world you come from Liz. You can share with the audience a little bit what your job was before taking on what you’re doing now because it fits perfectly with this. So how do you design an ETA to ensure de-risking capital flows upfront for the most urgent fossil fuel transition projects in emerging markets, from the banker’s perspective?

ELIZABETH YEE: Thanks, Fred, and just to come clean on that, I think, in my old life before I got a chance to work in philanthropy, I spent about twenty years as a public power infrastructure banker at a firm called Lehman Brothers, which some of you may have known.

But I think one of the—I think that’s what’s really interesting to me in this regard because there is a lot that needs to be done in terms of developing the financial structure, and that is why, as Andrew said, we need people like Anne, like Brian—all of the bright financial minds we’ve got—Chris Leeds on our team, as well—helping us think about how do we actually marry the forces of banking and markets together since that will be such a critical element of the design.

And, you know, I think there is—I’ll just say a couple of things. One is I want to acknowledge that there are a number of other existing structures that people are working on in the market today, so Asian Development Bank has its energy transition mechanism; you know, the Climate Investment Funds has its own fund. So I think we want to learn from what other people have already done and have started doing so that we can build on top of that.

I think we also need to take a look at some of the interesting ways that we can securitize and use that market to be able to look at the forward opportunities there, to basically think about how then we can take those revenues that might come later or those opportunities and financial gains that come later and put them forward because, as the secretary said, we need the resources upfront to developing countries today to be able to both decommission and create the infrastructure asset on the other side that allows them to continue building and growing their economies.

So we’ve got a lot of financial structuring work to do. That is why it’s a critical work stream of the ETA and the path that we are going to take going forward.

So stay tuned, but I think, as Andrew said, you know, this is a whole-of-planet effort. We need your engagement, and we would encourage and welcome it as part of the work going forward, so thanks.

FREDERICK KEMPE: Terrific. Please.

JOHN KERRY: One thing just very quickly. The IRA is going to make an enormous difference in this challenge, and I know some people are reacting, oh, my gosh, there are some provisions in the IRA that are kind of protectionist and maybe get in the way. And I think we’ll be able to resolve and work through those. I really do.

But the bottom line is by putting literally hundreds of billions of dollars on the table for further R&D and development, and deployment of initial startup initiatives, we’re going to help develop supply chains where they don’t exist. And we’re going to help accelerate—I mean, that’s an enormous amount of concessionary funding that is going into—right now in the Department of Energy we have billions of dollars that are going into companies, into projects. It’s going to help close the gap here in terms of what is fundable and financially—you know, can work.

And I think it’s going to change things. We’re going to have—it will help with the deployment of green, or blue, or, you know, turquoise hydrogen and so forth. I think that exciting things are going to be happening.

And rather than having some other entities complain and say, well, you guys have now changed the market and you’re going to shift things, everybody should join and do the same thing. That’s how we accelerate to the four trillion dollars, folks. We shouldn’t be sitting there saying, oh, my god, let’s go backward. Everybody should join up and do the same thing. Put your money into this development. Put your money on the line in terms of research and development, and that’s how we’re going to win this battle, I’m convinced.

ANDREW STEER: Amen.

FREDERICK KEMPE: Thank you, Mr. Secretary, and the Inflation Reduction Act—I got a good briefing just yesterday on what it does alone for hydrogen, and so that’s pretty exciting.

So finally, Andrew, I think this—we’ll wrap up with this question. When this platform was launched, you stated there were very knotty—meaning K-N-O-T-T—questions that the group would have to grapple with.

What are the knottiest, and how are you—and are you grappling with them?

ANDREW STEER: Well, first, who wants to solve easy problems? These are difficult problems. And that’s why we’re sort of stuck, we’re sort of constipated at the moment. I mean, there is plenty of money out there, but it’s not going to the right place—plenty [of] money in the world, and it’s not going in the right place.

So what are they? There are on the both supply and the demand sides, standards that are honorable, including human standards, environmental, ecological standards, and so on. On the demand side, that’s—you know, a company has to honor its own scope one, two, three emissions. Those are difficult problems.

But there are other difficult problems which we’re going to be grappling with, which is going to be really exciting, you know. How do you set the price? Where does the money go? And this is your point, Liz, about de-risking it—which also Secretary Kerry mentioned. The great thing about voluntary carbon markets is they work for you twice. You put a hundred million dollars into this. That buys renewable energy in and of itself. But in addition to that, it changes the entire calculus for a deal, as Secretary Kerry says. That hundred million dollars can unlock two hundred—several billion dollars if you do it right. But you have to then actually make sure the money is injected in the right way.

So those are some of the knotty problems, but they’re exciting. And, you know, someone—I had the privilege of running one of the best environmental think tanks in the world, the World Resource Institute, and we were leaders in standards. Environment NGOs have done us a huge favor setting high standards, but sometimes in this very, very high-stress, high-pressure, need-for-action-today world, sometimes almost too thoughtful, and sometimes we slow things down too much.

So what we’re trying to do is unlock that, get the standards that are just as high, but actually then unleash, you know, a flow of funds that can make a huge difference.

JOHN KERRY: As a result of Andrew’s alliterative description, we now understand that the ETA is the Colace or Senekot of a movement, right?

FREDERICK KEMPE: That does seem to be a really good place to end this.

So Mr. Secretary, Liz, Andrew—what a wonderful conversation. This could go on a lot longer. I’m sure people in the audience who would like to contribute to this in one way or another will catch you and provide you ideas. And we can help connect you all, as well, with the ETA and with this group.

But thank you so much for being here. Thank you for what you are doing—

JOHN KERRY: Ten seconds?

FREDERICK KEMPE: Please.

JOHN KERRY: Everybody here, your organizations, your countries—whoever can speak out—Alexei Navalny’s family has made it clear he is very ill and being held in prison without medical care that he needs. So anybody who could speak out and make it clear that the world believes that even prisoners should be given the medical care that they need—and hopefully we can make a difference.

FREDERICK KEMPE: Thank you for that, thank you for being here.

Watch the full event

The post US climate envoy John Kerry outlines new principles for accelerating private capital needed for the energy transition appeared first on Atlantic Council.

If the world gets lucky, this could be the year fossil fuel producers and climate activists bury their hatchets and join hands to reduce emissions and ensure our planet’s future.

If that sounds hopelessly utopian, take that up with the leaders of this resource-rich, renewables-generating Middle Eastern monarchy. The United Arab Emirates is determined to inject specificity, urgency, and pragmatism into a process that often has lacked all three: the twenty-eighth convening of the United Nations Climate Change Conference, known as COP28, from November 30 to December 12.

To kick off 2023, the oil and gas and climate communities gathered this weekend for the Atlantic Council Global Energy Forum, launching the annual Abu Dhabi Sustainability Week. After decades of mutual mistrust, there is a growing recognition that they can’t live without each other.

Thank Russian President Vladimir Putin’s criminal war in Ukraine, and his ongoing weaponization of energy, for injecting a new dose of hard-headed reality into climate conversations. It’s seldom been so clear that energy security and cleaner energy are indivisible. The guiding principle is “the energy sustainability trilemma,” defined as the need to balance energy reliability, affordability, and sustainability.

What’s contributing to this new pragmatism is a recognition by much of the climate community that the energy transition to renewables can’t be achieved without fossil fuels, so they must be made cleaner. They have come to accept that natural gas, in particular liquified natural gas (LNG), with half the emissions footprint of coal, provides a powerful bridging fuel.

Once derided by green activists, nuclear power is also winning over new fans—particularly when it comes to the small, modular plants where there are fewer concerns over safety and weapons proliferation.

For their part, almost all major oil and gas producers, who once viewed climate activists with disdain, now embrace the reality of climate science and are investing billions of dollars in renewables and efforts to make their fossil fuels cleaner.

“Every serious hydrocarbon producer knows the future, in a world of declining use of fossil fuels, is to be low cost, low risk, and low carbon,” said David Goldwyn, the former State Department special envoy for energy. “The only way to ensure we do this is to have industry at the table.”

Nowhere is this shift among climate activists more evident than in Germany, where Vice Chancellor Robert Habeck, the Green Party leader, is serving as the pragmatist-in-chief.

Habeck, who serves as federal minister for economic affairs and climate action, has been the driving force behind extending the life of the country’s three nuclear plants through April and in launching Germany’s first LNG import terminal in December, with as many as five more to follow.

“I am ultimately responsible for the security of the German energy system,” Habeck told Financial Times reporter Guy Chazan in a sweeping profile of the German politician. “So, the buck stops with me. … I became minister to make tough decisions, not to be Germany’s most popular politician.”

Some climate activists were aghast this Thursday when the UAE named Sultan Al Jaber, the CEO of the Abu Dhabi National Oil Company (ADNOC), as president of this year’s COP28.

“This appointment goes beyond putting the fox in charge of the henhouse,” said Teresa Anderson of ActionAid, a development charity. “Like last year’s summit, we’re increasingly seeing fossil fuel interests taking control of the process and shaping it to meet their own needs.”

What that overlooks is that Al Jaber’s rich background in both renewables and fossil fuels makes him an ideal choice at a time when efforts to address climate change have been far too slow, lacking the inclusivity to produce more transformative results.

Full disclosure: Al Jaber’s companies ADNOC and the clean-energy innovator Masdar (where he was founding CEO in 2005 and is now chairman) are sponsors of the annual Atlantic Council Global Energy Forum in Abu Dhabi, a fact that has given me a close-up look at his years-long commitment to reducing emissions and promoting renewables.

Al Jaber also represents a country that despite its resource riches has become a major nuclear power producer, was the first Middle East country to join the Paris Climate Agreement, and was the first Middle East country to set out a roadmap to net-zero emissions by 2050.

Over the past fifteen years, the UAE has invested forty billion dollars in renewable energy and clean tech globally. In November it signed a partnership with the United States to invest an additional one hundred billion dollars in clean energy. Some 70 percent of the UAE economy is generated outside the oil and gas sector, making it an exception among major producing countries in its diversification.

Sheikh Mohamed bin Zayed al Nahyan, president of the United Arab Emirates, has explained his country’s approach this way: “There will be a time, fifty years from now, when we load the last barrel of oil aboard the ship. The question is… are we going to feel sad? If our investment today is right, I think—dear brothers and sisters—we will celebrate that moment.”

Al Jaber, speaking to the Global Energy Forum, captured his ambition to drive faster and more transformative results at COP28.

“We are way off track,” said Al Jaber.

“The world is playing catch-up when it comes to the key Paris goal of holding global temperatures down to 1.5 degrees,” he said. “And the hard reality is that in order to achieve this goal, global emissions must fall 43 percent by 2030. To add to that challenge, we must decrease emissions at a time of continued economic uncertainty, heightened geopolitical tensions, and increasing pressure on energy.”

He called for “transformational progress… through game-changing partnerships, solutions, and outcomes.” He said the world must triple renewable energy generation from eight terawatt hours to twenty-three and more than double low-carbon hydrogen production to 180 million tons for industrial sectors, which have the hardest carbon footprint to abate.

“We will work with the energy industry on accelerating the decarbonization, reducing methane, and expanding hydrogen,” said Al Jaber. “Let’s keep our focus on holding back emissions, not progress.”

If that sounds utopian, let’s have more of it.

This article originally appeared on CNBC.com.

Frederick Kempe is president and chief executive officer of the Atlantic Council. You can follow him on Twitter @FredKempe.

THE WEEK’S TOP READS

#1 A new world energy order is taking shape
Rana Foroohar | FINANCIAL TIMES

In this smart piece, the FT’s Rana Foroohar warns of a China-led energy order and how that could shift the global balance of power.

“What does that mean in practice?” Foroohar asks. “For starters, a lot more oil trade will be done in renminbi. [Chinese leader] Xi [Jinping] announced that, over the next three to five years, China would not only dramatically increase imports from [Gulf] countries, but work towards all-dimensional energy co-operation.”

“This could potentially involve joint exploration and production in places such as the South China Sea, as well as investments in refineries, chemicals, and plastics. Beijing’s hope is that all of it will be paid for in renminbi, on the Shanghai Petroleum and Natural Gas Exchange, as early as 2025.” 

This is something any serious thinker on energy should bear in mind. Read more →

#2 Ships going dark: Russia’s grain smuggling in the Black Sea
ECONOMIST

In this thought-provoking narrative, the Economist highlights the growing economic potential of the North Sea, particularly as a producer of wind power.

While the Economist acknowledges significant hurdles, from the vagaries of weather to the threat of cheaper competition in Southern Europe, it also writes that if “these problems can be overcome, the new North Sea economy’s impact on the continent will be momentous.

“As Europe’s economic epicentre moves north, so will its political one, predicts Frank Peter of Agora Energiewende, a German think-tank. Coastal Bremen, one of Germany’s poorest states, could gain clout at the expense of rich but landlocked Bavaria. At the European level, France and Germany, whose industrial might underpinned the European Coal and Steel Community, the EU’s forebear, may lose some influence to a new bloc led by Denmark, the Netherlands and, outside the EU, Britain and Norway.”  Read more →

#3 Time is not on Ukraine’s side
Condoleezza Rice and Robert Gates | WASHINGTON POST

Former Secretary of State Condoleezza Rice and former Secretary of Defense Robert Gates, two of the most perceptive international strategists out there, deliver a compelling argument for how President Joe Biden’s administration should do more for Ukraine now.

The only way to avoid Russian domination of Ukraine, they write, “is for the United States and its allies to urgently provide Ukraine with a dramatic increase in military supplies and capability — sufficient to deter a renewed Russian offensive and to enable Ukraine to push back Russian forces in the east and south. Congress has provided enough money to pay for such reinforcement; what is needed now are decisions by the United States and its allies to provide the Ukrainians the additional military equipment they need — above all, mobile armor.”

“Because there are serious logistical challenges associated with sending American Abrams heavy tanks, Germany and other allies should fill this need,” they write. “NATO members also should provide the Ukrainians with longer-range missiles, advanced drones, significant ammunition stocks (including artillery shells), more reconnaissance and surveillance capability, and other equipment. These capabilities are needed in weeks, not months.”

One hopes Biden is reading. Read more →

#4 Robert Habeck was Germany’s most popular politician. Then he took office
Guy Chazan | FINANCIAL TIMEs

Don’t miss Guy Chazan’s brilliant, sweeping profile of German Vice Chancellor Robert Habeck, who oversees his country’s energy and economic policies, and his struggle as a Green politician to diversify resources away from Russia.

“As the energy crisis continued, traits that distinguished Habeck from other politicians came to the fore,” Chazan writes, reporting on Habeck’s willingness to make tough decisions. “On the day of the invasion last February, amid rounds of emergency meetings, he found time to visit Andrij Melnyk, Ukraine’s ambassador to Berlin. ‘That was the most important meeting I had since the war began,’ Melnyk told Der Spiegel, ‘because he offered real human sympathy.’ Habeck also spoke openly about the uncertainties the government faced.”

Read this for a profile of the type of leader who, understanding the importance of compromise and pragmatism, will be vital in making the energy transition a success. Read more →

#5 American Democracy is Still In Danger
Erin Baggot Carter, Brett L. Carter, and Larry Diamond | FOREIGN AFFAIRS

This week’s must-read is a clarion call on the importance of US democracy and the dangers it faces, from Erin Baggot Carter, Brett L. Carter, and Larry Diamond.

“The health of American democracy,” they write, “is both a domestic and a national security concern. China and Russia—the United States’ principal authoritarian adversaries—have been using (and exacerbating) America’s democratic divisions and travails to gain advantage in the competition for global leadership. To regain the advantage, the United States must both repair its own democracy and reinvigorate its voice for democracy in the global arena. Democracy must go on the offensive.”

To do this, they argue, “Washington must rejoin the battle for global soft power, in a manner that reflects American values. It must transmit the truth, and in ways that engage and persuade global audiences. The goal must be not only to counter disinformation persuasively with the truth but to promote democratic values, ideas, and movements. In order to counter disinformation and report the truth that autocracies suppress, multiple credible streams of information are needed. Furthermore, they must be independent; while the US government may provide material support, these outlets must operate free of editorial control. That way, they will be seen to be independent because they are.” Read more →

Atlantic Council top reads

Global Energy Forum Jan 14, 2023

COP28 president-designate: With the world ‘way off track’ on Paris goals, ‘transformational progress’ is needed

By Daniel Malloy

In his first remarks since being named the incoming president of COP28, Sultan Al Jaber spoke on Saturday morning at the Atlantic Council’s Global Energy Forum in Abu Dhabi.

Climate Change & Climate Action Energy & Environment

Fast Thinking Jan 9, 2023

How Brazil can respond to its democracy stress test

By Atlantic Council

Now that authorities have cleared the protests and launched an investigation into security failures, our experts break down what’s to come.

Brazil Democratic Transitions

New Atlanticist Jan 13, 2023

Russian War Report: Russian hacker wanted by the FBI reportedly wins Wagner hackathon prize 

By Digital Forensic Research Lab

In December 2022, Wagner Group organized a hackathon that was won by a man wanted by the FBI for his connection to computer malware.

Conflict Cybersecurity

The post Dispatch from Abu Dhabi: How to reduce carbon emissions without blocking progress appeared first on Atlantic Council.

But that’s only spurred the world’s most influential energy experts and policymakers to take another look at the needs of the energy system and devise new policies, practices, and standards to fill those needs. And from January 14 to 15, many of them gathered at the Atlantic Council’s Global Energy Forum to lay out their solutions and call for urgent collaboration on improving energy security and accelerating progress toward climate goals.

Below are highlights from the event, hosted by the Global Energy Center in partnership with the United Arab Emirates Ministry of Energy and Infrastructure as part of Abu Dhabi Sustainability Week, and featuring leaders such as COP28 President-Designate Sultan Al Jaber and US Special Presidential Envoy for Climate John Kerry.

Editor’s note: This article was updated on January 18 to note sponsors of the Atlantic Council’s Global Energy Forum.

Explore the full event

Jan 14, 2023

2023 GEF: Day 1

The 2023 Forum has a special focus on the challenge of managing energy security priorities and decarbonization efforts in tandem, including the continuing impact of the crisis in Ukraine on the energy transition.

Jan 15, 2023

2023 GEF: Day 2

The 2023 Forum will enable world leaders to be at the front end of empowering an inclusive energy transition at a moment where the nexus of energy security and climate action has come into acute focus.

The latest from Abu Dhabi

• European energy commissioner: Stronger green targets are coming amid gas supply challenges
• Tackling the biggest challenges for critical minerals supply chains—capacity, resiliency, and sustainability
• The next steps to harnessing hydrogen’s potential
• Achieving net-zero will require rethinking supply chains. Here’s how to make it happen.
• Nuclear energy is ready for a breakout moment—if it can find the fuel
• Biden administration official raises critical questions around critical minerals
• How will the global climate effort change after the Inflation Reduction Act?
• Overcoming the biggest challenges that stand in the way of a net-zero developing world
• John Kerry on the carbon offset initiative that aims to bring renewable-energy investment to developing countries
• COP28 leaders: Here’s how to spark a just energy transition that includes everyone
• Read coverage from day one

European energy commissioner: Stronger green targets are coming amid gas supply challenges

By Andrea Clabough

“Both our presidents are willing to invest a lot to keep [the] transatlantic relationship,” said Kadri Simson, the European Commission’s commissioner for energy, as she brought a message of unity and optimism to close out the Atlantic Council 2023 Global Energy Forum. 

Speaking with Richard Morningstar, founding chairman of the Council’s Global Energy Center and former US ambassador to the European Union (EU), Simson addressed how the past year has endangered the bloc’s energy and economic security in ways unseen in decades because of Russia’s war of aggression in Ukraine. Simson explained that the EU’s rapid action to reduce its natural gas consumption, efforts to grow renewable power capacity wherever possible, and support of diverse suppliers of liquefied natural gas (particularly the United States) enabled the bloc to pull through this winter. Though she acknowledged that the winter ahead could be even more challenging, she noted that “2022 was an extraordinary year for our renewable production… and targets for next year are even higher.” Renewable energy expansion via the REPowerEU strategy surpassed all expectations. 

She thus rejected the notion that the EU has abandoned the “Green Deal” and countered that the bloc is negotiating even stronger green targets right now. She also rejected the idea that the price cap on Russian seaborne oil, coordinated with the Group of Seven (G7) nations, was ineffectual at sixty dollars per barrel, saying the evidence suggests that Russia is selling oil at discounts well below this number. She added that she hopes to never have to trigger the newly developed natural gas pricing mechanism. 

Simson was cooler, however, on the issue of the US Inflation Reduction Act—a source of mounting tensions throughout late 2022 over its perceived nationalistic provisions. She reasserted that the transatlantic relationship remains robust to the benefit of both sides and that any issues around unfair competition in the law can be solved through the existing EU-US working group on this issue. Her remarks suggested that, whatever 2023 may bring, Europe is fully prepared to weather the storm—and will do so alongside its friends and allies. 

Tackling the biggest challenges for critical minerals supply chains—capacity, resiliency, and sustainability

As clean energy technologies proliferate, demand is soaring for critical minerals—but there is a two trillion dollar investment gap over the next fifteen years to finance supply chains for minerals needed to keep global warming below 2 degrees Celsius. Panelists including Indonesia’s energy minister took on the best ways to resolve these questions on Sunday at the Global Energy Forum.

Read more

Global Energy Forum

Jan 15, 2023

‘Global collaboration is needed’ on critical minerals to support the energy transition, says Indonesian energy minister

By Atlantic Council

Energy minister Arifin Tasrif told fellow policy leaders at the Global Energy Forum that Indonesia is ready to cooperate with partner countries to develop the infrastructure needed to ramp up critical-mineral production.

Energy & Environment Energy Markets & Governance

Dive into the research

Report

Mar 27, 2022

The United States, Canada, and the minerals challenge

By Reed Blakemore, Paddy Ryan, Randolph Bell

An energy mix enabled by clean technologies will be far more mineral-intensive than its hydrocarbon-based predecessor. Demand for minerals like lithium, nickel, and cobalt is projected to skyrocket over the coming years, with supply chains largely unprepared to scale up accordingly. And procurement of these minerals has been plagued by concerns over environmental impact, human […]

Americas Energy & Environment

The next steps to harnessing hydrogen’s potential

By Andrea Clabough

Is hydrogen the Swiss Army Knife of low-carbon energy? It may be too early to tell, but there are plenty of potential end uses for the fuel that point to the fuel’s role in the long term, said a panel of private-sector hydrogen experts at the Global Energy Forum on Sunday.

Both Meg Gentle, executive director of High Impact Fuels, and Shuayb Ismail, associate partner and head of partnerships at Xynteo, agreed that hydrogen and e-fuels are not future visions; rather, these are usable fuels right available now with vast decarbonization potential in the right conditions. Gentle discussed her company’s work in Chile producing “drop-in” e-fuels suitable for a variety of vehicles, both land and seaborne. High Impact Fuels’ facility in Chile is powered entirely by wind energy resources available in the region and produces methanol. Ismail explained how his company assisted an Indian steel producer switch to green hydrogen to decarbonize its production methods, resulting in a 10 to 20 percent cost reduction. He emphasized that at Xynteo, “we truly believe that industry has to be the driver for the energy transition.”

But there remain significant barriers to widespread hydrogen adoption. Joe Webster, Atlantic Council senior fellow, noted that there are a number of policy issues around hydrogen—especially around hourly matching, which would require hydrogen facilities to limit their use of electricity to an amount equivalent to the renewable energy they use in a given hour. Hussein Fouad El Ghazzawy, senior energy and industry consultant at LYNX, spoke from Egyptian and African perspectives. He cited that a recent European Investment Bank report showed that African clean-hydrogen production potential could reach fifty million tons per year by 2035. However, Africa remains tightly constrained by limited or insufficient infrastructure of all kinds. For global hydrogen economies of scale, further investments in Africa are needed, he said.

The panelists broadly agreed that the price of renewable energy is continuing to pose a challenge, as it plays a major role in high hydrogen costs. This is among the key areas where policymakers could potentially do more to support scaling of global hydrogen production.

Editor’s note: Xynteo is a sponsor of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

Achieving net-zero will require rethinking supply chains. Here’s how to make it happen.

By Andrea Clabough

Value and supply chains are one of the hottest topics in the energy space ever since the onset of the COVID-19 pandemic. After realizing the energy system’s vulnerability to disruptions amid a pandemic, is it possible to reconfigure global value chains toward a net-zero emissions future? 

A group of private-sector and think-tank experts, as well as US government officials, considered what decarbonized value chains of 2030, 2050, and beyond might entail for sustainability at the Global Energy Forum on Sunday. Andrew Herscowitz, chief development officer of the US International Development Finance Corporation (DFC), asserted that “it’s absolutely critical that all of us are playing a role in diversifying the supply chain.”

The path there will require considering diverse energy systems and unique regional and country pathways to net-zero. Fahad Alajlan, president of the King Abdullah Petroleum Studies and Research Center, noted how dramatically the conversation around fuels such as natural gas and nuclear has shifted since the war in Ukraine began. He argued that the world cannot deploy a whiplash approach to how it perceives energy and energy supply chains every time a new crisis emerges. Lorenzo Simonelli, chairman, president, and CEO of Baker Hughes, and Christian Bruch, president and CEO of Siemens Energy AG, supported Alajlan’s perspective. Simonelli reiterated that the key challenges are emissions—not a particular type of fuel—and thus there is no benefit for the public or private sector to be overwhelmed by arguments over certain energy sources. Herscowitz added that “[DFC] will finance gas projects… It’s one of the reasons I’m here, to see what we can do.”

Another key area of agreement was the need for energy efficiency throughout value chains, as well as thoughtful management of existing equipment. Bruch noted the risk of stranded assets—when a piece of energy infrastructure is not used for its full lifespan and thus becomes a financial loss—if the energy community fails to plan ahead and utilize what it has already. 

The challenges to successfully transition supply chains to a net-zero world are thus substantial, but perhaps not insurmountable. Marisa Drew, chief sustainability officer at Standard Chartered Bank, described the need for unity and a frank discussion among all stakeholders on these very problems at the next United Nations Climate Change Conference, known as COP28, to unlock long-term, sustainable, and investable solutions.

Editor’s note: Baker Hughes is a sponsor of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

Nuclear energy is ready for a breakout moment—if it can find the fuel

By Andrea Clabough

Is nuclear energy’s guiding mantra “no fuel, no fun”? Daniel Poneman, president and CEO of Centrus Energy Corp. and former deputy US secretary of energy, suggested as much in a special session of the Global Energy Forum on Sunday afternoon. He and expert panelists representing the Polish, Romanian, and Canadian nuclear energy industries delved into what opportunities and challenges lie ahead for nuclear power of all stripes in a decarbonizing world. 

The panelists firmly agreed that, without nuclear power, achieving net-zero emissions is impossible for the global community; indeed, the world must grow its nuclear fleet and pursue innovative, emerging nuclear technologies such as small modular reactors and microreactors, which show tremendous potential as flexible reactor options. Ana Birchall, special envoy for strategic and international affairs at Nuclearelectrica, spoke from the Romanian perspective and emphasized the importance of nuclear now regaining its status as a clean, affordable, reliable fuel in the wake of Russia’s invasion of Ukraine. Indeed, she projected that Romania could, with its imminent unit additions, become an exporter of nuclear-generated zero-carbon power to its neighbors. Adam Guibourgé-Czetwertyński, undersecretary of state for the Polish Ministry of Climate and Environment, lauded nuclear energy in Poland as a source of energy independence and stable industrial supply. 

That said, the panelists acknowledged that a buildout of nuclear power in a net-zero world faces some challenges. Most important, as Poneman explained, is the scarcity of supply (and suppliers) for High-Assay Low Enriched Uranium (HALEU) fuel, which was produced in Russia but is now limited to just a few remaining suppliers. He recommended that the US government consider making a US-based plant a global supplier of HALEU, reducing the proliferation risks but enabling the necessary export of this crucial input. 

Joseph McBrearty, president and CEO of Canadian Nuclear Laboratories, delved into the permitting and stakeholder relationship challenges associated with nuclear energy construction and waste management. He noted that indigenous relationships are especially foundational to nuclear power companies—because nuclear facilities are often on or near indigenous-owned land—and that these and other relationships must be nurtured early on. Guibourgé-Czetwertyński and Birchall agreed that robust public support for nuclear energy is a lynchpin to a successful nuclear policy and noted that public support for nuclear energy is very high in both Poland and Romania thanks to their industries’ sterling safety records. Broadly, the panelists expressed optimism for advanced nuclear technologies to be a major component of the decarbonization puzzle and for the ability of industry to scale these technologies safely while maintaining public confidence.

Nuclear Energy Policy Initiative

The Atlantic Council’s dedicated home for the exploration of nuclear energy’s future.

Biden administration official raises critical questions around critical minerals

Amos Hochstein has a warning. The special presidential coordinator for global infrastructure and energy security at the US State Department said Sunday at the Global Energy Forum that securing minerals such as cobalt and copper, which are critical to clean energy technologies, is becoming a crucial challenge for the energy transition—and one that will look familiar to those who lived through the 1970s.

“The way we’re going right now, we’re actually creating a carbon copy of the twentieth century geopolitics of energy architecture and just putting it in the twenty-first century,” Hochstein said. “Instead of having a small group of countries that control oil supply and perhaps refining, we’re now going to create one or maybe a couple of countries that will control the entire supply chain for wind, solar, electric vehicles, and chips.”

Read the full transcript

Global Energy Forum

Jan 15, 2023

Amos Hochstein on how critical minerals impact net-zero progress—and US national security

By Atlantic Council

The special presidential coordinator for global infrastructure and energy security warned that twentieth-century energy geopolitics are being copied over into the twenty-first century.

Energy & Environment Energy Markets & Governance

How will the global climate effort change after the Inflation Reduction Act?

By Andrea Clabough

The Inflation Reduction Act (IRA): A zero-sum game, or transatlantic win-win? Brad Crabtree, assistant secretary of the Office of Fossil Energy and Carbon Management at the US Department of Energy, says the latter. At a Global Energy Forum panel discussion, Crabtree argued that the IRA, despite concerns that some of its provisions may be nationalistic, is in many respects how the United States is paying it forward on achieving major global emissions reductions. “We, the United States as a country, have already benefited from the investments that others have made,” he said, later adding, “[t]he way we look at it, we’re all in this together.”

But he acknowledged some of the lingering concerns around the IRA, which has been criticized by European allies for subsidizing domestic industry at the expense of European companies, noting that officials “are working really hard now” on some of those concerns; he also said that the Biden administration will sincerely address these issues to the fullest extent possible. Other panelists argued that Europe should consider a similar approach to that of the United States. Lee Beck, senior director at the Clean Air Task Force noted that “climate is a political-economy outcome” and Europe could benefit greatly from an incentives-based approach that can commercialize technologies. Ben Backwell, chief executive officer of the Global Wind Energy Council, added, “It’s not about taking investment from one place and going somewhere else… we should not see this as a competitive thing at all.” He recommended designing “an IRA for Europe.” 

Tim Holt, member of the executive board and labor director at Siemens Energy, and Julian Mylchreest, executive vice chairman of Global Corporate & Investment Banking for Bank of America, emphasized that there need not be a competition for money, attention, or other resources among the transatlantic allies. Both private-sector representatives agreed that there is sufficient capital for rapid decarbonization in the United States and the European Union. They argue the IRA is especially well-positioned to catalyze that money and drive transformational change at scale in key sectoral investments such as hydrogen and carbon capture, utilization, and storage. 

The panelists all cautioned that more challenges to IRA implementation remain; Crabtree pointed out that the US government remains understaffed and under-resourced in managing the regulatory and permitting side of the IRA, particularly with the wave of applications for new infrastructure (such as carbon storage wells) that is expected to come. The panelists’ discussion conveyed that while the IRA represents a crucial and impactful step forward, realizing its full potential—for both the United States and the world at large—will be an ongoing process with numerous hurdles still ahead.

Editor’s note: Bank of America is a sponsor of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

Overcoming the biggest challenges that stand in the way of a net-zero developing world

By Andrea Clabough

According to Isabel Munilla, deputy assistant secretary of energy for market development, climate, and multilateral engagement at the US Department of Energy (DOE), “innovation anywhere supports progress everywhere.” Speaking at a Global Energy Forum panel about supporting developing countries in their net-zero goals, Munilla described a number of innovative programs at the DOE that may help, including the Net Zero World Initiative, which aims to mature, then scale, promising decarbonization technologies, as well as the Clean Energy Solutions Center, through which the Department offers technical assistance. She said that the DOE believes driving down costs for key technologies in the United States (such as with the DOE’s “cost targets for hydrogen and long-duration battery storage) will help set the developing world on a pathway to success.

But other panelists cited extant challenges. Otmane Benamar, GE Gas Power’s chief technology officer for Europe, Middle East, and Africa, warned that especially in the developing world, “a lot of grids cannot handle the intermittency of renewable fuel,” upping the urgency to improve and harden grid infrastructures. Daniel Schroth, director of the African Development Bank’s Renewable Energy and Energy Efficiency Department, agreed with Benamar, adding that focus should also be placed on improving legal and regulatory frameworks for power systems in developing countries. Mary Burce Warlick, deputy executive director at the International Energy Agency, pointed to the extremely high costs of capital—in some cases seven times that of developed regions—as a key limiting factor in moving money to the regions that need climate finance the most. She argued that governments providing concessional finance can help ignite the private sector, which can then begin to move money at a meaningful scale. 

The panelists’ discussion conveyed that there are numerous and complex problems in scaling up climate development finance, and they are unlikely to be resolved with any silver-bullet solution; however, the panelists largely agreed that there is potential for transformative change.

Editor’s note: GE is a sponsor of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

John Kerry on the carbon offset initiative that aims to bring renewable-energy investment to developing countries

By Andrea Clabough

“We have to be more than deadly serious,” about climate change, said US Special Presidential Envoy for Climate John Kerry at the Global Energy Forum. “This is life and death.” 

Kerry spoke on a panel that included representatives of each of the partners behind the Energy Transition Accelerator, a joint initiative introduced at COP27 last year that is intended to catalyze billions of dollars in much-needed private-sector investment to phase out fossil fuels and accelerate renewable energy. 

Kerry said that the Accelerator is one important way to move trillions of dollars of annual climate financing (foundational to limiting global warming to 1.5 degrees Celsius) to where it is needed most: developing countries and the energy sector. He explained that “energy is the single summary of how you cure this problem… [because] the problem is emissions.” The partners behind the Accelerator, he explained, are figuring out how to “de-risk the deals that are out there… and create valuable deals” that will make investment in the energy transition a viable opportunity for the global private sector.

At the Forum, the partners announced new guiding principles for the Accelerator, a list that calls the project to be inclusive, comprehensive, and high-integrity; it also calls on the project to promote near-term efforts to reduce greenhouse gas emissions and to incentivize new private-sector climate finance that is supplemental to, rather than a substitute for, other sources of finance.

Kerry was joined by Accelerator co-founders Andrew Steer, president and chief executive officer of the Bezos Earth Fund, and Elizabeth Yee, executive vice president of programs at The Rockefeller Foundation. Yee and Steer both emphasized the importance of a “highly credible” and transparent initiative, resilient to claims of “greenwashing.” Yee noted that the system created by the initiative must accelerate job growth in developing countries to build robust coalitions behind clean-energy acceleration. She also said that the Accelerator will need to ensure that it allocates a certain percentage of funds from carbon-credit sales toward adaptation purposes. Steer said that carbon credits are necessary because, without this clear incentive structure, cleaning up the global energy sector (through investment in renewable energy) is “not happening at anywhere near the pace that is required.” He added that the governance element of this mechanism, such as ensuring that emissions reductions in one locality are not neutralized by emissions increases elsewhere, is crucial to ensuring credibility and success.

Read more

Global Energy Forum

Jan 15, 2023

US climate envoy John Kerry outlines new principles for accelerating private capital needed for the energy transition

By Atlantic Council

US special presidential envoy for climate John Kerry joined with partners behind the Energy Transition Accelerator to announce the next steps for the initiative at the Global Energy Forum.

Energy & Environment Energy Markets & Governance

COP28 leaders: Here’s how to spark a just energy transition that includes everyone

By Andrea Clabough

What does equity really mean in the context of the upcoming COP28? Panelists at the Global Energy Forum discussed how to ensure the entire global community is brought into the transition. 

Yasmine Fouad, the Egyptian minister of environment and ministerial coordinator, played a key role in Egypt’s execution of COP27 in 2022 as the country’s climate envoy for the summit; she argued that each COP must build upon the other and that, going forward, COP28 must be defined not by exclusion but rather by inclusion. This inclusion should highlight groups such as the Global South, the world’s least developed countries, and women—but it should also embrace industries that have felt unwelcome in the COP process. Pointing to the oil and gas industry, Fouad said that “the crisis affects us all, so everyone has to be around the table.” She suggested that all industries and all sectors of the economy must be prepared to put forth credible transition strategies. 

Mahmoud Mohieldin, the United Nations (UN) special envoy on financing 2030 agenda for sustainable development, focused on the need for localized solutions to ensure that no one gets left behind in the energy transition. He emphasized the financing challenge for debt-stressed developing economies and the progress made by innovative financing models at local, regional, and global levels that are directing money toward the most vulnerable countries and regions. He argued that because the climate crisis has arrived, “ministers from developing economies should ask for more funding for adaptation” immediately. 

Damilola Ogunbiyi, special representative of the UN secretary-general and chief executive officer of Sustainable Energy for All, concurred with Mohieldin on the need for immediate, innovative financing models. She cited her organization’s African Carbon Market Initiative as a key example but also encouraged further action: “You cannot hit net zero and leave a billion people in energy poverty,” she said. She added that close partnership with recipient countries, bearing their unique resources and potential decarbonization pathways in mind, must underpin these efforts, explaining that “being realistic about what a country has to do is important.” 

The panelists’ remarks underscored the enormous challenge ahead for the UAE during its COP28 presidency as it seeks to integrate a wide range of sectors and stakeholders, particularly those long shut out from the COP processes; pave the way for an implementation plan for the loss and damage fund; and mobilize climate finance for the developing world.

Read more

Global Energy Forum

Jan 15, 2023

The lessons of COP27 and how they can apply to COP28

By Atlantic Council

Speaking at the Atlantic Council’s Global Energy Forum, leaders from COP27 in Egypt give a debrief on lessons learned that could be applied to COP28 in the United Arab Emirates.

Energy & Environment Energy Markets & Governance

Day one coverage

• How the UAE could tackle the tricky business of climate diplomacy
• The role of natural gas vs. renewables sparks debate
• Europe has taken major strides to reduce its dependence on Russian energy. How can it work for the long haul?
• What will it take to solve the energy trilemma?
• Powering forward—and paying for—the energy transition
• UK official: Cooperation on a low-carbon, secure energy future “makes us all more prosperous”
• Gas is here to stay—until renewables are ready, say ministers
• COP28 president-designate: With the world “way off track” on Paris goals, “transformational progress” is needed
• The 2023 Global Energy Agenda

How the UAE could tackle the tricky business of climate diplomacy

By Andrea Clabough

As climate change rapidly accelerates, geopolitics seems to be pushing the key players who could resolve it further apart. But according to an expert panel of diplomatic and private-sector experts who gathered Saturday at the Global Energy Forum, that direction need not be destiny, and creative approaches may yet help the global community fill the gaps. 

Charles Hendry, former minister of state for energy for the United Kingdom, opened the discussion with the view that the United Arab Emirates, host of the upcoming United Nations Climate Change Conference of the Parties (COP28) is ideally suited to help bridge the serious and growing differences among key stakeholders such as the United States and China, but also many developing countries skeptical of Western leadership on climate. Neil Brown, managing director at KKR Global Institute, concurred that the UAE brings “credibility” on climate negotiations where the United States and Europe often lack it. He emphasized the importance of what happens not at COP28 but afterwards—especially for the private sector. “Will [COP28] bring private capital off the sidelines?” Brown asked.

Paula Dobriansky, senior fellow at the Harvard Kennedy School of Government and vice chair of the Atlantic Council’s Scowcroft Center for Strategy and Security, reiterated that great-power competition could still dangerously undermine collective, targeted action at COP28 regardless of who hosts the conference. She highlighted China and Russia as problematic examples of countries that remain largely aloof from the COP process and deeply suspicious of US leadership. Ana Palacio, former Spanish minister of foreign affairs and a member of the Atlantic Council’s board of directors, added that China is among those intent on undermining a rules-based international order. In this context, she argued that the US Inflation Reduction Act is a sorely needed example of leadership that has intrinsic value for Europe. 

The panelists agreed that geopolitical competition is as tense now as anytime in recent memory—but this competition cannot be allowed to circumvent meaningful collaboration wherever possible on addressing climate issues. Trust and mutual agreement must be pursued wherever possible, and the UAE at COP28 may be best positioned to make up the trust deficit.

The role of natural gas vs. renewables sparks debate

By Andrea Clabough

Are expanded investments in natural gas fundamentally in conflict with renewable energy as the world ponders the reliability challenge of the coming decades? This was a central debate among panelists on Saturday at the Global Energy Forum. 

Paddy Padmanathan, vice-chairman and CEO of ACWA Power, which has a wide-ranging portfolio of projects in several developing countries, argued that the focus should be on the potential of renewable and emerging energies to power the future. He suggested that Europe can rapidly replace Russian energy resources with expanded renewable power and that it is already doing so. Likewise, many developing countries are starting from the ground floor on energy access altogether; renewable energy can be deployed quickly and effectively at scale, compared to conventional fuels projects which could take a decade or longer to become operational. 

But the other panelists had different views. Helima Croft, managing director and head of global commodity strategy of RBC Capital Markets, cautioned that the worst of the global energy supply uncertainties may be yet to come—for example, if China reopens and dramatically increases its oil and gas demand later this year. She expressed concern that Europe and the world writ large may be forced to rely on the Organization of the Petroleum Exporting Countries (OPEC)—which has the only real spare capacity in the world—and traditional energy diplomacy in such a circumstance. 

Osama Mobarez, secretary general of the East Mediterranean Gas Forum, emphasized that a strategy like REPowerEU, which may prove viable in Europe, may not be so in many developing countries. He warned that no one solution (such as renewable energy alone) can satisfy the energy needs of the world and that oil and gas will remain integral to the global energy system for years to come—themes echoed by speakers throughout the Forum. Carlos Pascual, senior vice president for global energy at S&P Global Commodity Insights, concurred that multiple energy sources are essential in a world where billions of people still lack access to reliable power and clean cooking resources. He added that high capital costs for many developing countries, which are not typically a barrier to renewable energies with high up-front costs in the United States and the European Union, are a major challenge that could potentially shut these economies out of major growth opportunities due to poor energy access.

This debate suggests that equity and justice considerations around clean energy, the Just Transition, and energy poverty remain fundamental challenges despite the rapid, and ongoing, progress in lowering barriers to zero-carbon energy sources. 

Editor’s note: RBC Capital Markets is a sponsor of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

Europe has taken major strides to reduce its dependence on Russian energy. How can it work for the long haul?

By Andrea Clabough

Europe has just faced one of the most dangerous, fraught years in its recent history—with energy security at the heart of the challenges presented by Russia’s invasion of Ukraine. At the Global Energy Forum on Saturday, Ditte Juul Jørgensen, the European Commission’s director-general for energy, joined officials and business leaders to discuss how Europe weathered the storm (so far) and what the European Union (EU) can do in concert with its allies and private-sector leaders to remain resilient against Russia’s ongoing weaponization of energy. 

Jørgensen’s keynote remarks highlighted how the EU’s energy security strategy, RePowerEU, was initially received with skepticism at its launch in May 2022—with critics asking: “Can Europe reduce its dependence on Russian energy supplies as much as they say they want to?” she recalled. “Yes is the answer after this year, and it has been done swifter than what anyone had in mind.” 

She argued that by setting clear and binding targets, and matching action with ambition, Europe was able to withstand Russia’s attempts to starve the continent of energy. She concurred with Maksym Timchenko, CEO of Ukraine’s DTEK, who argued during the panel discussion that Ukraine can, and will, rebuild its energy infrastructure and become a reliable supplier of natural gas, nuclear, and renewable energy to its European neighbors. “Putin will not plunge Ukraine into darkness,” he said. “The country will not be frozen. And we will be stronger after this winter season.”

Geoffrey Pyatt, assistant US secretary of state for energy resources, said that the Russian invasion has demonstrated the strength and endurance of the US-EU alliance and that the United States remains firmly committed to seeing Europe through the upcoming winter and beyond. US liquefied natural gas (LNG) exports and the shared commitment to energy transition, Pyatt said, are central to this partnership. He framed the Inflation Reduction Act, currently a source of transatlantic tension given its tax credits for electric vehicles made in the United States, as an opportunity for Europeans to invest in the United States and ultimately accelerate the energy transition on both sides of the Atlantic. 

Panelists representing European energy companies offered their own suggestions on how Europe might move forward. Anatol Feygin, executive vice president and chief commercial officer of Cheniere Energy, suggested that his company has pioneered the very model of market flexibility that enabled Europe to resist Russia’s manipulation of energy markets. Even so, he argued that it is critical for suppliers of natural gas to continuously improve the lifecycle emissions profiles of their products. Luis Cabra, deputy CEO of Repsol, noted that while Europe has made vast strides in reducing emissions, renewables alone cannot solve the complex, multi-faceted problem of economy-wide transition.

Ben Wilson, chief strategy and external affairs officer of National Grid, suggested that the powerful combination of hydrogen and renewable energy is a compelling long-term solution for Europe and that investment in transmission must accompany the anticipated enormous expenditure in new renewable energy capacity. Amid these varying perspectives on what to do next, one thing is clear: Europe has a great deal of work ahead to fully disentangle itself from Russian energy over the long term.

Editor’s note: DTEK, Cheniere Energy, and Repsol are sponsors of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

European energy security commentary & analysis

Working with a wide-ranging community of experts and stakeholders, the European Energy Security project provides timely commentary and analysis on the geopolitical, sustainability, and economic implications of transatlantic energy security developments

What will it take to solve the energy trilemma?

By Andrea Clabough

Panelists discussed the challenges in solving the energy trilemma—affordability, reliability, sustainability—at the Global Energy Forum on Saturday, soon after the Atlantic Council’s Global Energy Center launched the 2023 “Global Energy Agenda.” The panel featured Albanian minister of infrastructure and energy Belinda Balluku and experts representing private-sector energy companies including Crescent Petroleum, General Electric, and Excelerate Energy. 

Balluku opened the discussion with a frank assessment of the energy security situation in Southern Europe. She pointed out that there’s a need for not only a range of energy solutions to address the current crisis fueled by the Russian war in Ukraine, but also for long-term resiliency and economic growth in the region. She highlighted the importance of rapidly expanding Albania’s renewable energy resources (an expansion that has been accelerated all over Europe by Russia’s recent invasion). But she also noted the importance of Albania’s strategy around Floating Storage Regasification Units (FSRU)—a strategy supported by the United States—which has since 2020 become a cornerstone project supplying imported liquid natural gas to Albania’s neighbors. Diversification of energy supplies and suppliers, she concluded, is thus crucial to Albania’s and Europe’s energy security. Steven Kobos, president and chief executive officer of Excelerate Energy, concurred with Balluku and pointed to his company’s rapid response FSRUs in Finland and elsewhere. He warned, however, that a real supply crisis for natural gas could be in the making as demand outside Europe could grow in the coming months and new supply in the near term will be sharply limited as new production infrastructure is still years out from operations. 

The other panelists offered similarly nuanced views of the role of gas in the energy transition—particularly when considering the unique needs of many developing countries. Neeraj Agrawal, chief financial officer of Crescent Petroleum, described his company’s work harnessing natural gas to shift Iraqi electricity generation away from diesel fuel, which is more polluting. He argued that natural gas will be a lynchpin resource for many developing economies in Africa and Asia that are decarbonizing while providing a reliable power supply to more than one billion people worldwide who lack it. Roger Martella, chief sustainability officer at General Electric, agreed with the imperative to expand global electrification but steered the conversation toward the importance of resiliency. He argued that amid accelerating cyber attacks and intensifying climate change, the world must harden electrical grids. He also acknowledged the need to address the “ecosystem” of challenges in building energy infrastructure in many parts of the world which, he said, policy alone cannot solve on its own.

Editor’s note: Crescent Petroleum, General Electric, and Excelerate Energy are sponsors of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

Read the report

Global Energy Agenda

Jan 13, 2023

The 2023 Global Energy Agenda

By Landon Derentz, Christine Suh, Ameya Hadap, Paul Kielstra (Editors)

The third edition of the Global Energy Agenda provides context for the year that has passed. It features a survey of thought leaders in the energy sector, as well as a series of essays by the leading figures in energy, to set the energy agenda for 2023.

Energy & Environment Geopolitics & Energy Security

Powering forward—and paying for—the energy transition

The energy transition will require unlocking tremendous amounts of capital; but energy investments aren’t keeping up as much as is needed, warned a panel of experts at the Global Energy Forum on Saturday.

Read more

Global Energy Forum

Jan 14, 2023

How to finance a sustainable and just energy transition

By Atlantic Council

At the Global Energy Forum, experts plotted out ways countries can incentivize investments that can support a stable energy supply and finance a sustainable and just energy transition.

Energy & Environment Energy Markets & Governance

Watch

UK official: Cooperation on a low-carbon, secure energy future “makes us all more prosperous”

By Andrea Clabough

According to Grant Shapps—the UK secretary of state for business, energy, and industrial strategy—energy matters more than it ever has before.

Shapps’s message was part of keynote remarks he delivered at the Global Energy Forum, where he emphasized both what has and has not changed in the energy sector over the last year. He pointed to hard energy-usage choices that the world has faced as prices for fuels have skyrocketed and the world’s low-income economies have been forced to make difficult decisions. In addition, the worrisome acceleration of climate change has presented a constant threat as heat waves have scorched Europe, bomb cyclones have devasted the United States, and flooding has led to thousands of fatalities in Pakistan. 

But Shapps expressed his confidence in the future, arguing that “we will succeed as humanity” in fighting the existential challenge of climate change. He noted the growing number of entrepreneurs and innovators worldwide pushing ahead with crucial technological innovations, such as the recent nuclear fusion success at the United States’ Lawrence Livermore National Laboratory. He lauded Britain’s rapid strides in building some of the largest wind farms in the world in the North Sea, which provide 86 percent of the United Kingdom’s electricity needs. These developments, he concluded, should give us all hope for the future. 

He cautioned, however, that “a fairer future is worth fighting for” and emphasized the need for expanding just transition initiatives, such as those in South Africa and Indonesia, to provide both climate and economic security (as well as needed job growth) to developing countries. Despite the world facing what he deemed a challenge no other generation has faced before, he said there are many reasons to be hopeful—and much work to be done.

Shapps’s remarks took place a day after the United Kingdom and United Arab Emirates signed a Clean Energy Memorandum of Understanding to increase investment and cooperation between the two countries on energy security. “When it comes to climate change… none of us should have to settle for less. So working together really matters.”

Gas is here to stay—until renewables are ready, say ministers

After gas prices spiked this year, some energy users are beginning to regain a sense of equilibrium with steadier prices. But that may not be the case in the long term, said two energy ministers speaking at the Global Energy Forum.

“There isn’t much gas coming into the market until 2025,” said Saad Sherida Al-Kaabi, the Qatari minister of state for energy affairs and president and chief executive officer of QatarEnergy. “So I think it’s going to be a volatile situation for some time to come.”

“Gas has to be available, and it has to be affordable,” to help support renewable energy, clean up the environment, and assist countries in reaching their climate goals, said Suhail bin Mohammed Al Mazrouei, UAE minister of energy and infrastructure.

“More renewable energies will be installed,” Al Mazrouei added, “but we need a baseload; and for a baseload, we need more investments in gas.”

Editor’s note: The UAE ministry of energy and infrastructure is a partner of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

H.E. Eng. Suhail bin Mohammed Al Mazrouei and H.E. Saad Sherida Al-Kaabi speak with Frederick Kempe at the Atlantic Council’s Global Energy Forum on January 14, 2023. Photo via the Atlantic Council.

H.E. Eng. Suhail bin Mohammed Al Mazrouei and H.E. Saad Sherida Al-Kaabi speak with Frederick Kempe at the Atlantic Council’s Global Energy Forum on January 14, 2023. Photo via the Atlantic Council.

H.E. Eng. Suhail bin Mohammed Al Mazrouei and H.E. Saad Sherida Al-Kaabi speak with Frederick Kempe at the Atlantic Council’s Global Energy Forum on January 14, 2023. Photo via the Atlantic Council.

H.E. Eng. Suhail bin Mohammed Al Mazrouei and H.E. Saad Sherida Al-Kaabi speak with Frederick Kempe at the Atlantic Council’s Global Energy Forum on January 14, 2023. Photo via the Atlantic Council.

H.E. Eng. Suhail bin Mohammed Al Mazrouei and H.E. Saad Sherida Al-Kaabi speak with Frederick Kempe at the Atlantic Council’s Global Energy Forum on January 14, 2023. Photo via the Atlantic Council.

H.E. Eng. Suhail bin Mohammed Al Mazrouei and H.E. Saad Sherida Al-Kaabi speak with Frederick Kempe at the Atlantic Council’s Global Energy Forum on January 14, 2023. Photo via the Atlantic Council.

Read more

Global Energy Forum

Jan 14, 2023

Why accessible and affordable gas plays a role in helping countries reach climate goals and expand renewable energy

By Atlantic Council

Energy ministers from the United Arab Emirates and Qatar discussed the role gas plays in the energy transition at the Atlantic Council’s Global Energy Forum.

Energy & Environment Energy Markets & Governance

COP28 president-designate: With the world “way off track” on Paris goals, “transformational progress” is needed

By Daniel Malloy

With a pivotal United Nations climate change summit set to take place in the United Arab Emirates at the end of this year, “the world is playing catch-up” to implement emissions-reduction goals, said UAE Minister of Industry and Advanced Technology Sultan Al Jaber, the newly designated president of the summit. But, he added, there’s ample opportunity to accelerate new technologies and refashion old ones to reach net-zero emissions, a milestone that would represent “the greatest economic and human promise since the first Industrial Revolution.” 

In his first remarks since being named the incoming president of the twenty-eighth UN Climate Change Conference of the Parties (COP28), Al Jaber spoke on Saturday morning at the Atlantic Council’s Global Energy Forum in Abu Dhabi, a two-day gathering of policymakers, government officials, and business leaders that sets the energy agenda for the coming year.

Al Jaber acknowledged that the world is “way off track” in hitting the goals of the 2015 Paris climate accords, intended to limit global warming to 1.5 degrees Celsius. 

But in his first opportunity to set out the vision for the landmark conference—which he said will be a COP of “solidarity” and “action” as it engages in the first “global stocktake” progress report—Al Jaber offered a roadmap to the “transformational progress” he envisions.

Editor’s note: Al Jaber is CEO of the Abu Dhabi National Oil Company and chairman of Masdar, both of which are sponsors of the Atlantic Council’s Global Energy Forum. More information on Forum sponsors can be found here.

Read more

Global Energy Forum

Jan 14, 2023

COP28 president-designate: With the world ‘way off track’ on Paris goals, ‘transformational progress’ is needed

By Daniel Malloy

In his first remarks since being named the incoming president of COP28, Sultan Al Jaber spoke on Saturday morning at the Atlantic Council’s Global Energy Forum in Abu Dhabi.

Climate Change & Climate Action Energy & Environment

Watch

The 2023 Global Energy Agenda

By Landon Derentz, Christine Suh, Ameya Hadap, Paul Kielstra (Editors)

In 2022, Russia’s invasion of Ukraine undermined the global energy system’s return to pre-COVID normalcy, injecting turmoil and uncertainty into the sector. Russia’s gas cuts led Europe to compensate for the loss of energy supply by reverting to coal and oil, leading the global community to confront deepening tensions between national security, energy security, and climate action.

However, the crisis in Europe, despite causing an upsurge in carbon-intensive power, provided the world with fresh impetus to change the trajectory of the energy transition. In response, policymakers worldwide are hastening efforts to decouple their economies from foreign hydrocarbons and to decarbonize energy systems. Ultimately, the war may accelerate longer-term energy trends toward a more sustainable and secure system.

Against this backdrop, energy leaders head into 2023 with a greatly revised outlook from 2022, as revealed in the Atlantic Council’s third edition of the Global Energy Agenda. The publication includes an analysis based on our survey of energy stakeholders, representing a wide variety of professions across the sector from more than fifty countries. Complementing our survey analysis, a diverse group of experts, corporate leaders, and policymakers contributed essays that provide deeper insights on the tumult of 2022 and its implications for reshaping energy systems for the future.

Despite a year defined by complications to the energy transition, there is reason to be optimistic as the global energy community doubles down on in-tandem efforts to achieve climate goals and longer-term energy security for all.

Read the agenda

Global Energy Agenda

Jan 13, 2023

The 2023 Global Energy Agenda

By Landon Derentz, Christine Suh, Ameya Hadap, Paul Kielstra (Editors)

The third edition of the Global Energy Agenda provides context for the year that has passed. It features a survey of thought leaders in the energy sector, as well as a series of essays by the leading figures in energy, to set the energy agenda for 2023.

Energy & Environment Geopolitics & Energy Security

The post Highlights from Abu Dhabi as policy leaders gathered for the Global Energy Forum appeared first on Atlantic Council.

Flagship Event Sat, January 14, 2023 • 12:01 am ET

2023 Global Energy Forum

The 2023 Forum will have a special focus on the challenge of managing energy security priorities and decarbonization efforts in tandem, including the continuing impact of the crisis in Ukraine on the energy transition. This two-day conference starts at 9:00 AM in Abu Dhabi and virtually at 12:00 AM ET (midnight).

Africa Americas Energy & Environment Energy Markets & Governance

Event transcript

Uncorrected transcript: Check against delivery

Speakers

Amos Hochstein
Special Presidential Coordinator for Global Infrastructure and Energy Security, US Department of State

Claudio Descalzi
Chief Executive Officer, Eni

Bernard Mensah
President of International, Bank of America

Elizabeth Yee
Executive Vice President of Programs, The Rockefeller Foundation

Moderator

Hadley Gamble
Anchor, CNBC

Introduction

Landon Derentz
Senior Director, Global Energy Center, Atlantic Council

LANDON DERENTZ: I’m Landon Derentz. I’m the senior director of the Atlantic Council Global Energy Center and I’m really excited to welcome each of you back to the seventh annual Global Energy Forum as we build on what was, really, a remarkable and incredible morning featuring Their Excellencies—His Excellency Dr. Sultan Al Jaber, Minister Suhail Mazrouei, Minister Saad al-Kaabi, and, of course, Minister Grant Shapps.

When I joined the Atlantic Council last year and we began to build towards this forum, I gravitated towards one issue: How do we incorporate a conversation about financing all aspects of the energy transition, both conventional and clean?

We heard this morning the world is short energy today, and without investing trillions of dollars into the zero-emissions technologies and infrastructure we need we’ll be short energy tomorrow. As we shift to the next segment of the program, I’m really excited because we’re lucky to have the experts that can help us start to break down the financial barriers to accelerate the energy transition.

Before we have a panel discussion hosted by Hadley Gamble, to kick off this discussion I’m thrilled to invite to the stage one of the strongest voices in global energy policy in Washington, DC, maybe even globally, and bring to the forum his deep policy, diplomatic, and industry expertise.

So please join me in welcoming Amos Hochstein, special presidential coordinator for global infrastructure and energy security. Welcome, Amos.

AMOS HOCHSTEIN: Morning, and thank you, Landon. It’s good to be back in a place where I can be working with you and in your new role in the Atlantic Council. Really, congratulations both to you and to the Atlantic Council, and, really, congratulations to the Atlantic Council for convening again because when the Atlantic Council has this gathering, as I think, Dr. Sultan says, it’s setting the agenda for the year, for 2023, and as we look at setting the agenda, I think before we can set that agenda we have to look, I think, in review of 2022 and to see what kind of lessons we need to learn and what we’ve learned.

Now, 2022 is packed with a lot of things that happened. So I want to focus on the many lessons that we need to learn on—within the energy sector.

This is a year where the energy markets were upended, not by market fundamentals but, rather, by missiles, tanks, and bullets as a horrific assault of one country on its neighbor, invasion, the aggressor being a major energy supplier, which then impacts the markets and really changed—as we sort of talked about a little bit earlier, changing the flows of energy in a way that we never thought would ever happen but also we probably would think was never possible.

How could Europe possibly survive not one but two winters without flows from Russia? And, yet, that’s exactly what has been unfolding and we’re still in that process of trying to figure out how do you redirect energy around the world, both in gas, oil, and upon us on February 5 is the EU ban on oil products, and that is a change that we saw fundamentally in 2022, [and] we have to think about what does that mean.

And one of the things that that means as we focus on the energy transition is we have to do so while ensuring that we have adequate supplies in the market, and how do we do two things at the very same time? How do we make sure that commodities are priced—first of all, commodities are available and are priced in a way that support economic growth, especially as the world is facing increased inflation concerns and, potentially, a recession and trying to battle against that?

How do we make sure that we focus on that transition, but we do have enough investment in increased production that supports the years of the energy transition to make sure we have those commodities and priced appropriately?

And while we do that, we have to invest in accelerating the energy transition and that means increasing investment in [the] deployment of renewable energy and advancing clean technology. In 2022, the US Congress passed the largest investment in energy, climate, and energy transition that we’ve ever seen in the United States. And while we’re seeing that, we know that that investment is coming, and we’re going to look at 2023 as the year of implementation. And we know that to do that, we have to think about the last two years were about getting the tools—in the United States at least, getting the tools from Congress, getting the funding that we needed in this investment.

But as we go forward, now it’s all about implementation. It’s all about making sure that we can have the resources to invest. And we’re already seeing that ahead of 2023 taking shape in the United States. We’ve seen record investments in solar, wind, electric vehicle, battery supply chains, materials, and products from mining to processing—opening the first mining sector in the United States that we’ve seen in many, many decades; the first cobalt mine opening in Idaho this year. These are things we haven’t seen in the United States in a very long time. And what that means is that we can ensure a diversified energy security for the future.

So as we’ve talked about for the last twenty years energy diversification, and we talked about oil and gas, we now have to have the exact same conversation for energy diversification in the energy of the future. And as we do that, that is the agreement that we signed with PACE that was mentioned before between the United States and the United Arab Emirates, a Partnership to Accelerate Clean Energy, to invest together one hundred billion in these technologies.

But here is the thing that was blocking us. Here is what’s not working. As we hear financial institutions and the private sector and governments around the world talking about hundreds of billions of dollars into trillions of dollars of commitments and pledges to invest in the energy transition, we have to talk more about where are those dollars being deployed. They’re being deployed increasingly only in OECD and developed countries, and not in developing countries and middle-income countries. And that’s because there’s a barrier to finance. And that barrier to finance is risk—whether it’s commodity risk or it’s currency risk or ESG risk or—well, the E of ESG or the G of ESG—and reputational risks. And therefore, the easier dollar is always going to be spent somewhere in the United States or in Germany or in Australia, or in Chile, and that’s as far down as we go when it comes to the developing and middle-income countries.

And that’s the—that’s the kind of discussion we need to have, is how do we come together to de-risk. What is the role of government? What is the role of banks? What is the role of private equity? What are the roles of multilateral development institutions and financial institutions [in de-risking] these projects? What are the kinds of steps that can be taken so that we don’t just have examples of a project here and there, but actually have a de-risking of these projects so that they are not just investment opportunities or charity or development, but they are bankable projects? And I think that’s the challenge that we’re going to face as we go into the future if we really want to have an equitable energy transition. And if you want to fight climate change, it can’t be done in one group of countries and not in another.

So I’m looking forward to this panel. I’m looking forward to the next couple of days as we look at how we manage this energy transition…

HADLEY GAMBLE: Good morning, everybody, once again, and welcome to the Atlantic Council’s Global Energy Forum. I’m here to join you to talk about something that is very close to all of our hearts and minds, and at a time when energy security has never equaled national security in quite the same way.

We’re going to be talking about financing a sustainable and inclusive energy transition. Amos you know. I want to introduce the rest of my panel. Liz Yee. She is the executive vice president at the Rockefeller Foundation. I’m also speaking to Claudio Descalzi, of course, the CEO of Eni; and Bernie Mensah, the president of international at Bank of America. Panelists, welcome and thank you so much for joining us.

I want to kick it off, actually, with Amos. Just to sort of follow on to the situation that we find ourselves in today, it’s no secret that the oil and gas community in the United States had high hopes, if you will, of the fact that the Republicans would be taking the House and what that could potentially mean for their agenda in the United States. But given what we saw over the last couple of weeks and their seeming inability to elect a speaker, do you think those hopes are misfounded?

AMOS HOCHSTEIN: Speaking of energy finance…

HADLEY GAMBLE: You know me so well.

AMOS HOCHSTEIN: Well, first, I think there were high hopes for the Republicans, for winning the House and the Senate. I think they’re willing to look at the House or maybe now they’re happy they only won the House.

Look, I think it’s not about politics on this issue. It’s—

HADLEY GAMBLE: Of course it is.

AMOS HOCHSTEIN: Politics govern so much of what we do in order [to] be able to get things done.

But what I said before is what I really mean. We’ve gotten a lot of tools from Congress. Congress has passed enormous amounts of funding for energy, for [the] energy transition. So I think where we need to be now is working with the oil and gas sector.

And you know, the Biden administration is clearly going to have continued disagreements on many issues with the oil and gas sector in the United States. It is no secret. I don’t need to say it another way. We’re going to have disagreements. But I think we can also come together in dialogue to understand that we are living through an extraordinary time—a time of a war in Europe that is affecting the energy market… that we are coming out of COVID, the demand is rising, and we’re all battling together to make sure we don’t have an inflationary pressure. So I think the dialogue that we need to have with the oil and gas sector in the United States is how do we have an increase in production, how do we take extraordinary profits and invest them right back into America, into additional production.

I think that’s not going to be about Congress. We’re going to hear a lot of investigations and hearings, and Congress will do what Congress does. But I think we have to keep our eye on the ball, and that is to make sure we have enough production in the United States and around the world while we do everything else to invest in the energy transition. We know we need it, and we know that we have a horizon that is long enough to justify those investments.

HADLEY GAMBLE: It’s tough to engage with the American oil and gas community when you’re telling them that they’re acting in an un-American way by giving profits back to their shareholders. Isn’t that capitalism? And capitalism, doesn’t that pay for our ability to be a democracy and project our values?

AMOS HOCHSTEIN: So, Hadley, as you and I have discussed before, in prior discussions, what I mean about when I say un-American, there’s no accusation of companies’ motivations and companies how they’re working. But when you’re in a place where as a result of this extraordinary year, the two best quarters in 150 years are both in the same year, and you compare the profit level of companies with the historic arc of translating profits on a sustained basis within investment in [capital expenditure (CAPEX)], we’re a little bit of a mismatch of—based or in a correlation to historic trends. And therefore, if you are going to have those [kinds] of profits—and these are not revenues; these are profits—on a sustained basis and not invest, that is not what [the] American business community has done for the last hundred-plus years. And we want to go back to the way it normally is, that when there is an extraordinary event, when there are large profits, when there’s justification for additional capital expenditures, the companies do that.

And to be fair, that’s exactly what’s happened over the last couple of months and weeks. We have heard more American companies announce that they are increasing CAPEX for 2023. Their projection for increased production in 2023 is going up as well. We’re having those conversations not just with American companies, but with companies both public, private, and state-owned to have the same exact conversation across the board.

HADLEY GAMBLE: Is a windfall tax still on the cards for 2023?

AMOS HOCHSTEIN: I’m going to leave that conversation for—if that’s a tool that we need, then we can talk about it. It is not on the table at the moment.

HADLEY GAMBLE: Bernie, I want to bring you in and talk a little bit more about the finance side of things. When you look at what’s happening in the United States today, obviously when it comes to governing, a divided house is not necessarily what you want from a policy perspective, but from a markets perspective, from a finance perspective, from a banking perspective, tied-up House and Senate actually means markets can look forward to a bit of status quo.

How difficult, in your mind, is 2023 going to be for the financing of projects that we’re talking about today?

BERNARD MENSAH: Thanks, Hadley. Thanks for having me here, and great to be here this week.

I think for us in finance the big issue is what the central banks are doing, and I think that’s what’s driving global flows. The deposits taken by the largest banks—and we all announced our results yesterday through the pandemic—increased a lot. I think our balance sheet at Bank of America went up from something like 2.3, 2.4 trillion dollars to about 3 trillion dollars, some of that because of all the stimulus money that came in.

But I think one of the most important macro issues that we’re all facing is that for ten years, central banks have expanded their balance sheets enormously, by trillions of dollars. I think cumulatively Japan, Europe, United Kingdom, and the United States, maybe ten trillion, something like that. They’ve all said, we’re shrinking our balance sheets back down, and we’re feeling that ripple effect. And I think after ten years of expansion, it’s going to take more than a quarter or two for that to feed through. And we’ll all have to adjust from zero rates, negative rates. I’m not sure if it’s a headwind, but it will be a reallocation of all of those excess savings in the marketplace, and we’ll deal with that, and we’re very well set up and able to deal with that.

And everybody is watching what happens to just, you know, overall savings rates, et cetera. Within that there’s a huge amount of capacity to lend and to drive changes, and I’m sure we’ll touch on this later. And I absolutely sympathize with what Amos has been saying, which is getting the capital and the balance sheet to the right place. There is a huge amount of excess savings in the world—in this region, in Japan, in Northern Europe, in the United States, and our job in finance is—that’s what we do. We take money from the savers and give it to those that want to invest it, and we’ve done it very well in the standard model of the oil and gas sector. As we move into this new sector, that’s the challenge. And that’s why I’m here; that’s why we’re all super engaged.

HADLEY GAMBLE: So less the politics and more the central bank policy.

BERNARD MENSAH: Yeah, the central bank policy is an important—this is in oil and gas. I don’t want to turn it into a finance piece, but it’s something that we—not that we grapple with, but I think in finance we’re cognizant of the fact that that expansion of central bank balance sheets was massive. It drove massive underlying flows, and when it stops and it’s starting to shrink, it will have impacts definitely.

HADLEY GAMBLE: No doubt. No doubt.

Claudio, I want to bring you in on this just a little bit more broadly. Earlier we had the chance to hear from two of our, frankly, experts in the field: His Excellency, Suhail Al Mazrouei, the UAE’s energy minister, as well as Saad Al Kaabi, the energy minister from Qatar, two gentlemen that I have interviewed on multiple occasions. And we heard some comments about 2023 and what that should look like. And one of the comments was that we should forgive Russia. How difficult is that to hear?

CLAUDIO DESCALZI: We have to forget Russia or—

HADLEY GAMBLE: Forgive.

CLAUDIO DESCALZI: Ah, forgive. (Laughter).

No, I don’t know. I think that the war is still there, and it’s not easy to forgive anybody when you kill people, or innocent people, or women and children, and bomb hospitals…(audio breaks).

HADLEY GAMBLE: Bernie, in terms of those financial instruments, what does this look like to you?

BERNARD MENSAH: It has solutions for this. I think it looks like a lot of—I think it looks like a lot of just engagement… across different parts of the capital structure. So… just have a different risk appetite although they’ll have different, you know, return metrics that they might want, which is different to what shareholders of Eni might want or what just my bank, others. We’ve got a structure financing that’s been growing… then you call somebody that Amos might know and he might come in, or she, and figure out how to make that work. The Indonesian just energy structure was interesting. It started off in South Africa.

Perhaps my specific piece is trying to make sure that we do it at scale as quickly as possible. At the moment, my sense is [there are] lots of smaller things. There’s an element of, oh, isn’t this cool, we’ve done this innovative thing for this piece here. But it hasn’t really lit a fire, as I might say. But practically, those things are—those things are happening.

HADLEY GAMBLE: Yeah.

One of the comments that we heard earlier from Mr. Mazrouei, he was, essentially, saying the challenges, the things that he’s worried about, and he said another year of high price fluctuation. Amos, in your mind, is the United States prepared for prices at a hundred dollars? Because when we spoke yesterday on CNBC, there have been suggestions that we could see prices at a hundred, $110 a barrel, and you told me, I just don’t know if prices will get there.

AMOS HOCHSTEIN: And since yesterday, I still don’t know. But I think that there’s a—look, it’s not for us to—we have to prepare for different scenarios and what we’ve done over the last eighteen months in hyperdrive has been to work with consumers and suppliers around the clock.

I mean, I’ve—before the war started, I was making calls to Claudio to ask him, in different scenarios what happens? How do you surge capacity in different markets? And I called others to do the same thing—how do we figure out what that is?

I can’t control what the price is going to be. What I can control is what our reactions are and we had a weird market wherein gas—global prices were rising but it was because of an event. We were taking a product off. A producer took its product off the market all of a sudden in natural gas. We now have—the EU passed a ban on crude and a ban on products. We have a price cap on crude. We may have a price cap on products that would come into play in a few weeks from now. We have to see. We’re all in discussions on that.

So we are—this is a—this is not a regular market where there’s just price fluctuation based on supply and demand. There are real geopolitical events that are affecting that. So I think we do have to be prepared for higher prices and what our responses are. We will be prepared for that. We are looking at those scenarios. We have to be prepared for the reverse and what happens if prices decline and go to a lower level, and how are we opportunistic in the market there in order to continue to ensure our future.

So this is going to be a really fluid dynamic. I don’t know what’s—I think Claudio is right in one fundamental way, and I think His Excellency Minister Mazrouei, as you just quoted, that this year is going to be about the war, and what happens in the war, if it escalates or if it dissipates, will determine where the price and what the price environment that we’re all in. And we’re going to have to all get together and have this conversation. And that’s going to go towards the financial sector in the United States and around the world, the oil and gas sector, and the governments to figure out how do we prepare for it.

HADLEY GAMBLE: Yeah. You’ve used the Strategic Petroleum Reserve repeatedly to address price fluctuation. Some people would say successfully, others would say you got lucky or it was a blip. What else is on the table?

AMOS HOCHSTEIN: Look, let me just correct you. We didn’t use the Strategic Petroleum Reserve because of price fluctuations. We’ve had plenty of price fluctuations in the past. We had years of prices above a hundred dollars and we didn’t use the Strategic Petroleum Reserve. We used the SPR as the result of a crisis that was causing price fluctuations, and there’s a big difference. The previous time we used the SPR was during the Libya war when nearly two million barrels came off the market overnight. It’s not the fluctuation that you’re addressing; it’s the fact that there’s an underlying security crisis that is an emergency. And that’s what the SPR is. We’ve used it, as you said, in extraordinary [circumstances].

If you remember, in June we were at over $120 a barrel. Today, we’re at eighty dollars or so. So if those who argue that adding a million barrels a day doesn’t matter, then it shouldn’t matter in any event. So I think that’s a bit hard to argue.

We’ve used—we have more that we can use in the future. I think that we worked together with Congress and canceled the mandated releases 2024 through 2027. That’s a significant amount of oil that the market was expecting that would be released from the SPR. Well, we canceled it. In this price environment, that doesn’t make a lot of sense. And we will at the same time continue to use that if a crisis emerges or one that will affect consumers in the United States and around the world. And I think the alternative of going into a recession as a result of exceeding energy prices is probably not advantageous.

HADLEY GAMBLE: Yeah.

Claudio, how difficult is the price environment for you today in Europe? Because we’re talking about recession. We’re talking about the worries about central bank policy. And frankly, in the United Kingdom, they are already there.

CLAUDIO DESCALZI: So the price is not really the main problem because after eight years of very low prices other companies, our company immediately reacted so—because we cannot control the price, we had to control, ourselves, the cost. And we reduced what we call the cash neutrality, so the total breakeven. We can imagine that in 2012, 2013 the average cash neutrality for a company was $110, $100 per barrel. Now it is about less than forty dollars per barrel. It means that with a price at forty dollars a barrel, you can survive. Maybe you break even, but you can go ahead. So there [is] a lot of efficiency that we can create.

The issue outside is that—so outside our company—what you said before. We have a situation over a gap between demand and supply. And the supply is low because we didn’t invest. And after COVID and after the war, we realized that the hydrocarbon demand with coal we can say is inelastic. Ten, twenty years ago we thought that now the gas demand in Europe was 50 percent less; the same. And in China, it’s seven or eight times more. So there is a big increase of gas demand, and that was good because coal went down. Now coal is ramping again. So we have this issue that we have to invest.

And investing now is not easy. You must have the right key performance indicator to go to bank and ask for money because what we are doing still is link our bond or our financing process to sustainability link bonds. We have been the first last year to have a framework that we presented, and then after one month we issued bond. Sustainability bond means that you have to set a path out to 2050 where you must be net zero. You must have intermediate targets, so 2026, 2030, 2035, 2040, 2045, 2050. And you have to demonstrate in term of renewables, [carbon dioxide], greenhouse gas emissions, methane emissions, scope one, two, and three. So is a—is a matrix over a lot of elements, certified. You go to the bank and say: I need this because I have this. And if you’re not able to be compliant, you pay a penalty in term of cost of money. So it’s quite complex. A big company can do that. Small companies, much, much more difficult, so they cannot get money to invest in the upstream. So the process is this for the investment.

Then—and we talked before—the supply chain, there is a big disruption. So now there is hub. There is onshoring, nearshoring. And after COVID, we have a regional hub that try to be self-sufficient because they realize that if they need something it was not like before that you buy also if the product is built—is manufactured in somewhere else. No. Now the main and critical issue to survive must be in your country. So that means a big separation. That is true for renewables, because there is now a long-distance connection. It’s true for everything. So energy. From energy you have health, food. Food is—we never talk about food, but the disruption that we have with food because of the war and because of the, I think, lack of investment especially in Africa—Africa is buying everything—is creating a very dangerous underbalance.

So I’m not worried about the price—the price I can cure the price with our internal stuff—but the rest. So if we have to increase the production to reduce the price it’s almost impossible now, first of all because upstream take six, seven years to get through with some production—maybe more if it’s a green field—and then we have this discrepancy and gap between the supply that we made in the last three years. Talk about green hydrogen, where we work, or renewable in term of continuity of energy deliver. And we are not there.

HADLEY GAMBLE: Yeah.

CLAUDIO DESCALZI: So we have to be, I think—you know, the issue is that, it’s not for the United States, but generally speaking, that the world never talk about energy security. Never, because energy is there, Russia. And we never talk, like for the virus, we never talked about COVID. But overnight, everybody became expert. So everybody talk about COVID. Now everybody talk about energy. And that create a big mess.

HADLEY GAMBLE: (Laughs.) Are we talking about the politicians or just the—

CLAUDIO DESCALZI: No, no, I talk about—I talk about everybody.

HADLEY GAMBLE: The armchair politicians.

CLAUDIO DESCALZI: It’s a big mess because, you know, you must be competent to talk about something. You can jeopardize and kill somebody, kill—in term that you can arm somebody, because if you select the wrong solution that is much worse than the problem itself.

HADLEY GAMBLE: Do you ever believe there will be accountability for those who made decisions that actually imperiled Europe’s security with regards to Nord Stream 2, with regards to Nord Stream and to the relationship with Russia? And I’m talking about Angela Merkel and others.

CLAUDIO DESCALZI: I think that if there is no energy security plan, you know, what you can do. If there is an energy security plan, the first one is diversification of regional—of the sources, diversification—diversification of technologies, and experts permanent ready to face the issues. So that is organization and processes. If you don’t have that—and it’s not easy. You grab what you have every day and you live day by day, but that is not in an organized and rich society.

HADLEY GAMBLE: Yeah.

Bernie, when you think about how difficult it is for you to make decisions long term, obviously, His Excellency the Qatari energy minister was talking about governance and the worry of having a four-to-eight-year time horizon on what you can do, and the security of your investment as a result of that. Now we’re seeing activist investors pushing back. We’re seeing, for example, the Florida—the state of Florida, in terms of their pension fund, they don’t agree with the ESG methods in investments, for example, of Larry Fink, and so they’ve decided to pull their money. We saw that during the Trump administration as well. To your mind, how difficult does that make your decisions? Because if you can’t—if you don’t have a long-term horizon and you’ve got to worry about, as we say, the politics—and perhaps those may or may not actually understand the energy market—it’s kind of tough to be one of the top investors.

BERNARD MENSAH: We would love a roadmap set by the politicians that says here’s the transition path, here are the transition energy sources, here’s what’s going to happen. And then that way we can, you know, figure out, you know, what the investment horizons might be, et cetera. And actually, we’re one of those highly regulated industries, so we don’t want to become a tool for that policy mix. A decision by governments—our regulators telling us what our balance sheet should look like or stressing it in this way or that or adding capital or liquidity buffers given how—what our lending book looks like. So we’re very keen to be told what the path is and then—and then to get it.

If a government says no more hydrocarbon cars in ten years or—

CLAUDIO DESCALZI: No more Claudio. (Laughter.)

BERNARD MENSAH: No more—(laughs).

CLAUDIO DESCALZI: You drop—you drop me.

BERNARD MENSAH: Then it makes a difference. So we have to manage through that. And we have huge competing interests that call on us and ask us what we’re doing with our lending, absolutely. In the United States, there are some states that have subpoenaed us—it’s public knowledge—with respect to what our lending policies are, and we have others that are the other way. I occasionally attend our annual general meeting when it’s in person, which it hasn’t been, and we have a lot of activists that are pretty aggressive about what we’re doing. So we have to navigate that, which is fine. That’s what we do. And I think that’s what we choose to do. But I think we are engaged, as is the rest of the industry, in really trying to keep that balance and to manage through.

And then the other thing I would say is, touching a little bit on where Claudio went, there is a lot of underlying infrastructure and finance as well that isn’t as visible—really boring stuff like accounting policies and disclosure policies. And we do a lot of work with middle-market companies that are in the supply chain because for Eni, for the big companies, they know what’s coming and they’ve got the resources to set themselves up for that. And we worry about a lot of people that we lend a million dollars to, two million dollars to, smaller companies that will wake up one day and find that they can’t sell their product on Amazon because Amazon says is it green or not, and they’re like, what are you talking about. So there’s a lot of nitty-gritty work. But some of the things around accounting disclosures are really dull—I could send everybody to sleep in the room—but really important, like, I think, in the energy space grids, for example, where I’m absolutely not an expert but in the last six to eight months I’ve realized how critically important it is. And I’m getting my credit investment committees to make sure that we’ve got, you know, the capital to back acquisitions, mergers, restructurings in a bunch of large, you know, grid spaces around Europe.

HADLEY GAMBLE: Yeah.

Elizabeth, just in terms of the job situation, particularly in the United States, obviously, with the transition, depending on which side of the fence you fall, this could be a boon for US job growth, and at the same time we are hearing so much pushback from politicians who say that this is bad for business. In your research, what have you seen?

ELIZABETH YEE: I’m so glad you brought that up because I think, listening to the conversation, I want to make sure that we put people at the core of what we do. One of the things we talk about is being in the humanity business, and I do think, you know, there are, with the [Inflation Reduction Act (IRA)], with the Infrastructure and Jobs Act, there are a lot of opportunities to create jobs. You know, the transition’s going to be hard, but we can’t lose sight of the fact that from that there is a lot of opportunity to be created.

And I see my colleague Joseph Nganga in the front row. I mean, that is why, for example, at the Glasgow COP we launched the billion-and-a-half-dollar philanthropic and [nongovernmental-organization] alliance called the Global Energy Alliance for People and Planet, which is focused on energy access for the eight hundred million to a billion people who don’t have reliable energy and want to be part of the modern economy and need to be part of the modern economy. But in so doing, it’s not just the carbon. It’s really thinking about how do we actually create the millions and millions of jobs that need to happen. How do we make sure—Hadley, we were talking about, too—women, half the planet, we need access to jobs.

And we have seen when we actually put women at the center of what we do—and we’ve been working in India, I think just to your point, Bernard, one of the things that the Global Energy Alliance does is it supports small developers to be able to deploy mini-grids to places that don’t have access to energy so that we have clean energy in communities that don’t currently have that opportunity. If we do that, we create jobs in the community so that they understand and they have a chance to be part of the green economy. We electrify communities. We’ve seen household incomes rise by 30 percent. So I think if we can continue to do that, both in emerging markets but also, Amos, in our home country, I think there is a lot of things that we can tap into to create the jobs of the future that we need for the transition.

HADLEY GAMBLE: Amos, the Inflation Reduction Act, a major win for the Biden administration, landmark legislation, but has ruffled feathers, as you know, in Europe. And apparently, they’re even considering a Buy European Act to counter what they see as unfair practices. There was even the suggestion that we could see in the coming weeks a move to file a complaint against the United States at the World Trade Organization over this. When you take a step back and think about this a bit more broadly, how dangerous is it that in the moves to the energy transition, because they are coming from very different governments and very different situations, we could undermine the strategic alliance of the West?

AMOS HOCHSTEIN: Well, first, I think it would be difficult to say that the Biden administration is undermining the alliance. I think the—really the last eighteen months have been all about strengthening the alliance. And I, in twenty-seven years in working in Washington in both energy and foreign policy, have never seen the alliance stronger, in fact. And I think one of the things that Putin underestimated the most and was surprised the most was the strength of the alliance, both the transatlantic one—NATO—but then beyond that into global alliances from Middle East to Asia and around the world. So I think the alliance is strong.

I think you saw President Macron’s visit in Washington a few weeks ago where President Biden addressed this issue directly and said that we’re going to be working with the EU. We have a task force that’s working between the Commission and the United States. We’re working also with other countries that affect.

The IRA is an enormous success. I mean, it is a remarkable investment in clean energy that nobody ever expected the United States to do. In fact, most people inside the United States who spend a lot of money trying to figure out what’s about to happen in America did not know that this legislation would pass, and it did. And it has some things, as when you do large pieces of legislation like this that are transforming the economy into the future, there are going to be some things that we got to fix and we have to address. And we’re working with our allies to be able to address them.

But I think that that should not be the distraction towards what we are achieving. One, unemployment is at the lowest rate it has been in a very, very, very long time in the United States—talking, Elizabeth, to your point about putting people at the center of this. The IRA is driving investment from around the world and inside the United States in a sector that—what have we been all saying since Paris? That we want to drive investment and incentivize investment in an energy transition. That’s what the IRA was supposed to do, and that’s what it—I’ve never seen something translate so quickly, and we’re already seeing those investments in the United States in this sector. We’re doing things we haven’t done in a long time. We are diversifying a global economic engine of renewable energy from one single-source supplier, which is where we are heading, into a much more diversified sector. So I think the IRA is incredibly important.

And I think we’re going to be fine with the—in the alliance, but I think it’s important for countries to follow suit, not in the way you described, but in creating these incentives across the board. We need more of that. And if you think about some of the things that we are depending on—so just on the critical minerals, and I know we’ll talk about it during this conference—some of the processing facilities that don’t exist yet that we are going to be building now, if they are built on time and in the broadest term—sort of expectation of what they hope the size will be, it will still only supply us, in the near term, 15 percent, 20 percent of what the United States’ demand is.

So we need these kinds of incentives across the board and around the world for countries to incentivize investment, and that’s what Claudio was talking about when he says that a carbon tax—what does a carbon tax do in Europe? It incentivized him to invest in [the current cost of supplies].

And what Bernie is talking about—if you have these kinds of incentives, then he is going to unlock in his investment committee the dollars that need to go to this. That’s what the IRA does; it’s not about isolating the United States from the rest of the world; it’s about sending a message that’s a clear message across the world we need to incentivize investment because on its own, it’s not going to happen. We have this mantra of the market will fix it, the market will address it. The market will not fix it, the market will not address it. And investments into transforming the global energy system is not going to happen. We need to build a lot more across the whole spectrum.

Look at nuclear. We need to have a lot more nuclear if we want to reach any of these goals, whether it’s traditional nuclear, or it’s SMRs, or future fusion investment that we need to do. But to do that, the market on its own is not going to do it. We have to create government spending and signal sending to the market that if we’re willing to make the small dollar investment, that will leverage the larger dollar investment.

And so I think that all of these things are not signs of weakness in the alliance; on the contrary, I think they are signals of strength of the alliance. We’ll get past it; I assure you we’re going to be fine.

HADLEY GAMBLE: More time in Brussels for me.

Gentlemen—Claudio, you had a point?

CLAUDIO DESCALZI: Do I finish, or? No, I just want one comment on what Amos said about the need to give incentive or—not subsidy, incentive through the investment. It’s true, and it’s not—a gap between the United States and Europe is a general gap also inside Europe because you can do that also if you have the fiscal space.

HADLEY GAMBLE: Yeah, and I—

ELIZABETH YEE: Hadley, can I just add on to that for one sec? I think one of the things that I just want to make sure—I mean, it—emerging markets only have 27 percent of the flows they need to actually do the energy transition. I just don’t want to lose sight of that because I think it’s really critical to your point, Amos. And I think one of the things that I—you know, to the point of trying to create, bring together critical actors to change…

We need to fix the global financial architecture in a way that it doesn’t—that is not impeding investment from the private sector, that encourages additional investment from government. And so I think, you know, working together as a planet to achieve these goals, with all the different people coming together…

HADLEY GAMBLE: Thank you guys so much for joining.

Watch the full event

The post How to finance a sustainable and just energy transition appeared first on Atlantic Council.

Flagship Event Sat, January 14, 2023 • 12:01 am ET

2023 Global Energy Forum

The 2023 Forum will have a special focus on the challenge of managing energy security priorities and decarbonization efforts in tandem, including the continuing impact of the crisis in Ukraine on the energy transition. This two-day conference starts at 9:00 AM in Abu Dhabi and virtually at 12:00 AM ET (midnight).

Africa Americas Energy & Environment Energy Markets & Governance

Event transcript

Uncorrected transcript: Check against delivery

Speakers

H.E. Eng. Suhail bin Mohammed Al Mazrouei
Minister of Energy and Infrastructure, United Arab Emirates

H.E. Saad Sherida Al-Kaabi
Minister of State for Energy Affairs, State of Qatar; President and CEO, QatarEnergy

Moderator

Frederick Kempe
President and CEO, Atlantic Council

FREDERICK KEMPE: It’s an honor to be with the two of you today, and thank you for helping us kick this off. Concerns around energy security and improving energy access in the developing world have been at the top of the agenda this year, with natural gas being a major area of attention given Europe’s efforts to rapidly diversify its natural gas imports.

So I actually have two questions. One of them is that we had a quite extraordinary 2022 in the energy world, and a little bit of reflection on that but what you expect for 2023. But then, on world natural gas questions, prices spiked this year but seem to be returning back to earth. And then, within 2023, in your eyes does it reflect an equilibrium of supply and demand balance for gas, or do you foresee in 2023 further imbalances on the horizon in the short term but—or through this year? So a look at the year ahead, a reflection on the year past, with a specific look at what you expect for natural gas. Minister.

MINISTER SAAD SHERIDA AL-KAABI: Well, first I’d like to thank you for hosting me and thank my very good friend His Excellency Suhail for inviting me to this event. It is a pleasure to be back in the UAE with such a distinguished audience.

I think if you, you know, look at the gas supply/demand and what happened last year, it started actually before the [war in] Ukraine, where a lack of investment in the oil and gas sector caused really a shortage in gas. And ahead of the [war in] Ukraine, the oil and gas prices, obviously, were clearly going higher due to lack of supply. And that lack of investment was driven by many factors, including, you know, the bigger push for the green without having a real plan for how the transition is going to happen. So there was a scarcity of investment over about five, six years. And then, when the Ukraine situation happened, you know, a big volume was taken out of the market, and obviously, that would take it even further up.

I think—and you know, 2022, the spike is very obvious why, but 2023, I think it has come down as everybody has witnessed. But you know, the mild winter, I think, in Europe is the biggest cause. And there is storage—I mean, ample storage—but luckily, they haven’t had a very high demand for gas due to the warmer weather. The issue is what’s going to happen when they want to replenish their storages in this coming year and the next year. There isn’t much gas coming into the market until 2025, 2026, 2027. So I think it’s going to be a volatile situation for some time to come.

FREDERICK KEMPE: And prices will be volatile with it, it’ll be going up and down, but—

MINISTER SAAD SHERIDA AL-KAABI: Yeah, prices are a factor of supply/demand. I think some people think that we are very happy for high oil prices and so on. The biggest worry that we would have, I think, as an oil and gas producer is demand destruction, and you can see that there is demand destruction with—whether it’s gas or oil. And, unfortunately, and I think of the wonderful speech that we heard from His Excellency Sultan, [he] talks about what we’re going to do, going forward, and we’re all for what he mentioned.

But you can’t have coal at record highs and say that we are going to achieve our targets. You know, 30 percent of the power in the world thus far uses coal, and all the countries that were calling for coal to be stopped are using it at record levels today.

So I think I we need to take very serious action and I think coal is the biggest emitter by far and I see a lot of [attacks] on oil and gas companies and demonizing oil and gas companies. I don’t see the same attack on the biggest polluter on the planet.

FREDERICK KEMPE: I’m really looking forward to coming back to you about the communication question.

Mr. Minister, you have lived through so much change and so much history since you took over as the minister, everything from OPEC+ to what we experienced last year, rolling off the war in Ukraine.

How do you look at 2022? What do you expect for 2023? And the same question, particularly with a particular focus on natural gas?

MIN. SUHAIL BIN MOHAMMED AL MAZROUEI: Well, first of all, it’s glad to see this crowd. I think probably this is the biggest Atlantic Council energy that we have ever since we started, and I’m grateful for His Excellency and for all of Your Excellencies for coming.

Actually, the—I would build on what His Excellency Saad mentioned. We’ve been talking about the lack of investments and the lack of interest from the financial institutions to finance fossil or oil and gas projects, and part of that is also the lack of understanding [of] what is the future for many countries when it comes to energy strategy, what contributions or what percentages they would have of gas or even the pace of reducing their coal.

It’s not clear. I mean, there are plans but those plans are not concrete and then that unclear long-term strategy by many countries put them in a situation where it’s very difficult for them to commit [to] long-term gas contracts, which has in return made the companies or those who are developing the gas at a very difficult position with their financiers because they would like to see long-term contracts and those long-term contracts are not there.

Everyone [wants] to buy, but they want to buy in a two-year or three-year span, and that is not enough for someone to develop gas. Gas is available and there are huge discoveries in recent history. But the development pace is not there, and the investment is not there.

So that is one of the problems or one of the issues that is causing the problem today. Of course, Russia is a major producer of gas and LNG, and when you shift from one location to another, trying to adjust, that takes time and that’s what happened in 2022 where some of that gas has been relocated to another market and other gas from other markets is [coming] to Europe, especially from the US.

But is that sustainable in the longer run? I think you’d need more collaboration between the European nations on agreeing on the optimization of the [Floating Storage Regasification Units (FSRUs)] that are also limited and also agree on some pipelines. I think one of the things that [contribute] to energy security is pipeline gas, and together with Qatar and with Oman we have established the first regional Middle East pipeline that is secured and made energy security affordable and available for the three countries, and I think in the future—if you ask me about the future, I think we need to do more of these projects.

There are countries [that] require gas and we cannot do everything as LNG. I think [the] state of Qatar and His Excellency personally is involved in some of the largest expansions of LNG. Dr. Sultan as well and ADNOC, they are also increasing their capacity of exporting. But even with that, with those investments, it’s not enough.

Gas has to be available, and it has to be affordable to secure and to become a base load that helps the renewable energy and helps [clean] up the environment and [reach] the COP goals.

And we are committed. We will do the investments. But I think the whole world needs to think about the resources and needs to think about how we enable the companies and the [international oil companies and national oil companies] to produce more gas to make it available and affordable.

FREDERICK KEMPE: Thank you for that answer.

Minister al-Kaabi, I want to come back to your comment about demonization. This is a country that’s one of the—I guess, OPEC’s third largest producer of energy. It’s also a country that’s been a pioneer. Dr. Sultan talked about Masdar in the renewable space at the same time.

In the COP process in the past, the climate community and the fossil fuel providers were rarely in the same room. Are you seeing a change?

The climate community seems to be more open now to, particularly, natural gas as a bridging fuel, more open to nuclear power as well, other solutions in decarbonizing carbon, and the fossil-fuel community is investing billions in new technologies and renewables, et cetera.

Dr. Sultan was talking about a paradigm shift. Is that too utopian to think that that’s where we’re going? Talk a little bit about how you think these two communities can come together and actually accelerate the reduction of emissions, not slow it down.

MINISTER SAAD SHERIDA AL-KAABI: If I can just be a little bit blunt, maybe, about this is the community that was driving the green was living in a dream that they realized they can’t achieve, OK, and, basically, if you want to achieve what we all want to achieve, I think—we’re the hottest place in the world, probably. So climate change affects us more than most. So, for us, it’s very important that we head in that direction. It’s very important that we achieve these goals.

But we need to be realistic about what we can and cannot achieve and we can’t be driven by just political agendas of people wanting to be elected. OK. It should be based on reality, based on what can be achieved. I’m an engineer. You tell me, I want to achieve an objective, I’ll tell you, OK, can I do it per the plan, what’s the budget, and [can] we achieve it at this timeline.

But just to talk about achieving net zero and the majority of the countries that you talk to they talk about net zero and you say how you are going to achieve it, they say we achieve 60 percent, 70 percent of it by 2040 by doing this, this, and that, and the rest is technology improvement.

So that—I’m not a native English speaker but that doesn’t mean we will achieve net zero. It means we will strive to, we’ll try, we’ll see what we can do to achieve it. OK.

So, to me, I think the realization of the need for gas because wind doesn’t blow all the time, solar is not available all day, and technology improvements in storage and so on is going to improve and there are a lot of things that will improve and, hopefully, help us in that scale.

But I think there are two sources that will be needed for the very long time for people that don’t have hydro and other, you know, renewable energies. You need nuclear for those that can afford it and are capable of building it and have the technology. And you need gas. And these two will have to be the baseload for countries for a very long time.

And I don’t agree that gas is a transition fuel. I think it’s a destination fuel until we have a realistic solution that can do away with gas. It’s a destination fuel that you will need for a very long time. And when we say we need more investment in gas—and as His Excellency mentioned, you know, they’re expanding in LNG. We’re building 65 million tons. We’re producing 77 million tons today. We’re building 65 million tons of LNG that has already been [through a flame ionization detector] OK? Now, so almost double. I mean, 48 million tons coming from Qatar and our investment in the U.S. is another, you know, 16 to 18 million tons. So we’re bringing, really, a lot of gas to the market, but it’s not enough.

And you can’t achieve what we need as humanity and the number of people that are going to grow. As His Excellency Dr. Sultan mentioned, we need growth. One billion people today are deprived of basic electricity that we all enjoy. So we need to be fair.

And I think one point I’d like to just add to that on the investment side; it’s very, very, very unfair of some in the West to say that African countries should not invest in oil and gas and they should, you know, remain green or whatever you want to call it while this is a God-given wealth that they can create for their national growth and for their prosperity. And it is oil and gas that is needed for the world. And we should not forget the oil and the petrochemicals and what you need there. People love kayaks. They love the coolers that they take for picnics. There is no renewable that can manufacture that. It’s oil-based solutions that get you there, OK? So it’s plastics and so on that are needed. I know we need to do a lot of work there, but let’s not forget reality of what we need. A lot of stuff that you have around you here, and the decoration and the flooring and all that, is oil and gas. We’re wearing, OK? So let’s be realistic while achieving the goals that we want.

FREDERICK KEMPE: Minister Suhail, I’d love you to build upon what you’ve just heard from your colleague with the question of: The climate community perhaps dreamt dreams that were inachievable, but also from the fossil fuel provider standpoint is enough being done?

MIN. SUHAIL BIN MOHAMMED AL MAZROUEI: No, I don’t think we are doing enough. But there is—there is a wave of new thinking. And I see it more in the IOCs, in the NOCs. Typically, the technology and all of that comes from you, Descalzi, and the others who are here.

But I am really glad to see companies now thinking of reducing their carbon intensity, to see state-owned companies seeking the highest technologies to reduce methane emissions. And that is a kind of a change in the industry that we haven’t seen. We need to remember that the cleanest hydrocarbon is probably produced here in the Gulf. If we compare the carbon intensity of what we produce as a barrel here and you compare it with barrels elsewhere, probably we have the cleanest barrels or the greenest barrels you can find. And that comes at an investment. It doesn’t come free. I mean, us and Qatar and—and same with gas. You could produce gas, but you could produce gas also with the intention in mind to reduce the carbon intensity. And that’s, I’m sure, what QP is doing and Qatargas and what ADNOC is doing.

The fact that we here… Abu Dhabi [walks] the talk and [says] that the only electricity we will use in the field to produce oil is going to come from renewable or clean sources, that’s by itself, it’s a commitment. It doesn’t come free. It comes, I’m sure, at a cost. But that’s the cost that we are willing to do our part. And I’m sure we will see more of these actions.

So we will do our part, but realistically, you need a base load. Until we reach a price for the base load to complement the hundred-percent renewable energy, whether it’s a battery or other technologies, we will need a base-load contributor. And I agree [with] what His Excellency said, for a very long time, gas will be there. Percentage-wise, it may reduce—and it will reduce, but in obsolete numbers, it will increase and it will increase significantly. What is the worry? The worry: with that increase in demand, we will not have enough supply. And gas and oil are finite resources; they are not going to stay there forever. We have seen countries going steeply in decline only—I mean, talking about oil, and gas is like oil—only within the twenty-three countries with OPEC+.

Since 2000, the reduction and the ability to produce is more than 3.7 million barrels. What does that tell you? That tells you that we are in a decline. Many countries, they are in the decline mode. Same with gas I am sure. So not every country has the resources that Qatar has, or [the] UAE has, or Saudi Arabia, or other countries. Many countries have started earlier, and they are [on] the decline more. Same with the United States. How many—how many years? And are we going to have enough batteries or technologies to assume that we will have it, and it’s going to be uniform everywhere? I think that’s a big assumption.

But at the same time, we need to do what Sultan has said, and we are committed to do it as a country. We can afford to do it, and many countries we do. But can we enable and be a platform for inclusiveness, so everyone is enabled to do it? How many companies like Masdar [do] we need? And how many alliances like the one with the United States [do] we need with the one hundred gigawatt?

India will need to install probably five hundred gigawatt in the next twenty to thirty years, and more in China, and many other countries. That’s I think where we are. More renewable energies will be installed, but we need a baseload, and for a base load, we need more investments in gas.

FREDERICK KEMPE: Thank you for that, Minister Suhail.

So Minister Al-Kaabi, I racked my brain last night about how to think about a question that linked the global energy market to the World Cup, and I couldn’t come up with it. And Lionel Messi just couldn’t get into any of my questions. But congratulations anyway on the World Cup.

MINISTER SAAD SHERIDA AL-KAABI: Thank you.

FREDERICK KEMPE: Give us your view of what you foresee in the global gas market that might be preventing the market from reaching equilibrium. Is it the resources? Is it the investment? You know, so much is being demanded of gas right now, so much is being demanded of LNG. If you had told me, you know, two years ago that suddenly Germany would have, within six months, three new import terminals brought into the market by the vice chancellor of Germany, who is the leader of the Green Party—it would have sounded preposterous.

So how do you see the future of equilibrium in the market? And what are the problems in getting there?

MINISTER SAAD SHERIDA AL-KAABI: Yeah, on the German side, we were negotiating with the Germans for about ten years, and suddenly they came to us and said, we want to build terminals. So, you know, the world changes.

I think, you know, the equilibrium will be achieved by hopefully some kind of a mediation or truce or some kind of a political solution where Russia and Europe get things, I think, sorted out, if you will, politically hopefully, and the sooner the better. I don’t think that—this war and this situation will not last forever. And I understand that the Europeans today are saying there is no way we’re going back to Russian gas. We’re all blessed to be able to forget and to forgive. And I think things get mended with time.

And I don’t think some of the countries that were depending 100 percent or, you know, a very large percentage on Russia will not go back to 100 percent or 80 percent or maybe 50 percent. They will diversify and they’ll learn from that situation, and probably have a much bigger diversity. But the Russian gas is going to come back, in my view, to Europe. It is next year? Is it in five years? I don’t know. But once the situation is sorted out. And that, I think, will be a big relief to the whole gas sector and to the whole market in Europe, and will stabilize prices. And again… on a big scale, our project from the United States is going to bring about eighteen million tons starting at the end of 2024 and then really peaking in 2025. And then QatarEnergy’s investment in our, you know, expansions in Qatar, 48 million tons are going to come. The rest are smaller projects that will come a little bit later. But other than that, that’s the volume that’s coming. And if governments and legislators do not promote additional gas investments, as His Excellency Suhail said, if I am being very selfish that’s good for us, but that’s not good for the development.

Watch the full event

The post Why accessible and affordable gas plays a role in helping countries reach climate goals and expand renewable energy appeared first on Atlantic Council.

High rates of inflation across the world are forcing central banks to reluctantly tighten monetary policy despite accompanying recession risks. Moreover, restricted credit access could jeopardize energy investments, particularly for capital-intensive clean energy projects, potentially rendering the world more vulnera­ble energy to price shocks, which are a significant contributor to the current crisis. 

This paper briefly considers the macroeconomic drivers of inflation in late 2022, including Russia’s war in Ukraine and uncertainties around energy supply, supply-chain resets, and lingering COVID-19 disruptions, before examining the persistent energy underinvestment of the past decade and how this has left markets exposed to varying degrees. As such, this paper also considers how private capital can accelerate cleaner energy adoption, suited to different markets’ unique conditions and needs. Bor­rowing costs will rise, but this doesn’t have to bring the transition to a standstill. With the Great Moderation of low volatility, interest rates, and inflation perhaps a relic of the past, assets offering inflation protection, such as infrastructure, may become increas­ingly attractive to investors.

There is a fear that global inflation will sharply curtail energy investment into emerging markets. The fear is justified. Higher interest rates in developed markets mean higher rates of return which will lure emerging markets investors back to the US and Europe.

Still, it’s not all bad news for emerging markets. Quasi-state actors like Pension and Sovereign Welfare funds are interested in very long term, high-yield projects—two criteria to which emerging market energy infrastructure correspond. Disruptions to interest rates and inflation, triggered in part by energy underinvestment, will cause disparate impacts in different markets.  

Inflation is not, perhaps, everywhere and always a mone­tary phenomenon. Energy investment faltered from 2014 to 2020, despite low interest rates. Meanwhile, aggre­gate supply shocks—first due to COVID, then from Putin’s invasion of Ukraine—have pressured energy production and prices, raising inflation and necessitating interest rate hikes. The consequences of persistent energy underinvest­ment are now becoming apparent. 

The need for new energy infrastructure cannot be met without private investment. This was the case when infla­tion was lower; it is even more important now.

Authors

Staff

Charles Lichfield

Deputy Director and C. Boyden Gray Senior Fellow

GeoEconomics Center

Economic Sanctions Economy & Business

Staff

Joseph Webster

Senior Fellow

Global Energy Center

Central Asia China

Related content

Issue Brief Dec 8, 2022

Securing alternative gas supplies and addressing critical infrastructure gaps in Europe

By Richard L. Morningstar, András Simonyi, Olga Khakova, Paddy Ryan

This issue brief offers recommendations for measures that European countries decoupling their energy supplies from Russia should take to give themselves the best chances of succeeding.

Energy & Environment Energy Markets & Governance

New Atlanticist Dec 2, 2022

What to expect from the new Russian oil price cap

By Reed Blakemore, Charles Lichfield, Brian O’Toole

As the EU comes to an agreement on a $60 price cap, here’s how it will work—and what impacts the world will see on the global and Russian economy.

Economy & Business Energy & Environment

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Energy investment in a time of inflation appeared first on Atlantic Council.

Russian President Vladimir Putin’s recent remarks on the establishment of a gas hub in Turkey have sparked a big public debate both in Turkey and in Europe about the essence of the proposal. Putin had made a similar statement during the construction of the TurkStream pipeline back in 2018, a second string of the project designed as a transit line to bypass Turkey, in addition to the fact that purchasers with offtake agreements from the first string had no right to re-export the gas. The main parameters of a developed gas hub are liquidity, gas-on-gas competition, and the import and export of gas molecules without any barriers. Since TurkStream did not meet these parameters, the project did not contribute much to Turkey’s goal of becoming a hub.

Even as Turkey balances its relations with the West and Ukraine on the one hand and Russia on the other, it would do well to remember that ultimately, the most important factors that determine the reliability and depth of hubs are liberal market principles and not interventions from politicians.

Natural gas should be freely imported, traded, or exported by dozens of companies. That kind of trading structure can generate a reference price without any government intervention and turn a country into a hub. Henry Hub in Louisiana, National Balance Point (NBP) in the United Kingdom, and Title Transfer Facility (TTF) in the Netherlands are good examples of this.

Turkey’s hub dream

In Turkey the gas hub concept is a rare issue that state institutions and the private sector agree on, at least in principle. Negative impacts of the pandemic on energy markets, followed by skyrocketing gas prices due to Russia’s war in Ukraine as well as a lack of investments in upstream activities, caused the hub concept to lose its former popularity in the country. However, after Turkish President Recep Tayyip Erdogan’s warm welcome of Putin’s statements, Energy Minister Fatih Dönmez stated that the proposal should be studied. A few weeks later Dönmez said that a gas hub roadmap would be completed by the end of the year and that an international conference will be held in Turkey early next year, bringing all stakeholders together.

In fact, the idea of a hub is one that has been talked about and studied for a long time by the stakeholders of the Turkish natural gas market. When I was the general secretary of PETFORM, which is one of the largest energy NGOs in Turkey, we carried out in-depth studies on the establishment of a gas hub in Turkey compared to developed Western hubs such as NBP, TTF, and Henry Hub. Between 2013 and 2020, PETFORM prepared detailed proposals and presented those to decisionmakers. Some of these proposals have been realized, and some are waiting to be realized. They can be summarized under four key themes.

1. Infrastructure

Infrastructure investments are the first and the most important issue. In 2013, Turkish daily send-out capacities of liquefied natural gas (LNG) terminals was 36 million cubic meters (mcm) per day, and its overall gas injection capacity to grid was 185 mcm/day, not allowing for the coverage of peak demand in winter. This changed dramatically after a Turkish Air Force plane downed a Russian fighter jet in November 2015. Back then, Russia was supplying almost 55 percent of Turkey’s gas demand, and Russia’s share was reaching as much as 65 percent during wintertime peaks. But the fighter jet incident led to strained political relations, and thus increased supply security concerns among Turkish decisionmakers, who started investing in diversification and flexibility—and LNG emerged as the fastest and most appropriate solution. Since then, Turkey’s LNG re-gas capacity has reached 131 mcm/day, and soon it will rise to 156 mcm/day after a new floating gas terminal in the Gulf of Saros is commissioned.

With ongoing underground storage investments (Tuz Gölü and Silivri), Turkey’s total withdrawal capacity will increase by around 150 mcm/day in 2023. In the meantime 10 mcm/day will start flowing in from the Sakarya Gas Field in March 2023, a volume that is expected to reach 40 mcm/day in 2025-2026. When we also count pipelines in, Turkey’s gas import capacity will exceed 500 mcm/day soon—unmatched by any other country in Southeastern Europe.

Considering all these investments, as of 2023, Turkey will have enough flexibility to supply gas to Southeastern European countries—even in the coldest days of the winter—where a lack of infrastructure is the main problem. For this, signing interconnection agreements with neighboring countries and opening key infrastructure such as LNG terminals and underground storage to third parties and enabling their use based on liberal market principles may boost cross-border gas trade and empower Turkey’s role as a gas hub.   

2. Regulations

Turkey’s Energy Market Regulatory Authority has been proactive in completing the legislative processes that could help the country emerge as a gas hub. These include measures ranging from spot imports to the establishment of continuous gas trading platforms, and from simplifying import licensing processes to the establishment of spot and futures markets. Further steps might be taken to decrease the market share of BOTAS in imports and domestic sales based on the gas market law as well as the implementation of regulations on opening LNG terminals to third parties. These measures will attract more traders to sell their gas as well as consumers to manage their risk via various contracts and financial tools, eventually increasing the depth and liquidity of a Turkish gas hub.  

3. Independence

The fact that BOTAS is not only the largest importer and wholesaler of gas in Turkey, but also is the sole transmission system operator, is problematic. Just like developed hubs, Turkey needs the transmission system operator to be an independent company. Ownership unbundling would be the most appropriate structure, serving all parties under the commercial confidentiality conditions. Thus, the transmission system operator needs to be separated from the existing structure of BOTAS and become independent.

4. Commercial woes

Although the natural gas market law that came into force in 2001 sets clear targets for the liberalization of the market, very few of them have been achieved so far. More than 90 percent of the imports and domestic sales of Turkey are carried out by BOTAS.

Mass subsidization—which is carried out from time to time for various purposes such as supporting exports, lowering electricity prices, or protecting residential consumers—completely disrupts the price formation in the market. The de-facto closure of LNG terminals to third parties, the closure of Greece and Bulgaria interconnections for exports, and BOTAS’s dominant role restrict liquidity.

This in turn reduces transactions and prevents the formation of a reference price—the biggest obstacle to Turkey becoming a hub. Once trade barriers are eliminated, a long-term gas reference price could be formed and Turkey would rapidly move on its way to becoming a hub.

Putin’s proposal

Putin said Russia would consider building another gas pipeline and “creating a gas hub in Turkey for sales to third countries, especially, of course, the European ones, if they are interested in this.” I don’t think that he meant a gas hub similar to TTF, NBP, or Henry Hub where gas-on-gas competition and the free import and export of gas are ensured.

It is highly probable that after the South Stream project—meant to take Russian gas to Bulgaria and Serbia through the Black Sea—was canceled in 2014 due to pressure from the European Commission, the TurkStream Project came to the fore. TurkStream was built as a pipeline that bypassed Turkey and directly sold Gazprom’s gas to European consumers. Turkey would do well to remember that Putin’s motivations might once again lie in revitalizing the legacy of the South Stream project—and not in developing Turkey into a hub.

In other words, while Turkish decisionmakers aim to establish a fully fledged hub, Russians might just be looking for a new route to Europe. Yet even if Russia’s perspective aligned with Turkey’s, challenges tied to accessing the needed material, technology, and financial resources could limit the supply of Russian gas to a Turkish gas hub in the short term.

Still, that pales in comparison to the biggest consideration that Turkish policymakers must keep in mind: They need to remember that liquid and reliable energy hubs are established by the market. The role of politicians here is simply to level the playing field.

Eser Özdil is a nonresident fellow with the Atlantic Council IN TURKEY. He is the founder of GLOCAL Group Consulting, Investment, and Trade, where he advises energy companies on issues that include public policy, government relations, and commercial diplomacy. Follow him on Twitter @eserozdil.

The post To realize its gas hub dreams, Turkey needs to follow liberal market principles appeared first on Atlantic Council.

Steel production in India is highly emissions-intensive, representing almost a third of country’s direct industrial carbon dioxide emissions. As India looks toward both increases in steel demand and a national target of net-zero emissions by 2070, steel decarbonization will become a crucial pathway for the industry. The issue is whether existing policy and economic tools can facilitate a sectoral transition to green technologies to produce net-zero steel quickly enough to meet the country’s overall goals.

India’s steel industry

The Indian steel industry has a number of characteristics that will make deep decarbonization particularly challenging. The industry is much more energy- and emissions-intensive than other countries’ steel industries, due to several factors. Steel production in smaller facilities relies heavily on coal-based direct reduction to meet local steel demand, which carries a high carbon dioxide intensity. The wide availability of domestic (non-coking) coal reserves, lack of domestic natural gas supply (especially in western India, where most coal production is located), and scant supplies of high-quality scrap contribute significantly to this reliance on coal and to the barriers to reducing coal use. Many of these smaller blast furnace facilities are relatively old—around twenty-five years since installation, on average—and consume more energy per unit of output as a result. Larger facilities and producers use blast furnace-basic oxygen furnace (BF-BOF) facilities, using iron ore and coking coal for steel production. The larger plants on average are slightly less emissions-intensive than the smaller local direct reduced iron (DRI) facilities, but they are still very coal-intensive.

Large vs. small producers

The differences between small and large facilities manifest in vastly different decarbonization outlooks in the upcoming years. Large steel producers comprise about 63 percent of total production and cater to an international market. As a result, they must be responsive to new initiatives in world markets and developments such as the EU’s Carbon Border Adjustment Mechanism (CBAM), which is expected to impact India’s steel exports significantly. These initiatives incentivize a transition toward green steel, in an effort to keep up with international market trends. About half a dozen large companies have the market and technological sophistication to seek funding for more efficient new plants. But the geographical distance from natural gas, lack of recycled scrap, and need to expand production at a large scale means they will almost exclusively be installing new BF-BOF technology. Smaller facilities cater to the domestic market, which is highly sensitive to price changes. For these producers, decarbonization is less appealing, as it could hurt their bottom line, so they are likely also to continue to use exclusively coal.

An increased push for decarbonization

Pressure within India on the steel industry to advance on decarbonization has also increased in recent years. India co-chairs the Industrial Deep Decarbonization Institute (IDDI), which is a global coalition of organizations working to create demand for low carbon industrial materials, including steel. IDDI also works with national governments to standardize decarbonization methods, such as carbon assessments, and incentivize investment into low-carbon procedures. In alignment with these goals, Prime Minister Narendra Modi recently announced a net-zero emissions goal by 2070. Specifically within the steel industry, the 2017 National Steel Policy aims to facilitate the growth of the industry by tripling production by 2030, increasing per capita consumption, and reducing carbon dioxide emissions intensity. In July 2022, Climate Group and ResponsibleSteel launched SteelZero in India, which is a global initiative focused on facilitating the transition to a net-zero steel industry by creating growing markets for less carbon-intense steel. Several large businesses in India have joined the initiative, which asks major steel-purchasing companies to commit to buying and using 50 percent low-emission steel by 2030. These policies and goals are ramping up pressure on the steel industry to take steps toward decarbonization, and several major steel producers are working on developing greener technologies and encouraging international technology cooperation.

Sector-wide cooperation is needed

Although such cooperation is promising, India is experiencing a piecemeal approach to decarbonization, in which individual actors and policies are working somewhat independently of one another. To create a net-zero steel industry, sector-wide cooperation is needed, in which goals and standards for the industry are determined. This could be best achieved through an incentive-based approach, particularly with smaller facilities, which will need additional support and prioritization in order to keep up with a changing market.

A few policy tools are already in place or in development to facilitate an incentivization initiative, such as India’s Perform, Achieve, Trade (PAT) scheme. PAT established a cap-and-trade system for energy, intended to help energy-intensive industries become more efficient. The Indian government is also working to establish a national carbon market, voluntary at first, but it is unclear whether such a policy will impact major technology investment choices by large steel producers in the short run.

With virtually all growth in steel production coming from large new BF-BOF facilities using coke and coal, roadmaps for short and medium-term decarbonization focus on a suite of measures and policies which must contribute an important but relatively small contribution to the overall goal. These include technological upgrades in energy efficiency, use of cleaner coal-based fuels, and channeling more scrap steel to the industry (for example, from ship and car dismantling). The possibility of future use of carbon capture utilization and storage (CCUS) is also a potential option, but India does not have ideal geology for underground CO₂ storage. The most important prospect for deep decarbonization will be pioneering use of hydrogen as a replacement for coal in the BF-BOF process.

Current strategies for capping and then reducing emissions after 2030 rely heavily on “green” hydrogen technologies, which use hydrogen produced by renewable energy, rather than coal, to reduce iron into a state that can be processed into steel. Implementing this technology at scale would slash emissions, and India is currently investing significantly in efforts to reduce the costs of this process. Pivoting to hydrogen would also reduce India’s reliance on imported coal, providing further economic incentives.

Research into the future of green hydrogen suggests that 100 percent green hydrogen-based steelmaking in India may not be cost-competitive until after 2030 and perhaps much later. However, “gray” hydrogen, which is hydrogen created using natural gas, is more commercially viable. If CCUS can be installed in these plants, the resulting “blue hydrogen” could reduce total emissions. Although gray hydrogen obviously does not have nearly the same climate benefits as green hydrogen, its use as a fuel and a reducing agent is still less carbon-intense than a coal-based process and could act as a bridge until green hydrogen is more cost-effective. Combining “gray” and “green” with some “blue” hydrogen technologies, along with expanding wind and solar resources, is likely the most cost-effective approach to bridging the transition to steel production via green hydrogen. Since blast furnaces built in the next ten years will still be early in their life cycles in 2040, a policy that requires all new Indian BF-BOF plants to be adaptable for later transition to hydrogen could be central to any long-term pathway to decarbonization by 2050 or even 2060. Even if India does not fully participate in an initial global steel decarbonization “arrangement” reached by some other steel-producing countries, the adoption of global green steel standards, a growing market, and border carbon measures favoring lower-emission steel would likely enhance the motivation of the Government of India and major Indian companies to align themselves with these trends.

Conclusions

Indian steel production is currently highly carbon-intensive. While some major producers are interested in decarbonization, the current approach is fragmented and slow-moving. As it moves forward to achieve its carbon neutrality goals, India has an opportunity to create sector-wide change. Differences in the funding streams and target markets among large and small steel producers pose a challenge. Looking towards practical action on decarbonization, using gray hydrogen in the short term can reduce the carbon intensity of the steelmaking industry until green hydrogen becomes commercially viable. But a suite of policies and funding initiatives across sectors will be required. The most important of those is to make sure that new BF-BOF steel plants have the capability for conversion to much cleaner technology, predominantly hydrogen, well before the end of useful life.

For that reason, any new global arrangement to decarbonize steel must be open to and seek to engage the Government of India and the leaders of India’s steel industry. Steel producers that operate in the global market must consider an accelerating international movement that emphasizes “green” steel and creates markets for it. They will need to access financing in global markets that is available only to decarbonizing borrowers. The Government of India must strengthen mandates and incentives to cut energy use and emissions, emphasize a circular economy for steel, support massive investments in new hydrogen facilities to serve the steel industry, and ensure that new plants are adaptable to lower-carbon technologies in the future. Without a multilateral arrangement that the G7 can kickstart, such progress in India is much less likely. Although India is not a member of the G7, its presidency of the G20 in 2023 and that fact that it currently co-chairs the Clean Energy Ministerial (CEM) with the United States—the meetings of both will be held in India in 2023—mean that it can coordinate closely and immediately with the United States and other G7 countries if the G7 were to take the lead in 2023 to initiate a global arrangement on decarbonizing steel.

Matthew Piotrowski is senior director of policy and research at Climate Advisers.

George Frampton is a distinguished senior fellow and director of the Transatlantic Climate Policy Project at the Atlantic Council Global Energy Center.

Nitya Aggarwal is a policy and communications intern at Climate Advisers.

Related content

EnergySource Dec 13, 2022

The G7’s role in developing a platform for global cooperation on industrial decarbonization

By Matthew Piotrowski and George Frampton

The G7 is an ideal forum in which to develop the basis for cooperation on industrial decarbonization. A successful program needs to be housed in the right venue and engage with the right stakeholders.

Energy & Environment Energy Markets & Governance

EnergySource Dec 12, 2022

Europe and the Caspian: The gas supply conundrum

By John Roberts and Julian Bowden

The Caspian has emerged as a major player in Europe’s effort to move away from Russian gas. But logistical and political difficulties could prevent crucial Caspian projects from getting off the ground.

Central Asia Energy & Environment

EnergySource Dec 7, 2022

The G7 should prioritize low-carbon steel at its upcoming summit

By Matthew Piotrowski, George Frampton, and Nitya Aggarwal

Steel decarbonization standards and methodology should be top of mind for the G7. Cooperation and harmonization is the only way to secure optimal climate and business outcomes for this emissions-intensive and trade-exposed sector.

Energy & Environment Energy Markets & Governance

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post India’s opportunity for steel decarbonization appeared first on Atlantic Council.

The post Wald quoted in The Hill on European natural gas appeared first on Atlantic Council.

The post Morningstar in Foreign Policy: Why the oil price cap won’t hurt Putin appeared first on Atlantic Council.

The post Roberts in Natural Gas World: Europe and the Caspian: The gas supply conundrum appeared first on Atlantic Council.

Below are four key steps that the G7 can take to increase coordination on industrial decarbonization.

1. Exert leadership. The G7’s leadership is essential to accelerate general acceptance of the International Energy Agency (IEA) methodology for measuring embedded carbon in steel and cement, or a version or portion thereof, as one key element in formation of a “climate arrangement” whose focus will be industrial decarbonization in hard-to-abate sectors beginning with steel, cement, and aluminum, on a sectoral basis.
2. Help design a venue and governance framework. The G7 could agree on and help design a venue and governance framework for administering reliable and confirmable labeling of steel and cement facilities (and possibly products) and maintaining access to transparent data to support such a system. This venue and framework should not, however, rest within the G7.
3. Engage India and China. The adoption of standards and establishment of a governance venue should take account of the need for early engagement with India and China, with the expectation that they will eventually become participants, since they will be the two largest future producers of steel and among the largest users. In fact, India will likely increase new installed capacity more than any other country. Key issues in engaging India will include the availability and collection of relevant data across the industry and policies of the Indian government in requiring a new regime of data acquisition and reporting.
4. Develop funding strategies. The G7 will need to develop funding strategies for assisting the transformation of the steel industries in countries where regional private capital is available but large-scale global private investment is likely to be difficult to access, particularly in India but also in Vietnam, South Africa, and others, with an initial focus on the “Just Energy Transition Partnership” approach of G7 partners developed to help decarbonize the power sector in South Africa and elsewhere (Indonesia, Vietnam).

What does an initial platform look like, and where does it reside?

Since only ten countries produce approximately 80 percent of world steel, it will be sufficient for even the most inclusive eventual steel decarbonization platform (or even an eventual “world agreement”) to target at the outset only the United States, the EU (Germany and Italy are the only EU countries in the top ten nation-states), India, China, Japan, South Korea, Russia, Turkey, and possibly Brazil. Others that could observe or join later as major producing, importing, or consuming countries include Ukraine, Vietnam, Poland, South Africa, and Indonesia. Canada and Mexico could potentially participate with the United States in a North American partnership. Potential “associate” membership categories that include companies, trade associations, and others are discussed below.

For this reason, as explained in our earlier article, the G7 is an ideal incubator and proponent of such an initiative and platform. However, neither the G7 nor some other existing multilateral entities appear to be ideal venues for a permanent platform. The G7 represents exclusively wealthy countries and does not include China or India, which will soon be producing around 70 percent of world steel, or other rapidly developing countries that will be consuming, importing, and initiating construction of increasing amounts of steel. While the G20 includes India and China, it may be over-inclusive of parties with competing and diverging interests. Neither has a permanent secretariat or body of expertise for steel (or cement, aluminum, or chemicals). Similarly, trying to locate this effort in the UN Framework Convention on Climate Change (UNFCCC) secretariat would be even more over-inclusive and potentially subject to “consensus” requirements on some major issues, whereas a Paris-type agreement on steel decarbonization with nationally-determined commitments need only require initial agreement among eight to ten countries, not 180.

The IEA has recently proposed a global agreement on decarbonizing steel in a paper prepared for the German Economy and Climate Ministry, submitted to the G7. There appeared to be general approval of this approach among the G7, although there was no formal endorsement or adoption. The Breakthrough Agenda for Steel, announced at last year’s COP, is also a trailblazing effort involving forty-five countries with 70 percent of global GDP. Some originally hoped that the current US/EU discussions on Sustainable Steel and Aluminum could be expanded to include Japan, the United Kingdom (UK), India, and South Korea (all of which are eager to participate), and become the basis for a global platform to meld green steel cooperation with supportive trade policy around steel.

There appear to be only three alternatives to the IEA for locating the platform venue: the Clean Energy Ministerial (CEM), housed at UN Industrial Development Organization (UNIDO), which hosts the Industrial Deep Decarbonization Initiative (IDDI); the Organization for Economic Cooperation and Development (OECD); or an entirely new and separate entity for the platform.

The OECD certainly has the capability to host such a platform. Though its membership includes twenty-eight countries, most of which are wealthy ones, its agenda includes both industrial development and trade. The OECD does not include India, but India participates in its Steel Committee discussions, and the OECD has a permanent secretariat and expertise in both steel production and trade policies impacting steel.

Selecting the CEM and UNIDO as a venue would recognize that the CEM already houses IDDI, which is co-sponsored by the UK and India but has now added Germany and the United States (as well as Saudi Arabia and the UAE). It has also taken the lead in developing both methodologies for steel and cement but also in shaping future public purchase program architecture. Moreover, UNIDO might be more acceptable to developing countries, even though it is perhaps less acceptable to G7 countries.

While a brand-new organization for a global steel initiative is certainly possible, if this platform is to become the future venue for efforts to decarbonize cement, chemicals, fertilizer, and aluminum as well, then building a secretariat and support base from scratch for this expanded role in a brand-new organization would be a considerable start-up challenge.

Under any organizational approach and choice of venue, a role for India is critical. India’s early engagement and openness to work toward becoming an enthusiastic participant in a global accord on steel at some point may be essential not just to include a critical mass of producers but equally as an incentive for China to engage in serious discussions and negotiations about joining the accord or affiliating with it in some fashion.

How to begin

Discussions within the G7 aiming toward a series of decisions at its meeting in Hiroshima should be focused on these initial subjects: agreement on a generally accepted methodology; agreement on a venue; and, at least, an initial regime specifying minimum data required for applying the methodology and requirements for its collection and transparency.

The first discussion topic (as mentioned in our earlier paper) would be coordination on adopting a common methodology to measure the GHG emissions embodied in steel facilities and products. Such standards are a prerequisite for any program to move toward lower- and zero-carbon steel. This should be a relatively non-threatening and mutually beneficial subject for discussion, and one that is supported by industry. To the extent that the industry in several major steel-producing countries is dominated by just one or a few giant companies (Japan, South Korea, the United States, India, and China), those companies and other major EU producers in Germany, Sweden, and Italy have the technical capabilities and economic strength to have set zero-carbon targets already. They are already worried about a plethora of methodologies for defining “low-carbon embedded steel” and should be powerful supporters of a movement toward a more uniform standard. Leading multilateral, industry, and civil society groups are beginning to coalesce already around the methodology most recently put forward in concept by the IEA and developed by SteelZero/Responsible Steel. This concept has already been endorsed by the United States, embraced by IDDI, and recently published as a detailed proposal by the IEA. The discussion is likely to center around whether the “sliding scale” measurement approach should be adopted, or only a part of it; whether there are alternatives; and to what extent the availability of data would require default values to be used in some instances.

The second discussion topic would focus on the choice of a permanent venue, as discussed above. In our view, the two most likely locations to be considered are the CEM and the OECD.

The third discussion topic should focus on the current state of relevant data both from facilities and supply chains; the minimum data requirements for reporting performance through standards; and how the administrative platform will develop increasingly strong requirements and require participating countries to encourage or insist that their producers adhere to them.

A final discussion topic (to be addressed in a later piece) would be to begin discussions about G7 financing vehicles to support pilot projects in transformative technologies in key countries such as India. A commitment by the G7 to develop and finance such a structure by the end of 2024 could be a key commitment of the G7 in 2023.

These four G7 actions in 2023 could constitute the core framework of a global climate arrangement, evolving from the original proposal by Olaf Scholz of Germany for a G7 “climate club.” The initial German concept was intended to promote global decarbonization by aligning carbon pricing in G7 members and others to guard against carbon leakage and protect competitiveness of carbon-intensive industries in high-ambition countries. But the climate club idea has now morphed into suggestions of a more open “climate arrangement” focused on promoting trade in key hard-to-abate sectors (steel, cement, chemicals) of products produced with lower and lower emissions—a necessary component of a common agreed methodology for measuring embedded carbon emissions and requiring certification through a global system of data collection and reporting.

Matthew Piotrowski is senior director of policy and research at Climate Advisers.

George Frampton is a distinguished senior fellow and director of the Transatlantic Climate Policy Project at the Atlantic Council Global Energy Center.

Related content

EnergySource Dec 7, 2022

The G7 should prioritize low-carbon steel at its upcoming summit

By Matthew Piotrowski, George Frampton, and Nitya Aggarwal

Steel decarbonization standards and methodology should be top of mind for the G7. Cooperation and harmonization is the only way to secure optimal climate and business outcomes for this emissions-intensive and trade-exposed sector.

Energy & Environment Energy Markets & Governance

EnergySource Oct 14, 2022

Pathways for DOE-enabled grid innovation

By Ameya Hadap

The DOE was handed $10.5 billion for grid resilience and innovation by the Infrastructure Investment and Jobs Act. Here are two of the areas in which they should use it.

Energy & Environment Energy Transitions

EnergySource Oct 12, 2022

Nuclear energy and global energy security in the new tripolar world order

By Robert F. Ichord, Jr.

As the United States, Russia, and China move into a period of overt confrontation, competition in both the current and next-generation nuclear technology spaces will assume even more importance. Climate concerns only add more urgency to the race to deploy.

China Energy & Environment

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post The G7’s role in developing a platform for global cooperation on industrial decarbonization appeared first on Atlantic Council.

The post Sullivan quoted in VOA on Syrian fuel shortages appeared first on Atlantic Council.

The post Ellinas in Cyprus Mail: What is the effect of the cap on the price of Russian oil?Ellinas in Cyprus Mail: appeared first on Atlantic Council.

The post Shaffer quoted in The Mandarin on Russian oil price caps appeared first on Atlantic Council.

The post Webster in The China Project: Mongolian coal anti-corruption protests draw attention of Beijing and Moscow appeared first on Atlantic Council.

The Kremlin’s weaponization of natural gas exports to Europe as winter approaches has shattered any illusions that Russia could be a reliable supplier. Europe urgently needs to import gas from other suppliers to heat its homes and power its industry. In doing so, Europe can build a more secure and sustainable energy system while cutting off funds for Moscow’s war machine.

Painfully high energy prices are already having a serious impact on quality of life and economic development in Europe. New natural gas supplies and expanded interconnections to bring them to market will drive down the costs of energy and reduce the likelihood of social unrest over energy poverty.

The surest means to end Russia’s energy leverage over Europe include accelerating the green transformation, curtailing gas demand, and boosting energy efficiency. However, the continent cannot implement these changes overnight. Gas remains instrumental in Europe’s transition from dirtier fossil fuels, electrification of power-hungry sectors, and integration of large-scale intermittent renewables. Natural gas will likely remain a critical part of Europe’s power baseload for at least the medium term.

Procuring an adequate supply of gas in the short to midterm is not at odds with the energy transition. Europe must cultivate alternative suppliers, build non-Russian-oriented import infrastructure, and accelerate decarbonization in tandem to boost energy security and affordability. Sourcing gas from non-Russian suppliers will sustain longer-term decarbonization efforts and prevent regression back to dirtier fuels amid the energy crunch.

To diversify their energy systems, European states must determine how much Russian gas can be replaced and from where, as well as what new infrastructure will be necessary to enable new imports. The European Union (EU) needs to clearly articulate the anticipated natural gas supply gap to identify investment opportunities for the relevant market players.

This issue brief examines potential sources of alternative gas supplies, the infrastructure required to bring new supplies to European consumers, and the financial and regulatory mechanisms needed to support diversification efforts. It offers recommendations for measures that European countries decoupling their energy supplies from Russia should take to give themselves the best chances of succeeding.

Hear more from the authors as they discuss how Europe can combat Russia’s weaponization of natural gas with The Washington Post’s climate correspondent, Tim Puko.

Authors

Staff

Richard L. Morningstar

Founding Chairman, Global Energy Center

Global Energy Center

Geopolitics & Energy Security Oil and Gas

Fellow

András Simonyi

Nonresident Senior Fellow

Global Energy Center

Energy & Environment Europe & Eurasia

Staff

Olga Khakova

Deputy Director, European Energy Security

Global Energy Center

Geopolitics & Energy Security Europe & Eurasia

Staff

Paddy Ryan

Assistant Director, European Energy Security

Global Energy Center

Energy & Environment Energy Transitions

Related content

In-Depth Research & Reports Sep 21, 2022

Bolstering energy security in Northeastern Europe through transatlantic cooperation

By Richard L. Morningstar, Olga Khakova, Paddy Ryan

Northeastern Europe has already made efforts to end its reliance on Russian energy supplies. It is the perfect region for the US and allies to prove that de-Russification and decarbonization of the energy sector can occur in tandem.

Energy & Environment Europe & Eurasia

Global Energy Agenda Jan 19, 2022

The 2022 Global Energy Agenda

By Randolph Bell, Jennifer T. Gordon, Ameya Hadap, and Paul Kielstra (Editors)

The second edition of the Global Energy Agenda provides context for the year that has passed. It features a survey of thought leaders in the energy sector, as well as a series of essays by the leading figures in energy, to set the energy agenda for 2022.

Energy & Environment Geopolitics & Energy Security

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Securing alternative gas supplies and addressing critical infrastructure gaps in Europe appeared first on Atlantic Council.

Existing technologies have the potential to decarbonize steel production, but they have not been implemented on a global scale and will require new investments unlikely to be forthcoming without aggressive creation of significant new markets for lower-emitting products. Steel is a heavily traded good and involves the highest ratio of “production emissions” (emissions in exporting companies) to “consumption emissions” (arguably attributable to the purchasing or importing countries where the goods are used) in the industrial sector.

The significance of steel in global emissions and its widespread use indicate that decarbonizing the steel industry is crucial to achieving net-zero and Paris Agreement goals, particularly since global steel demand is expected to grow to 2.5 billion tons by 2050, up by almost 40 percent from current levels. The global trade pattern in steel, the investment required, the critical nature of market creation, and the need to avoid “carbon leakage” that dilutes the efforts of countries leading the decarbonization effort will require new global alignment on strategy and cooperation between major steel producing and consuming countries that does not now exist.

The need for G7 leadership

The economic powerhouses of the G7 are particularly well positioned to initiate a process for global cooperation since its members have significant influence on international trade and includes three of the five largest steel producers globally, and two of the four largest steel importers of steel (considering European Union countries together). With the May 2023 G7 Summit in Hiroshima approaching, there is a window of opportunity for G7 countries to place industrial decarbonization, with a focus on steel, at the top of the agenda to make significant progress in reducing global greenhouse gas (GHG) emissions.

While some consensus has developed in the civil society and multilateral sectors to identify a common methodology, there is no broad agreement among governments, industry, or companies to coalesce around any approach. There is even less agreement about how to structure data reporting requirements that can be validated or develop a venue for supporting that process, with agreed data requirements and transparency.

Only new and focused intervention by government leadership can accelerate the process of agreeing on standards and a methodology. Although a number of corporate producers are moving forward in decarbonizing their steel output, increasing governmental involvement is necessary to incentivize widespread change to lower emissions and harmonize global trade of green steel. In 2022, the German presidency of the G7 initiated these conversations with its “climate club” initiative at the G7 summit in 2022, which could be used to align standards for green steel. Several G7 nations, including the United States and Japan, however, are not convinced that a new climate club proposed by Germany will work because of its emphasis on carbon pricing. However, in place of an official price-based climate club moving forward through the G7, an agreement on standards for embedded carbon emissions in steel and for collection of transparent data could supply the essential first step in harmonizing trade and coordinating steel decarbonization, and could be a harbinger of similar platforms for other heavy industries including cement, chemicals, and aluminum.

Importantly, any movement in green steel trade among G7 members will have impact beyond G7 countries, since G7 leaders play a major role in setting the global political, trade, and climate agendas.

Key initiatives

Even though there is no consensus on standards and methodologies, over the past three years, there has been substantive progress on methodology and protocols for evaluating the embedded carbon emissions in steel products, including by the Industrial Deep Decarbonization Initiative (IDDI) at the United Nations Industrial Development Organization (UNIDO). Others, such as SteelZero/Responsible Steel, the International Energy Agency (IEA), the First Movers Coalition, and now the Organization for Economic Cooperation and Development (OECD) have also taken important steps in this area.

Earlier this year, the International Energy Agency (IEA) developed recommendations outlining actions the G7 can take to facilitate decarbonization of heavy industry, citing its economic weight, industry leadership, and global alliances as factors contributing to its potential impact on the sector. These ten recommendations ask the G7 to develop long-term policies for sustainable transition, finance mechanisms for implementation of technologies, create lead markets for net-zero products, develop measurement standards, and more over the next few years, signaling that countries should prioritize industrial decarbonization in multilateral negotiations. The IEA further released a report on the steel and iron industries covering recommended actions specific to those industries, including the establishment of standardized methodologies for evaluating green steel. This is intended to serve as a roadmap for the G7 and other high-ambition countries looking toward heavy industry decarbonization.

At the same time, key industry actors have developed their own standards, around which several countries and corporations have begun to coalesce. The primary example of these is the ResponsibleSteel Standard, which integrates two versions of certification: for facilities producing steel and for the produced crude steel. The current ResponsibleSteel approach was developed over five years through input from various key players, including representatives from industry and civil society. The overall standard is defined by thirteen principles covering environmental, social, and governance (ESG) requirements for certified companies, such as responsible sourcing of input materials and prevention of GHG emissions. As a technology-agnostic certification, its standard for GHG emissions enables and motivates innovation toward decarbonization while remaining cognizant of different types of steel production and technologies around the world. ResponsibleSteel’s approach aims to encourage steel production while also considering larger social and environmental implications, and its certification has been adopted by multiple influential coalitions and organizations, such as IDDI.

Although the IEA describes several policy recommendations that can be bolstered by standards and methodologies demonstrated by ResponsibleSteel, countries have not yet fully endorsed these recommendations, or any that are similar. But governments of the United Kingdom (UK), India, Germany, the United Arab Emirates, and Canada recently announced a Green Procurement Pledge (GPP) through IDDI. The pledge asks signatories to start requiring materials used in public construction projects to be low-emission, and for private construction projects to have no emissions by 2030. In addition, the First Movers Coalition, strongly supported by United States, adopted an early version of the ResponsibleSteel GHG standard a year ago as its target for seeking future commitments by companies to acquire “zero-carbon steel” by 2030 and beyond.

Even though these various initiatives and programs are closely aligned, there is no obvious process yet for them to become tied together. Without that process, progress will continue to be preliminary and sluggish. Perhaps equally important, there is also no agreement on which international institutions should host, oversee, or administer the effort to make a final decision on methodology and data structure. G7 nations have agreed on the general importance of promoting green growth and industrial decarbonization but have yet to reach agreement on major questions like standards and methodologies needed for rapid progress in hard-to-decarbonize, energy-intensive, and trade-exposed industries like steel.

Recommendations for countries and companies

Despite the need for a consensus surrounding common standards, methodologies, and data, governments and industry have not come to full agreement on any approach. The following recommendations are provided to help jump-start actions to bring about the necessary steps required for accelerated action. G7 countries should consider the recommendations at their upcoming summit and work to adopt them in the next few years.

• Develop common methodologies. G7 governments should take the lead in moving toward substantial decarbonization in the steel sector. To do this, G7 countries should focus first and urgently on developing unified methodologies and standards so the industry has guidance in moving forward in a way that it can grow sustainably.
• Standardize data and reporting. G7 countries should further create requirements for data collection and reporting to create a transparent market and demonstrate willingness to bridge any gaps in data availability.
• Create public procurement programs. The measures on standards, methodologies, and data should be accompanied by aligned public procurement programs in G7 countries, which would enable governments to facilitate demand-side incentives for low-carbon steel and grow the market for these products. A G7 initiative to promote more alignment and commonality in national public purchase commitments and mandates for private purchase should be a subject of urgent consideration.
• Increase company advocacy. Steel companies and major customers (like automobile manufacturers) should unite in advocating for common standards and encourage governments to create standards that generate real sustainability returns and enable long-term growth of the industry. Major global steel producing companies from the United States, European Union, Japan, Korea, Turkey, and elsewhere have significant interests in seeing common standards so that they can plan their own investment and market decisions more efficiently. The advocacy community should appeal to industry leaders to join the pressure on the G7 to move forward promptly and bold on these issues.

Matthew Piotrowski is senior director of policy and research at Climate Advisers.

George Frampton is a distinguished senior fellow and director of the Transatlantic Climate Policy Project at the Atlantic Council Global Energy Center.

Nitya Aggarwal is a policy and communications intern at Climate Advisers.

Related content

EnergySource Nov 4, 2022

To meet energy security and climate goals, Africa needs investment in infrastructure

By William Tobin, Maia Sparkman

To this point, Western engagement in Africa has primarily taken the form of aid. For the continent to achieve widespread electrification and form the foundation for robust economic growth, that engagement will need to morph into investment and partnership.

Africa Energy & Environment

EnergySource Oct 14, 2022

Pathways for DOE-enabled grid innovation

By Ameya Hadap

The DOE was handed $10.5 billion for grid resilience and innovation by the Infrastructure Investment and Jobs Act. Here are two of the areas in which they should use it.

Energy & Environment Energy Transitions

EnergySource Oct 12, 2022

Nuclear energy and global energy security in the new tripolar world order

By Robert F. Ichord, Jr.

As the United States, Russia, and China move into a period of overt confrontation, competition in both the current and next-generation nuclear technology spaces will assume even more importance. Climate concerns only add more urgency to the race to deploy.

China Energy & Environment

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post The G7 should prioritize low-carbon steel at its upcoming summit appeared first on Atlantic Council.

Since gaining independence in 1992, Moldova has been almost completely reliant on electricity generated from Russian gas. Moldova generated about 10% of its electricity needs domestically, while 20% was imported from Ukraine and the remaining 70% was produced by the MGRES Cuciurgan Power Plant in Transnistria, the unrecognized breakaway region of Moldova that has been controlled by Russia since the 1990s.

The Kremlin has used its stranglehold on Moldova’s gas supply to pressure the Moldovan authorities into political concessions. The most notable recent example of this trend was Moscow’s 2021 demand to adjust Moldova’s Deep and Comprehensive Free Trade Area (DCFTA) with the European Union in exchange for a new gas contract on more favorable terms.

Subscribe to UkraineAlert

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

• Name
  First Last
• Email*
• 
  
  
• Phone
  This field is for validation purposes and should be left unchanged.

Moldova’s current energy crisis began in October 2022, when Gazprom cut gas imports to Moldova by 30% in an attempt to squeeze the country’s pro-EU government. The resulting electricity shortage led the Transnistrian authorities to cut power deliveries from the Cuciurgan Power Plant to Moldova by 73%. The effect was immediate. A draft document presented to Western leaders in November showed Moldova experiencing a 200% increase in electricity prices and 34% inflation, forcing the average Moldovan to spend up to 75% of their income on energy utilities.

After Russian missiles began targeting Ukraine’s energy infrastructure on October 10, Ukraine was forced to suspend all electricity exports to Moldova. Romania quickly responded by allowing Moldova to import electricity at a capped price, while Romania itself subsidized the difference between the Romanian spot price. At present, 90% of Moldova’s domestic electricity demand is being met by Romania.

While electricity imports from Romania continue to keep Moldova afloat, the chief vulnerability to Moldova’s electrical system remains connectivity. Moldova possesses one singular high-voltage 400kV line, which runs from the Romanian border town of Isaccea through Transnistria. Any energy imported from Romania must be routed through the separatist region. Local energy experts believe Moldova’s reliance on a singular high-voltage line presents significant risks. Any accident or act of sabotage would leave Moldova exposed to long-term blackouts.

Transnistria itself is not immune to the escalating energy crisis. After Ukraine suspended electricity imports to Moldova, Transnistrian leaders announced their November gas deficit would hit 40%. Two of Transnistria’s largest gas consumers, the Rybnitsa Cement Plant and nearby Metallurgical Plant, were forced to cease operations.

Eurasia Center events

Online Event Thu, July 20, 2023 • 8:00 am ET

After Vilnius: What’s next on Ukraine’s path to NATO?

Eastern Europe NATO Security & Defense Ukraine

Moldova has an immediate short-term need for direct financial support from the EU to offset rising energy costs. The European Union recently pledged 250 million euros during European Commission President Ursula von der Leyen’s visit to Chisinau. This financial support will be broken down into 40% grants, 40% loans, and 20% budgetary support.

Such financial backing is welcome, but more is needed. French President Emmanuel Macron’s pledge of 100 million euros announced at November’s Moldova Support Platform in Paris was another positive step, but Moldova will need sustained funding in order to continuously purchase electricity on the European spot market.

While the immediate focus is on addressing the current energy crisis, European policymakers can and should also invest in Moldova’s longer term energy security. This support should include backing for the expedited construction of the 400kV Vulcanesti-Chisinau power line, which would allow electricity imports from Romania to bypass the Cuciurgan Power Plant entirely.

This is now possible due to the synchronization of Ukrainian and Moldovan electrical networks with the Continental European Grid, a step taken earlier this year in an effort to move away from the Soviet-legacy Russian Unified National Electrical Grid. Without power grid synchronization, Moldova would have been forced to construct expensive “back-to-back” electrical transformers to convert imported electricity from the European Union to meet the parameters of the CIS electrical grid.

In the long term, policymakers should prioritize the construction of a high-voltage power line running from the Suceava substation in Romania to Balti in northern Moldova. Former Moldovan President Igor Dodon earlier proposed the project together with the European Bank for Reconstruction and Development, Moldova’s Moldelectrica, and Romania’s Transelectrica, but the initiative has largely stalled. Reviving the Suceava-Balti power line project would indicate the EU’s interest in supporting Moldova’s long-term energy security.

The effects of Russia’s invasion of Ukraine can already be felt beyond Ukraine’s borders. Every missile that falls on Ukraine exacerbates Moldova’s energy crisis and pushes the country closer to the brink. Europe must do everything in its power to help Moldova keep the power on this winter, and should also seek ways to move toward a more resilient state of energy security in the years to come.

Alexander St. Leger is an analyst at the Center for Advanced Defense Studies. He was previously a US Fulbright Program grantee in Moldova and Romania. You can follow him on Twitter @AlexStLeger.

Further reading

UkraineAlert Oct 17, 2022

Putin’s blackout blitz: Russia aims to freeze Ukrainians into surrender

By Suriya Evans-Pritchard Jayanti

Russia is seeking to plunge Ukraine into darkness ahead of the winter heating season by destroying the country’s energy infrastructure. Ukraine’s partners must step in to make sure Ukrainians are not frozen into surrender.

Conflict Energy Markets & Governance

UkraineAlert Oct 12, 2022

No, Russia’s airstrike escalation is not retaliation for the Crimean Bridge

By Razom Advocacy Team

International media coverage depicting Russia’s recent airstrike escalation as retaliation for the alleged Ukrainian attack on the Crimean Bridge risks creating false equivalency over Vladimir Putin’s war of aggression.

Conflict Disinformation

UkraineAlert Oct 25, 2022

Poll: 86% of Ukrainians want to fight on despite Russian terror bombing

By Peter Dickinson

Vladimir Putin’s campaign to destroy Ukraine’s critical civilian infrastructure marks a dramatic escalation in the Russian invasion of Ukraine as the increasingly desperate Russian ruler seeks to avert military defeat.

Conflict Human Rights

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Russia’s Ukraine invasion is fueling an energy crisis in neighboring Moldova appeared first on Atlantic Council.

The US may be emerging as a major OSW player, however. As of this writing, the US Energy Information Administration reports that approximately 7.5 GW of OSW capacity are already in queue to hit the US grid by 2029. Moreover, the United States has set a goal of deploying 30 GW by 2030. To catalyze deployment of offshore wind, a vital but nascent technology, the US is embarking on an inchoate but emerging strategy: reducing permitting time and incentivizing capital to enter offshore wind. While significant challenges remain, there are reasons to be cautiously optimistic about the future of US offshore wind.

Permitting reform: Rapid law administration is needed

The United States seeks to accelerate offshore wind deployment by reducing permitting times for offshore wind. US infrastructure projects, especially clean energy projects, face notoriously slow construction times due to a variety of legal and regulatory burdens. The National Environmental Policy Act (NEPA) is often a bugbear of various energy projects, with reviews—even for renewable projects—taking years before approval. Fortunately, however, OSW projects are not subject to NEPA reviews, according to a June 2021 ruling from the DC Circuit Court of Appeals. In the wake of the landmark ruling, the Bureau of Ocean Energy Management (BOEM) released new guidance in June 2022 on limiting the number of alternatives studied for environmental reviews. Many analysts, such as Joshua Kaplowitz of American Clean Power, praised BOEM’s new guidance, saying “[the new criteria] will help expedite the environmental review process by limiting the amount of time that agencies spend suggesting—and that BOEM subsequently spends analyzing—inappropriate and ineffective alternatives whose consideration will not improve the environmental review process or projects themselves.”

Despite these legal advances, which promise to reduce permitting times, regulatory hurdles continue to constrain project development. Stakeholders express that it is not due to a lack of will: on the contrary, regulators often simply lack the personnel to determine the environmental assessments of different projects and perform other tasks. For instance, while there are 42 MW of OSW capacity currently installed, there are nearly a thousand times that amount – about 40,000 MW – in various stages of development. Unsurprisingly, regulatory personnel have not been able to keep pace with the surge in new permitting requests. Indeed, some developers are calling for a doubling or tripling of headcount at offshore wind-relevant agencies at both the federal and state levels, to facilitate timely approvals.

Meshed grids could be the next frontier in using smart, limited regulation to advance offshore wind. Meshed grids, which cluster wind farms to create shared connections to shore, limit the number of shore connection cables, and allow for electricity diversion in the event of a fault. While the technical model is already being enabled, the commercial model has yet to be worked out. Who builds, owns, and pays is perhaps a step for future regulatory efforts.

The Inflation Reduction Act and incentivizing capital deployment

The Inflation Reduction Act (IRA) aims to encourage investments in offshore wind and clean energy more broadly. The IRA’s offshore wind provisions have already been explored at length, but some points are worth emphasizing. By extending fiscal policy measures which can run on “autopilot,” the IRA seeks to provide certainty to investors while incentivizing capital to deploy to the sector. Importantly, the legislation also aims to accelerate construction by granting the most generous incentives to projects that begin construction before 2024, with provisions becoming less lucrative over time. Furthermore, in recognition of OSW’s nascent supply chains, domestic content requirements are lower for offshore than onshore wind. The IRA seeks to spur significant cumulative investment, create an ecosystem of developers, and produce cost declines as the industry moves along the learning curve.

Uncertainties and opportunities as the journey begins

While the United States may have, consciously or not, developed an offshore wind strategy, the journey has only just begun. Substantial permitting and regulatory challenges remain, opponents of offshore wind may able to slow or even halt projects via lawsuits, and not-in-my-backyard concerns could lead to schedule slippages or project cancellations. Moreover, schedule delays can impose punishing costs, due to the new normal of higher interest rates. With higher input costs from inflation and more expensive financing costs already pressuring marginal projects, this year could see several projects scuttled. Finally, the “manning and crewing” requirements bill could substantially raise developers’ costs and, potentially, torpedo a substantial portion of planned OSW capacity.

Despite these uncertainties, there are several reasons for optimism. By setting its strategic “30 GW by 2030” objective, the US has committed to at least attempting to achieve additional offshore wind capacity. While the emerging strategy of using permitting reform and the Inflation Reduction Act will very likely face setbacks, there will be ways to refine the legislation and issue correctives. Permitting reform before the US legislature represents an avenue for policymakers to accelerate US energy infrastructure, including in the OSW space. Finally, the US industrial base is sizable, while offshore wind developers are eager to tap into a potentially lucrative market in the world’s biggest economy.

US offshore wind is in its early days, and its future is not yet written. As with many journeys, however, decisions made in the beginning can influence the path decades later. Choices in permitting reforms and the “manning and crewing” requirements bill could determine if US offshore wind succeeds or fails.

Joseph Webster is a senior fellow at the Atlantic Council Global Energy Center.

Global Energy Center experts respond to the Inflation Reduction Act

The IRA of 2022 marks the biggest climate investment in US history, and it will likely send reverberations around the world. Our experts offer their thoughts on its provisions and its consequences.

Read more

Meet the author

Staff

Joseph Webster

Senior Fellow

Global Energy Center

Central Asia China

Related content

EnergySource Oct 31, 2022

The Inflation Reduction Act’s impact on the US oil and gas industry

By Joseph Webster

The IRA will ratchet up competition in energy production with which the US oil and gas industry will have to contend, across any number of functional niches. But several of its provisions also represent opportunities for the industry to smoothly transition to a fresh role in the US energy sector.

Energy & Environment Energy Transitions

EnergySource Oct 25, 2022

Does the IRA make US offshore wind the “next big thing?”

By Joseph Webster and Elina Carpen

The Inflation Reduction Act sets the US clean energy industry up for rapid expansion, and offshore wind is no exception. Additional legislation could close remaining gaps and drive US offshore wind to the head of the energy transition.

Climate Change & Climate Action Energy & Environment

EnergySource Sep 28, 2022

Establishing a national green bank with the GHG Reduction Fund will reduce emissions, promote environmental justice

By Ken Berlin

The Inflation Reduction Act creates a $27 billion Greenhouse Gas Reduction Fund to accelerate the United States’ energy transition—and ensure that the transition is an equitable one. Capitalizing a national climate bank would provide a long-term, comparatively low-cost solution to reduce the United States’ reliance on fossil fuels and its greenhouse gas emissions.

Climate Change & Climate Action Energy & Environment

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post A nascent US offshore wind strategy? Permitting reform and the Inflation Reduction Act appeared first on Atlantic Council.

When we first looked at the debate in June, Secretary Janet Yellen’s Treasury was a strong proponent, but the EU was skeptical. By October, the EU had become a strong advocate and included in its eighth package of sanctions a promise to implement the cap before the EU ban on seaborne imports of Russian oil comes into effect on December 5.

A senior US team was in Brussels two weeks ago to iron things out. The fact that details as fundamental as the level of the cap are being agreed so close to the deadline betrays the extent to which conversations have been heated. Contracts on shipments that will arrive after December 5 have already been signed, and we hear the cap will only apply to shipments which are “loaded” after the date.

As implementation of the price caps finally gets under way, we will get answers to three critical questions:

1. How will the price cap work? And will it work?

The cap prevents firms in participating countries from providing shipping, insurance, and other services including trading and brokering to shipments of Russian crude oil that are sold above a certain per-barrel price, in this case sixty dollars. In practice, the onus will be on these providers to ask their clients for proof that they have bought at a cap-compliant price.

OFAC’s guidance shows some regard for the fact that shipping and insurance firms may not have complete information about how much their clients pay for each shipment. It calls upon them to request attestations that the cap has been respected via simple, and already standard, contract provisions. Firms that are requesting these (and have no reason to believe they are false) aren’t likely to face enforcement actions. This approach does give OFAC and its counterparts the authority to pursue whoever may have lied in an attestation, for instance by making a separate transaction above the cap.

For now, the cap isn’t as low as some would wish. Russian oil is already trading at a discount: about sixty-nine dollars per barrel compared to eighty-six dollars for Brent crude.

Some EU member states were pushing for a much lower cap—one which would remove Russia’s ability to turn a profit. They obtained a slight drop from a proposed sixty-five-to-seventy dollars to a (reportedly) final level of sixty. Even this was enough to generate concerns over implementation from the US Treasury. 

At sixty dollars Russia would still turn a strong profit. The much-discussed Chinese and Indian buyers the measure is designed to affect would simply use the cap in their negotiating tactics. When the stakes are low, it isn’t worth circumventing Western (especially European) firms’ hold on the shipping and insurance markets. If it were, Iran and Venezuela would have had an easier time exporting their oil in recent years.

We also think there will be opportunities for cheating, especially if the price difference between Russian-made Urals crude and Brent crude increases.

History has shown that it is possible for the shipping industry to misrepresent or obscure the origin of its cargo. Meanwhile, exemptions for certain pieces of the Russian production complex (notably the Sakhalin-2 project, which was heavily funded by Japan) suggests that there will be “un-capped” Russian barrels still floating into the market. The cap doesn’t fully address blends that include Russian crudes (perhaps intentionally), suggesting that there may be additional opportunities to maneuver Russian barrels through refined or partially refined products. Finally, it will be difficult for countries enforcing the cap to truly track the price paid, given the market’s opacity.    

The primary onus for compliance is placed on the unregulated brokers and traders of Russian oil products. The crucial test of this policy’s viability will lie in enforcement of the cap when breaches inevitably happen. OFAC has threatened cheaters with consequences, but taking action against them may well chill participation by other participants in the scheme and further undermine the dual policy goals of keeping Russian product on the market but cutting revenues for Moscow. 

2. What kind of global impact can we expect?

Washington, Brussels, and other capitals will be judged on whether we see Russia’s export revenue decline without prices at the pump at home increasing too much. As long as these two conditions are fulfilled, it doesn’t matter whether the cap is the decisive factor.

For now, the cap is not significantly below the price of Russian crude, so it’s not clear how Moscow will respond. Indeed, Russian President Vladimir Putin has just approved an increase in production. Assuming most of Russia’s supply remains on the market, the effect on prices will be small.

Should global prices increase and the cap force Russia to accept an even higher discount, we do expect Moscow to respond by selling less. The question is whether this is a little less or whether most of Russia’s supply becomes temporarily unavailable. Prices are well down from their July peak. This is mainly due to the risk of a G7 recession, but it is also true that engagement from the governments behind the price cap has reassured market participants. We had initially feared that additional layers of complexity would add tension to the market and result in higher prices.

However, the cap also becomes harder to enforce if prices increase and stay high. Between a sixty-dollar cap and an eighty-six-dollar Brent price, it may not be worth taking the risk of being fined and Russian revenues will be down compared to 2022 anyway. But the temptation will grow with the market price.

While G7 governments decided that a floating cap was too complicated, participating countries can always decide to move the fixed cap by committee. The cap could be moved down if G7 governments believe that enforcement is working. It could also be moved up.

3. What kind of impact can we expect on the Russian economy?

Russia’s export revenues have fallen since the record-breaking second quarter of 2022, due to lower oil prices and lower volumes of gas sold. The second factor—lower volumes—is partly due to Russia’s decision to reduce gas flows into Europe.

Consequently, the Russian government is already struggling to finance the increasing costs of its war in Ukraine and day-to-day spending (some of which is indexed to inflation). The latest budget foresees deficit spending in 2022 and for the three years to come. Initially, the gap was meant to be filled by transfers from the National Welfare Fund, which receives some of the oil and gas export income every year. But the government has now turned to borrowing on domestic markets.

The outlook is certainly bleak. Perhaps bleak enough to argue that Russia needs its oil revenue and will therefore continue to sell, even if the cap becomes more of a constraint than it will be to start with.

Reed Blakemore is the deputy director of the Atlantic Council’s Global Energy Center.

Charles Lichfield is the deputy director of the Council’s GeoEconomics Center.

Brian O’Toole is a nonresident senior fellow at the GeoEconomics Center and a former senior adviser to the director of the Office of Foreign Assets Control at the US Department of the Treasury.

The post What to expect from the new Russian oil price cap appeared first on Atlantic Council.

Russia’s airstrike campaign against civilian infrastructure began in early October following a series of Russian military defeats in Ukraine. The change in strategy appears designed in part to address mounting domestic unease within the Russian Federation over Vladimir Putin’s rapidly unraveling invasion.

Kremlin officials and regime propagandists openly praise the bombings and depict them as a means of provoking additional refugee flows to Europe. Moscow hopes that a new wave of Ukrainian refugees will persuade EU leaders to reduce support for Kyiv. The Kremlin also appears to believe that blackout conditions inside Ukraine will pressure the country’s leaders into negotiating a compromise peace settlement on Russian terms.

Subscribe to UkraineAlert

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

• Name
  First Last
• Email*
• 
  
  
• Email
  This field is for validation purposes and should be left unchanged.

On November 17, Russia expanded its targeted missile strikes on civilian energy infrastructure to include ten gas production facilities across Poltava and Kharkiv in eastern Ukraine. These critically important facilities provide about one-third of Ukraine’s domestic hydrocarbon production. Some facilities were destroyed, while others were damaged and require immediate repair.

Naftogaz Ukraine, the state-owned gas and oil company that I was appointed to lead as CEO earlier this month, is the country’s largest producer, storer, and supplier of domestic natural gas. We are currently working to prepare an appropriate level of gas in underground storage facilities. We are therefore in need of both stable production and predictable import volumes.

Relentless Russian missile strikes on our power infrastructure are forcing us to reinforce our energy stocks for the coming winter season. Electricity blackouts are putting pressure on our hydrocarbon reserves and may require us to purchase additional natural gas on the external market. Generous assistance from our partners in the US, Canada, France, Norway, and the EBRD in the form of loans and grants has already allowed us to procure some much needed additional gas internationally. More will certainly be required. With Russia’s aerial assault set to continue, we face the toughest winter season in our three decades as an independent nation.

Eurasia Center events

Online Event Thu, July 20, 2023 • 8:00 am ET

After Vilnius: What’s next on Ukraine’s path to NATO?

Eastern Europe NATO Security & Defense Ukraine

The resilience that my company has shown throughout the war has been remarkable, but resolve alone is not enough. In the spirit of solidarity, we need to galvanize more support from our Euro-Atlantic and Pacific partners and from the international business community. Prior to Russia’s aggression against my country, Ukraine was a net exporter of electricity to Europe. Naftogaz is positioned to become a net exporter of natural gas to Europe. To achieve this goal, we need to leverage new technologies, international expertise, and investment like never before. This can only be done with support from our partners and allies.

Despite the existential challenges of today’s wartime conditions, we have already taken a number of key steps to restore trust and reaffirm our commitment to our international lenders and bondholders. These steps include the recent appointment of an internationally respected special advisor, who has been tasked with providing both oversight and guidance on ongoing negotiations with our partners. We have already resumed constructive dialogue with holders of our 2022 and 2026 Eurobonds, as we recognize that they are key to successfully financing the exploration and production activities that are our growth drivers.

Another important priority is prolonging corporate governance reforms at Naftogaz in line with OECD principles. During my first day on the job, I sent a note to Ukraine’s Cabinet of Ministers requesting a conclusion of the international selection process to identify qualified, independent directors for our Supervisory Board. The company’s continued transformation depends on a predictable development track founded on trust, transparency, and good governance, which can only be guaranteed by a stable and professional international board.

As an essential service provider to the people of Ukraine, we are committed to providing the civilian population with the gas and heating required to withstand harsh winter conditions. Despite ongoing Russian attacks on civilian infrastructure, we will continue to demonstrate the kind of courage and resilience that the world has come to expect from Ukrainians over the past nine months of Putin’s brutal invasion.

Russia’s attack on Ukraine is an attack on international rule of law and the entire global security system. As we confront this shared threat, the continued support of our international partners, creditors, investors, and allies will be fundamental to our coming victory.

Oleksiy Chernyshov is CEO of Ukrainian state energy company Naftogaz.

Further reading

UkraineAlert Oct 12, 2022

No, Russia’s airstrike escalation is not retaliation for the Crimean Bridge

By Razom Advocacy Team

International media coverage depicting Russia’s recent airstrike escalation as retaliation for the alleged Ukrainian attack on the Crimean Bridge risks creating false equivalency over Vladimir Putin’s war of aggression.

Conflict Disinformation

UkraineAlert Nov 14, 2022

Ukraine needs urgent help to counter Putin’s energy infrastructure attacks

By Aura Sabadus

Ukraine urgently needs international support in order to counter Moscow’s campaign of airstrikes against the country’s energy infrastructure and prevent Putin from freezing Ukrainians into submission this winter.

Conflict European Union

UkraineAlert Oct 25, 2022

Poll: 86% of Ukrainians want to fight on despite Russian terror bombing

By Peter Dickinson

Vladimir Putin’s campaign to destroy Ukraine’s critical civilian infrastructure marks a dramatic escalation in the Russian invasion of Ukraine as the increasingly desperate Russian ruler seeks to avert military defeat.

Conflict Human Rights

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

Learn more

The post Fueling Ukraine’s fight back against Russia’s blackout blitz appeared first on Atlantic Council.

The post Goldwyn quoted in The New York Times on Chinese oil demand appeared first on Atlantic Council.

The post Ellinas in Cyprus Mail: EU’s RES plans offer no certainty regarding East Med gas appeared first on Atlantic Council.

The post Goldwyn quoted in New York Times on corporate oil taxes appeared first on Atlantic Council.

However, achieving the target to limit global warming to below 2, preferably 1.5 degrees Celsius, compared to pre-industrial levels by the end of the century seems more unfeasible than ever. The reason is simple. This target, adopted by 196 parties at COP21 in Paris, on December 12, 2015, necessitates global greenhouse gas emissions to decline as soon as possible. Nevertheless, as seen in figure 2, global CO2 emissions—the most critical of greenhouse gases—have continuously risen in the past decade (excepting 2020 as a result of the pandemic shutdowns and lower global economic activity).

CO2 emissions are only expected to grow more in 2022 and for the foreseeable future. That increase is mainly due to coal’s strong comeback after Russia’s invasion of Ukraine. The subsequent financial and energy warfare between Russia and the Group of Seven (G7) has led to global shortages in crude and natural gas, forcing many economies to make a shift back to coal. Coal, used mainly in electricity generation and the industrial sector, emits twice as much CO2 than burning natural gas, setting the world even further back from its 1.5 degrees Celsius target by 2100. According to the United Nations Environmental Program, global temperatures have already increased by 1.1 degree Celsius in comparison to pre-industrial levels. Levels will rise by more than 3 degrees Celsius by 2100 if business continues as usual and global emissions aren’t reduced drastically. The world’s largest emitters must take meaningful steps to reduce greenhouse gas emissions. Little to nothing should be expected from those economies —such as Small Island Developing States—that have contributed minimally to global greenhouse gas emissions but bear the brunt of global warming’s impacts. 

As seen in figure 3, responsible for more than 31 percent of the world’s CO2 emissions, China is the largest CO2 emitter in the world, followed by the United States and India at 14 percent and 7.2 percent, respectively.

Clearly, reducing emissions of the world’s largest CO2 emitters can lead to substantial gains in reducing global warming. However, to achieve the most effective and efficient global outcomes, it is important to put these numbers in perspective. While China is by far the largest CO2 emitter in the world, in per capita terms, twenty-seven countries in the world had higher CO2 emission than China did in 2019. As seen in figure 4, twenty-one of these countries—representing about 30 percent of global CO2 emissions—were high-income economies and four were from the G7: Canada, the United States, Japan, and Germany. Specifically, Canada—with 15.4 metric tons per capita—and the United States—with 14.7 metric tons per capita—had about twice the per capita CO2 emission than China’s 7.6 metric tons per capita. This is while China is responsible for 28.7 percent of the world’s manufacturing—which is much more energy-intensive than services and agriculture, as compared to 16.8 percent in the United States, 7.5 percent in Japan, and 5.3 percent in Germany (figure 5). As part of its manufacturing, China produces 70 percent and  40 percent of the world’s solar panels and wind turbines, respectively. In other words, even though China is the world’s largest factory producer for the global market—including the global renewable energy industry—twenty-seven other economies attending COP27 have higher CO2 emissions per capita than China.

This does not mean that China, as the world’s largest CO2 emitter, has a less important role in reducing global greenhouse gas emissions. Not at all. However, it certainly means that a majority of high-income advanced economies—especially the United States—must play a more significant and active role on this front. This is for three main reasons. First, as seen in figure 6, CO2 emissions per capita in high-income economies are on average more than 1.5 times, 5.5 times, and 33 times that of upper-middle-income, lower-middle-income, and low-income economies, respectively. Second, from budgetary and technical perspectives, high-income economies have more resources to reduce greenhouse gas emissions without significantly impacting the well-being of their economies. Most other economies, especially those in the lower-middle-income and low-income categories, simply don’t have the economic capacity to reduce their emissions. Third, a significant share of CO2 emissions in high-income economies is “luxury emissions” versus those in poorer economies which are mainly “subsistence emissions” in nature. The share of global emissions of the world’s richest 1 percent (mainly residing in high-income economies) is expected to reach 16 percent of the world’s total by 2030 (from 13 percent in 1990 to 15 percent in 2015). Furthermore, the world’s richest 10 percent are responsible for a third of global emissions. Achieving global climate justice means reversing the rise of inequality in the world’s emissions. If increasing emissions from poor economies is not an option, which certainly is not, the only remaining path to achieve climate justice is to reduce emissions of the world’s richer population.

To conclude, high-income economies account for more than 35 percent of global CO2 emissions while they host only 12 percent of the world’s population. Their CO2 emissions negatively impact the lives of the world’s most vulnerable and the poor, the vast majority of whom reside in lower-middle-income and low-income economies. The 1.5 degrees Celsius target is practically dead, and the Paris Agreement has become non-binding. The good news is that CO2 emission per capita in most high-income economies have declined over the past decade —for example by 16% in the case of the United States and Germany—but as seen earlier in figure 4 they remain to be at elevated levels and more needs to be done faster. Coal’s strong comeback is creating a strong headwind for this trend and could reverse it in some of these economies. COP27 needs to pave the path for a renewed international cooperative and enforceable framework to reduce global greenhouse gas emissions by the world’s top emitters both in absolute terms and in per capita terms. Unfortunately, the current geoeconomic and geopolitical rivalry and confrontation between the world’s largest economies does not help in this regard, but we have no choice but to remain hopeful.

Amin Mohseni-Cheraghlou  is a macroeconomist with the GeoEconomics Center and leads the Atlantic Council’s Bretton Woods 2.0 Project. He is also an assistant professor of economics at American University in Washington DC. @AMohseniC

Related reading

Econographics Apr 21, 2022

The North-South divide is growing. Can a new Bretton Woods help?

By Amin Mohseni-Cheraghlou

The growing divide is under the scanner as US Treasury Secretary Yellen and Colombian Finance Minister Restrepo both voiced a need to modernize the institutions.

Americas China

Econographics Apr 11, 2022

Democratic challenges at Bretton Woods Institutions

By Amin Mohseni-Cheraghlou

Voting quotas at Bretton Woods Institutions continue reflecting the 1944 power structure, despite significant changes to the global economy.

Africa Americas

Econographics Apr 11, 2022

“Inequality starts at the top”: Voting reforms in Bretton Woods Institutions

By Amin Mohseni-Cheraghlou

Full democratization of BWIs is not realistic. A more pragmatic approach would work towards a “double majority” system.

Africa Americas

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

Learn more

The post The target of limiting global warming to less than 1.5 degrees is practically dead. Why do emissions per capita matter? appeared first on Atlantic Council.

What are JETPs?

At their core, JETPs are climate finance agreements with three goals: 1.) facilitate the early decommissioning of coal-fired power plants; 2.) mobilize private sector capital to finance decarbonization efforts; and 3.) deliver a “just transition” for citizens. Labeled a “country platform,” this form of multi-donor engagement employs a system-wide approach to energy sector reform by addressing overlapping decarbonization challenges with an aligned policy response. In this way, JETPs seek to go beyond the funding of individual projects and become greater than the sum of their parts.

JETPs emerged from a longstanding attempt to combine climate and sustainable development goals in South Africa. The concept of a “just transition” has figured prominently in this debate since at least 2015, when the South African National Planning Commission formulated the country’s initial Nationally Determined Contribution (NDC). At the time, a transition to renewable energy represented an uphill battle due to strong vested interests in South Africa’s coal-dominated energy sector. In particular, Eskom, the country’s state-owned energy utility, strongly opposed efforts to ramp up renewables. This position has changed in recent years as both government officials and representatives of the debt-ridden utility have come to realize the need for more fundamental reform of its power sector. The South African electricity system not only faces significant future carbon risks, but is also plagued by frequent power outages caused by long-running underinvestment in new generation infrastructure. These mounting challenges finally led the government and Eskom to initiate discussions on a reform agenda for the electricity sector, in which the utility would relinquish some of its control and allow private investment to flow into new renewable electricity generation. Simultaneously, in October 2021, the South African government revised its NDC to encompass more ambitious climate goals. These actions ultimately paved the way for international donors to commit external financial resources at the COP26 in Glasgow, giving rise to the first JETP between several G7 donors and the South African government.

From South Africa to COP27

Since the announcement of the South Africa JETP in November 2021, the government of South Africa and so-called International Partners Group have been involved in lengthy negotiations on an Investment Plan to support the JETP’s implementation. In October, South Africa’s cabinet approved the long-awaited Investment Plan, which is set to be unveiled at COP27. While details of the Investment Plan remain to be disclosed, South Africa’s cabinet released a short statement expressing that the Plan “outlines the investments required to achieve the decarbonization commitments made by the government of South Africa while promoting sustainable development, and ensuring a just transition for affected workers and communities.”

Various constellations of G7 countries have also pressed forward with negotiating JETP deals with Vietnam, Indonesia, India, and Senegal, although all of these agreements are in different stages of development. For example, the United States and Japan are leading negotiations with Indonesia, with initial offers of around $10 billion. Although unconfirmed, the Indonesia JETP will most likely be confirmed at the G20 leaders’ summit in Bali, which will occur during the second week of COP27. Similarly, the EU and the UK are leading negotiations with Vietnam, with initial offers of around $5 billion. It is expected that the partnership with Vietnam will be announced at COP27, although negotiations are still underway.

Germany and France have begun negotiations with Senegal. Meanwhile, negotiations with India have slowed because the Power Ministry in India argues that coal cannot be singled out as a polluting fuel. With India’s G20 presidency approaching, it is likely that the negotiations will pick back up with a focus on accelerating deployment of renewables, and not on phasing out coal.

JETPs moving forward

Although many details regarding these JETP processes remain unclear, they bear the potential to represent a turning point in the climate finance agenda. By combining funding from several major G7 donor countries, they not only offer substantial financial support to partner countries, but they also send an important political signal. To be sure, the sums under discussion only represent a fraction of the capital needed to reach the needed scale of investment to place these countries on a pathway that is compatible with the 1.5°C target. Nevertheless, the hope is that they can lend additional momentum to ongoing reform efforts. 

To realize this potential, JETPs must be tailor-made and country-driven. This means, rather than reinventing the wheel, they should build on promising policy efforts, driven by the ambition of recipient countries. This way, JETPs can reflect the differing realities and starting points of major emerging economies regarding their domestic energy transitions.

Conversely, without a clear reform pathway in place, it is unlikely that a large-scale support effort from G7 countries will have a substantive impact. JETPs should rather be seen as an additional catalyst, providing support to domestic reform coalitions, as has been the case in South Africa. Such an approach would also provide incentives to like-minded governments to raise their climate ambition to pave the way for JETP-style support from donors.

Even then, success is all but guaranteed. Hence, as more emerging economies announce JETP-style agreements, it will be critical to track progress across the JETPs’ three primary dimensions: early coal decommissioning, the mobilization of private capital, and the realization of just transition goals. Such a monitoring effort will not only be needed to assess whether JETPs can generate the impacts the participating governments are hoping for, but to promote learning and exchange to further develop the approach over time.

The most tricky question will likely be the measurement of progress on a just transition. Given the differing conceptualizations of the term, this is likely to yield substantial variance across the countries. Furthermore, given the novelty of these agreements, it may be particularly valuable to promote dialogue between recipient nations. This will facilitate the exchange of lessons learned and, hopefully, improve the design of future JETP arrangements.

Another key question will be to what extent JETPs complement existing international climate finance architecture. Can they provide the basis for additional investments by multilateral development banks and existing climate finance mechanisms, such as the Green Climate Fund or the Climate Investment Funds? Moreover, G7 governments must also determine the extent to which JETPs can be utilized moving forward. JETP negotiations are resource-intensive processes involving months of consultations between donors and recipients. The South Africa JETP, for example, resulted from years of planning by domestic stakeholders. If JETPs cannot accomplish their goals in a timely manner, policymakers may elect to develop more streamlined processes. While these partnerships could lack the political significance of JETP-style arrangements, they may prove necessary to meet 2030 and 2050 emissions targets.

Finally, if JETPs prove a successful modality for delivering climate finance, it may be worthwhile to explore how the “country platform” approach can be expanded to other sectors. JETPs approach decarbonization from a system-wide perspective, recognizing the overlap between issues like infrastructure development, finance, and social displacement. If JETPs can facilitate the early phase-out of coal-fired power plants, it may be possible to use a similar approach for other decarbonization sectors, such as transport and energy-intensive industries. This may create opportunities for engagement with other emerging economies and allow JETPs to provide long-term value beyond the decommissioning of coal.

Christopher Cassidy is a US Fulbright Scholar at the Institute for Advanced Sustainability Studies.

Rainer Quitzow is a research group leader at the Institute for Advanced Sustainability Studies.

Maia Sparkman is an assistant director at the Atlantic Council Global Energy Center.

GEC at COP27: Ambitions for All

The Atlantic Council Global Energy Center will be at COP27 in Sharm el Sheikh, Egypt, to work alongside government, industry, civil society, and public stakeholders to devise pragmatic solutions and ideas to achieve net-zero #AmbitionsForAll.

learn more

Related content

EnergySource Nov 4, 2022

To meet energy security and climate goals, Africa needs investment in infrastructure

By William Tobin, Maia Sparkman

To this point, Western engagement in Africa has primarily taken the form of aid. For the continent to achieve widespread electrification and form the foundation for robust economic growth, that engagement will need to morph into investment and partnership.

Africa Energy & Environment

EnergySource Nov 3, 2022

The IEA World Energy Outlook 2022 highlights climate finance needs ahead of COP27

By Emily Burlinghaus

The new IEA World Energy Outlook 2022 should be used as a roadmap at COP27 for the allocation of climate-oriented resources. Doing so would better enable developing nations to ride the wave of interest in clean technologies amid the global energy crisis and share in the benefits of the transition.

Climate Change & Climate Action Energy & Environment

EnergySource Nov 2, 2022

A new Europe-MENA energy interdependence: The role of hydrogen

By Giampaolo Cantini

A deeper Europe-MENA relationship could aid a secure transition in Europe and create lucrative low-carbon export opportunities and industries in North Africa. Hydrogen could be the cornerstone of these new ties, and COP27 could be the perfect forum to develop them.

Energy & Environment Energy Markets & Governance

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Just Energy Transition Partnerships: Will COP27 deliver for emerging economies? appeared first on Atlantic Council.

This problem is self-perpetuating. When energy infrastructure is weak, there is less signal to invest as individual projects are less viable and are deemed riskier, particularly by the private sector, which has historically provided around 10 percent of infrastructure funding across the continent. Infrastructure, in this sense, should be expanded beyond the state of electricity grids or gas pipelines to include public services such as trained utility workers, water resources, public safety and security forces, and much more.

It is becoming clearer that the paradigm of “aid,” which has underpinned Western countries’ development strategies in the African continent, is increasingly insufficient. Providing aid alone to African nations will not provide the tools and enablers of self-sustaining, endogenous growth. For that, the continent needs investment, not just aid. 

Investment in African nations is not a question of charity. It is increasingly a matter of global economic—as well as ethical—importance. Higher levels of GDP are correlated with greater electricity use, affordability, access, and reliability. The African population is the youngest and fastest-growing of all continents, and thirteen of the world’s largest twenty urban areas are projected to sit in Africa by the end of the century. As occurred in China over the past forty years, Africa’s young and growing population can provide the globe with a capable labor force, along with industrialization for the modern era that can drive job creation and opportunity in African communities while spurring global economic growth.

Placing the chicken before the egg?

Africa’s energy infrastructure is plagued by longstanding underinvestment. In the past decade, the continent received investment of about $41 billion in the energy sector. This number is low in absolute terms, and when compared to the rest of the world, represents only 3 percent of global energy investment. More startling, however, is the fact that 99.5 percent of energy investment on the continent was routed to energy generation. Only the remaining 0.5 percent was routed to transmission and distribution networks. Turning to the World Bank, between 2010-2020, 7.5 percent of the bank’s electricity infrastructure investment went to sub-Saharan Africa, with 98.2 percent going towards generation and 0.3 percent for transmission. 

This underinvestment perpetuates existing problems, including low cost-recoverability and low revenues for utilities, and high project costs for new generation assets. Coupled with sky-high and rising interest rates in African countries such as Ghana, where the benchmark bank rate is 17 percent, poor energy infrastructure makes the risk premium high for new investors.

Untapped potential

The ultimate result is that despite increased focus on the issue of energy poverty facing the continent, infrastructure deficits hinder efforts to increase energy generation and distribution throughout the continent. Fortunately, the continent is rich in both natural gas and renewable resources to power the continent’s industrial revolution, address energy poverty, and spur economic growth, as long as the continent is provided investments at the scale needed to recognize this untapped potential.

Under the IEA’s Sustainable Africa Scenario (SAS), the model assumes that the annual investment in electricity grids more than triples in the 2026-30 timeframe, reaching $40 billion per year on average, with distribution networks accounting for over two-thirds of the total. However, achieving these annual investments is far from simple. Today’s existing financing mechanisms are insufficient for investments in large-scale energy generation, transmission, and distribution infrastructure projects. 

This does not bode well for the prospects of reaching the SAS’s $40-billion-per-year target, given that development banks and governments will need to step in to bridge the risk premium inherent in new investment on the continent. Despite the urgent need to invest, investment risk is high. But the only way to resolve this cycle will be to mobilize the capital necessary for the buildout of infrastructure which can sustain growth of more projects and more infrastructure. 

African governments will also need to step in to reform regulatory environments to build investor confidence, committing to both regulatory certainty and transparency in electricity markets. The SAS prioritizes regulatory reform to meet the continent’s energy goals, with a particular focus on cost-of-service electricity pricing reforms. To date, twenty-four countries in Africa have put such reforms in place or are under discussion to implement. Close coordination, collaboration, and transparency between African governments and utility companies will also be crucial to enhance cross-border interconnection.

Expanding engagement

On the matter of roads, ports, and railways, China has been Africa’s largest partner in developing infrastructure by far in the past 20 years. In fact, US influence in the region is waning, and trade between the United States and Africa decreased 55 percent from 2008 to 2021, to a sum of $64 billion. Africa’s trade with China in 2021 stood at $254 billion. As a response, President Biden and other G7 leaders announced the Partnership for Global Infrastructure Investment to mobilize $600 billion by 2027 for sustainable infrastructure developments in emerging markets, and to take steps to closing the financing gap. One of the four priority pillars included in this MOU is the commitment to build climate-resilient infrastructure, transform energy technologies, and develop clean energy supply chains. 

The US Development Finance Corporation (DFC)—the US government’s main tool to catalyze global infrastructure investments—is primarily designed to mobilize private capital for investment-ready projects, which are in short supply in Africa. The current structure of the DFC is insufficient in meeting the scale of infrastructure investments needed in low-income nations where it is most needed. In recent years, several public investment initiatives have emerged to crowd in, de-risk, and catalyze private investment in Africa. These include the African Development Bank’s New Deal on Energy for Africa and Desert to Power Initiative, USAID’s Power Africa, the Green Climate Fund, and CDC Group’s Gridworks Partners. Utilizing these initiatives to successfully mobilize private investment in energy infrastructure will be crucial in achieving the deployment of enabling infrastructure at scale.

Leveraging newfound attention to benefit African communities

Russia’s unprovoked war in Ukraine has sent Europeans scrambling to African capitals to identify new energy sources and completely rework European energy flows. In May, German Chancellor Olaf Scholz visited Senegal, where a significant gas deposit has been discovered along Senegal’s border with Mauritania; Italy has signed gas deals with Angola and the Republic of the Congo since the start of the war; and President Andrzej Duda of Poland visited the Ivory Coast to sign a Memorandum of Cooperation on exporting energy supplies from Nigeria to Poland. President Macky Sall of Senegal, the present chair of the African Union, has also hosted delegates from Europe to discuss the bloc’s need for resources.

Europe has expressed more interest than ever before in African energy resources as the bloc weans itself off Russian gas. However, an outstanding question remains: will Europe invest and support downstream infrastructure for Africans to benefit from their own resources, or will Europe’s willingness to invest only go so far as to secure gas exports for Europeans?

Europe’s elevated interest in the region as an energy provider might be a signal that investors have been waiting for to unlock significant investment to build out the needed energy infrastructure throughout the African continent which would allow African communities to use their own resources to expand energy access. Before Russia’s war in Ukraine, there was growing tension between African leaders advocating for the continent’s right to exploit its energy resources to industrialize and develop. Tensions grew stronger as the United States and the European Union (EU) blocked financing opportunities for fossil fuel projects abroad. However, since the war in Ukraine, both the European Union and the United States have eased up on this position, with the United States even including “gas for power” in its “US Strategy Towards Sub-Saharan Africa“ released in August 2022, recognizing the role of gas to support Africa’s development efforts.

Aligning with African leadership

African leaders from resource-rich nations have vocally opposed restrictions towards financing gas infrastructure. Speaking on a panel in Dakar in September, H.E. Bruno Jean-Richard Itoua, Minister of Hydrocarbons of the Republic of the Congo, said the following: “For the next 25 years we will see energy demand growing. We cannot face this demand without gas.”  In September, African Ministers of Finance, Economy, and Environment gathered to ensure coherence and prioritize actions in the lead up to COP27. From this convening, the Ministers underscored “the need to avoid approaches that encourage abrupt disinvestments from fossil fuels, as this will, in addition to the impacts of climate change, threaten Africa’s development due to the unintended impact on jobs, the economy, energy, food security, and the ability to mobilize finance.” Transatlantic policymakers must recognize that African nations strongly desire to utilize their resources to achieve development goals.

Whether the buildout of downstream infrastructure is for gas or transmission to carry the electrons produced by renewables, there is strong demand for an increase of investment in all forms of enabling infrastructure to achieve the UN’s Sustainable Development Goal 7—access to affordable, reliable, and sustainable modern energy for all—and remain on the path towards a low-carbon future. Given recent developments including the G7 committing to support infrastructure developments in emerging markets, Europe turning to Africa to secure energy resources, and African leaders advocating for a just energy transition, there is significant opportunity for developed nations to invest in usable ”downstream” infrastructure to recognize the African continent’s important role as a respected partner to address climate change and energy security. After all, emerging global actors and competitors, such as China, have long been doing exactly that.

William Tobin is a program assistant at the Atlantic Council Global Energy Center.

Maia Sparkman is an assistant director at the Atlantic Council Global Energy Center.

GEC at COP27: Ambitions for All

The Atlantic Council Global Energy Center will be at COP27 in Sharm el Sheikh, Egypt, to work alongside government, industry, civil society, and public stakeholders to devise pragmatic solutions and ideas to achieve net-zero #AmbitionsForAll.

learn more

Meet the authors

Staff

William Tobin

Assistant Director

Global Energy Center

Africa China

Staff

Maia Sparkman

Assistant Director

Global Energy Center

Africa Climate Change & Climate Action

Related content

EnergySource Nov 3, 2022

The IEA World Energy Outlook 2022 highlights climate finance needs ahead of COP27

By Emily Burlinghaus

The new IEA World Energy Outlook 2022 should be used as a roadmap at COP27 for the allocation of climate-oriented resources. Doing so would better enable developing nations to ride the wave of interest in clean technologies amid the global energy crisis and share in the benefits of the transition.

Climate Change & Climate Action Energy & Environment

EnergySource Oct 31, 2022

COP27 and financing for sustainable energy development

By Robert F. Ichord, Jr.

COP27 will place the issue of climate finance front and center. The need to provide adequate support for developing nations beset by climate-related hardship and pursuing transition policies cannot be overstated.

Climate Change & Climate Action Energy & Environment

EnergySource Nov 1, 2022

China’s energy security realities and COP27 ambitions

By Joseph Webster, William Tobin

China will enter COP27 firmly playing both sides of the energy transition. The country is a global leader in clean technologies, but it is also pouring money into new coal plants and production. Beijing may have to choose between its climate aspirations and its coal realities to compete successfully with the West.

China Energy & Environment

Learn more about the Global Energy Center

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post To meet energy security and climate goals, Africa needs investment in infrastructure appeared first on Atlantic Council.

On the domestic front, it must implement its legislative achievements and promulgate regulations which can both survive Supreme Court review and meet the timeline to avoid Congressional Review Act (CRA) reversal in a potential future administration.

The immediate task is to ensure that the funds provided by the bipartisan Infrastructure Investment and Jobs Act (IIJA) and the Democrat-led Inflation Reduction Act (IRA) are wisely and promptly spent. This is no easy task given the complexity of designating major projects like regional hydrogen hubs or maximizing the lending authorities of the Department of Energy Loans Program Office (LPO). Moving carefully and quickly is a balancing act indeed, especially when taxpayer monies are at stake. Equally crucial is the role of the Treasury Department, Internal Revenue Service, and other agencies tasked with crafting taxation regulations and clarifying complex legal provisions such as domestic content requirements, qualified sourcing, and more, as laid out in the original laws.    

On the regulatory front, the Biden administration is promulgating a host of important regulations with serious implications for energy and climate policy.  If these are published in final form more than 180 days before the end of the administration, they are likely to be the law of the land for multiple years while any differently-minded administration rewrites them. But if the Biden administration does not codify them in time, or cannot successfully defend them in a conservative Supreme Court using existing statutory authorities, they may not survive President Biden’s first term. Chief among these yet to be finalized rules are: a new power plant carbon dioxide emissions regulatory scheme (“Clean Power Plan 2.0”) and methane regulations for the oil and gas industry at the Environmental Protection Agency (EPA), an updated social cost of carbon (and other greenhouse gases) estimate, a climate disclosure rule for publicly listed businesses at the Securities Exchange Commission (SEC), and an updated Certificate Policy Statement and GHG Guidance at the Federal Energy Regulatory Commission (FERC). Additional agenda items could include vehicle performance standards and federal buildings efficiency standards, among other decarbonization regulatory efforts.

The makeup of Congress has little influence on the direction of these executive-level tasks. In practice, the parameters of these rules will be up to the agency heads themselves and perhaps ultimately the Supreme Court—which already reprimanded the EPA’s original Clean Power Plan approach earlier this year in its West Virginia vs. EPA decision. The Biden administration will be keen to finalize these regulations as soon as possible to avoid the threat of CRA in case of a GOP presidential win in 2024. Equally important will be disbursing federal monies promised in the IIJA and IRA, both to show concrete benefits to Americans in both laws ahead of 2024 and to prevent any efforts by a future unified GOP government to roll back the key funding components of these laws.

On the international energy front, the administration must manage the foreign policy challenges of a revanchist Russia, a freshly assertive China, a recalcitrant Iran, and souring relations with Saudi Arabia and the other Gulf Coast Countries (GCC). These tasks lie squarely in the authority of the executive branch, even while subject to congressional oversight and the appropriations cycle.

Indeed, major foreign policy challenges that are highly material to energy markets are ahead. Chief among these is the sweeping and punishing sanctions policy adopted by the United States and its allies targeting Russian exports of oil and gas—particularly as Europe weans itself off Russian natural gas supplies and prepares for years of supply insecurity as it recalibrates its internal infrastructure towards more liquefied natural gas (LNG). The ever-present tensions with Iran, and the issues facing a return to the Joint Comprehensive Plan of Action (JCPOA) and the lifting of extant energy sanctions, is another strategic problem with vast market consequences. So, too, the US relationship with Iran’s geostrategic adversary, Saudi Arabia, in light of US disappointment in the recent OPEC+ production cut decision. Looming over all of this is the United States’ own role as an energy superpower and major exporter of oil and gas, its use of the Strategic Petroleum Reserve (SPR) to calm markets, and the Biden administration’s oftentimes unclear approach with respect to approving expanded US energy exports. 

The international climate effort is no less complex. Efforts led by Special Envoy John Kerry to galvanize global action on emissions mitigation have been exemplified through the Global Methane Pledge and the First Movers Coalition targeting the multinational private sector, as well as robust US presences at COP26 and the upcoming COP27. But the international climate agenda has both inclusionary and exclusionary facets—the latter with regard to China. The Biden administration is working to diversify global clean energy supply chains (a key component of the IRA law), incentivize new supply chains for inputs like critical minerals, and ease China’s grip on clean energy technology manufacturing capacity. Ultimately, the direction of geopolitics will have enormous implications for US energy policy and, by extension, climate, but these decisions also lie squarely within the remit of the executive branch. 

Lastly, it must be remembered that the US is not one government, but rather dozens. State and local political developments have outsized influence on the direction of US clean energy buildout and broader decarbonization—particularly those “blue” states, such as California and New York, which are themselves charging ahead with innovative regulatory tools and investment in emerging fuels and technologies in the clean energy space. The US private sector plays an equally important and outsized role and often complements what all levels of US government are working on at any given juncture. The rapidly growing number of corporate “net-zero” commitments, now published in their securities filings, could have major impacts throughout their value chains. The to-be-awarded eight hydrogen hubs, similarly, will include multiple levels of public leadership and the participation of many private sector actors and investors.

As ever, unknown unknowns may lurk in the distance. But it is clear that after the major developments of the last two years, the next two will be equally consequential for the direction of the US energy system and its potential transformation—whoever holds the gavel on the Hill.

David L. Goldwyn served as Special Envoy for International Energy under President Obama and Assistant Secretary of Energy for International Relations under President Clinton. He co-edited Energy & Security: Strategies for a World in Transition (Wilson Center Press/Johns Hopkins University Press 2013), Editions 1 and 2. He is chair of the Atlantic Council’s Energy Advisory Group.

Andrea Clabough is a nonresident senior fellow at the Atlantic Council’s Global Energy Center and an associate at Goldwyn Global Strategies, LLC.

Meet the authors

Fellow

David L. Goldwyn

Nonresident Senior Fellow

Adrienne Arsht Latin America Center Global Energy Center

Caribbean Climate Change & Climate Action

Fellow

Andrea Clabough

Nonresident Fellow

Global Energy Center

Climate Change & Climate Action Energy & Environment

Related content

EnergySource Nov 2, 2022

US midterm elections, Part I: What’s at stake for energy and climate?

By David L. Goldwyn, Andrea Clabough

The US midterm elections could alter the course of the Biden administration’s energy and climate trajectory. But just like points of contention could emerge, consensus and continuity could as well.

Elections Energy & Environment

EnergySource Oct 25, 2022

Does the IRA make US offshore wind the “next big thing?”

By Joseph Webster and Elina Carpen

The Inflation Reduction Act sets the US clean energy industry up for rapid expansion, and offshore wind is no exception. Additional legislation could close remaining gaps and drive US offshore wind to the head of the energy transition.

Climate Change & Climate Action Energy & Environment

EnergySource Oct 14, 2022

Pathways for DOE-enabled grid innovation

By Ameya Hadap

The DOE was handed $10.5 billion for grid resilience and innovation by the Infrastructure Investment and Jobs Act. Here are two of the areas in which they should use it.

Energy & Environment Energy Transitions