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Americas Caribbean

EnergySource Aug 8, 2022

The Inflation Reduction Act places a big bet on alternative mineral supply chains

By Reed Blakemore, Paddy Ryan

The Inflation Reduction Act’s consumer electric vehicle tax credit will create strong demand for alternative minerals, sourced and processed outside of existing supply chains. The ability for these alternative supplies to meaningfully diversify mineral value chains hinges on further investment and policymaking effort.

Energy & Environment Energy Markets & Governance

EnergySource May 6, 2022

Colombia can lead the energy transition in Latin America

By Juan Gomez

Colombia’s geography gives it a chance to take a leadership role in Latin America’s energy transition. But to do so, Colombian leaders will first need to address indigenous concerns, remove barriers to investment, and fix long-standing mismanagement issues.

Colombia Energy & Environment

EnergySource Aug 10, 2022

Does the Inflation Reduction Act take the right approach to shoring up clean energy supply chains?

By William Tobin, Daniel Helmeci, and Selin Kumbaraci

The IRA houses two distinct approaches to building up domestic and friendly clean energy supply chains. The approach based on incentives is likely to be more effective than the one based on penalties.

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.

The post How cities can drive the energy transition in the Western Hemisphere appeared first on Atlantic Council.

Building a biofuels industry in Africa

Maia Sparkman, William Tobin, Maxwell Zandi — Wed, 28 Jun 2023 14:30:00 +0000

Many African nations are faced with simultaneous development imperatives to achieve a high-growth, low-carbon economy, while increasing access to modern energy services. Expansion of the biofuels industry across the continent, particularly in regions outside of North Africa, could potentially serve as a solution, albeit a partial one, to support these imperatives. When produced in localized or regionalized supply chains, biofuels—which are made from plants and other biological materials—can serve as a clean energy source to meet two fundamental needs of developing economies in African regions: transportation and—perhaps less intuitively—cooking. However, ensuring the availability of crops for food security is a prerequisite for expanding the biofuels industry.

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.

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AUTHORS

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.

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Meaningfully advancing the green agenda

Pepe Zhang — Mon, 26 Jun 2023 16:00:00 +0000

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.

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.
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.
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

Adrienne Arsht Latin America Center

China Coronavirus

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.

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1 Opportunities and Challenges in Latin America and the Caribbean: The Private Sector Perspective,” June 2022, question 10.

2 “GHO 2023: at a Glance,” Humanitarian Action, last visited January 25, 2023, https://gho.unocha.org/appeals/latin-america-and-caribbean#footnote-paragraph-136-1.

3 Carlos Felipe Jaramillo, “A Green Recovery of Latin America and the Caribbean is Possible and Necessary,” Latin America and the Caribbean World Bank Blog, September 11, 2020, https://blogs.worldbank.org/latinamerica/green-recovery-latin-america-and-caribbean-possible-and-necessary.

4 Enrique Oviedo and Adoniram Sanches, coords., “Food and Nutrition Security and the Eradication of Hunger: CELAC 2025: Furthering Discussion and Regional Cooperation,” Community of Latin American and Caribbean States, July 2016, 74–75. https://repositorio.cepal.org/bitstream/handle/11362/40355/S1600706_en.pdf?sequence=1&isAllowed=y.

5 Walter Vergara, et al., “The Climate and Development Challenge for Latin America and the Caribbean: Options for Climate-Resilient, Low-Carbon Development,” Economic Commission for Latin America and the Caribbean, Inter-American Development Bank, and World Wildlife Fund, 2013, 13–14, https://publications.iadb.org/publications/english/document/The-Climate-and[3]Development-Challenge-for-Latin-America-and-the-Caribbean-Options-for-Climate-Resilient-Low-Carbon-Development.pdf.

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

US offshore wind’s growing pains: Permitting and cost inflation

Joseph Webster, Elina Carpen — Mon, 26 Jun 2023 14:04:38 +0000

The United States has a nascent offshore wind strategy that requires approving new projects and catalyzing investment into the sector. Although offshore wind is gradually developing, it lags behind other important international markets, as the world’s largest economy has deployed less offshore wind than virtually every other advanced economy.

Two major issues are constraining US offshore wind deployment: challenges in securing permits and cost inflation. Regulatory uncertainty and a slow approval process are slowing the United States’ deployment of offshore wind. Project developers stress that there are not enough regulatory personnel to quickly approve projects. Meanwhile, projects are also constrained by rising installation costs which are largely macroeconomic in nature. The sector is not immune to broader inflationary forces and rising interest rates, while trade policy and steel tariffs are also raising costs. Still, there are also industry-specific cost pressures, including limited port and vessel infrastructure and skilled labor shortages.

These are, to some extent, growing pains for a rapidly developing industry. How fast the US offshore wind market matures will depend in part on whether the country quickly learns from others who have more developed offshore wind sectors.

A complex regulatory web

Over the past few years, the Biden administration has taken renewed leadership in the energy transition, rolling out measures intended to advance offshore wind in the United States. In March 2021, the administration set a target to deploy 30 gigawatts (GW) of offshore wind by 2030, and the Inflation Reduction Act (IRA) incudes federal tax credits that support the deployment of offshore wind in the country.

Yet, these newfound commitments do little to address the bottlenecks that result from the environmental permitting process in the United States. Nor do they provide clarity on the federal regulatory process.

Since 2009, the US Bureau of Ocean Energy Management (BOEM) has been responsible for lease sales and the coordination of permitting activity for US offshore wind projects. However, the US Bureau of Safety and Environmental Enforcement (BSEE) remains responsible for offshore wind safety and environmental enforcement and compliance, while other agencies have environmental authority over permitting processes related to protected species and other filings under the National Environmental Policy Act (NEPA). This lack of federal coordination can result in delays issuing Environmental Impact Statements—federal documents that assess the impact that a project might have on the surrounding environment—preventing the deployment of these projects.

Similarly, connecting offshore wind power to the onshore electricity grid remains a work in progress in the United States, and will require significant infrastructure development. The environmental impact of expanding transmission infrastructure is largely unknown and will be subject to its own regulatory process.

Learning from Europe

Europe, in contrast, is a mature offshore market, boasting approximately 255GW of installed wind capacity. Europe is also developing a meshed grid, which will comprise clusters of offshore wind farms that are connected to multiple energy grids across the continent to allow for a more coordinated deployment of offshore wind power infrastructure. This success has been made possible by a clearly defined permitting process.

Germany, for instance, has a one-stop permitting approach, where a single government authority coordinates the entire process. This government agency, the BSH, handles all approval methods, including strategic environmental assessments. Germany also has a fixed permitting timeline, which requires specific permitting requirements to be completed on a predetermined schedule, providing additional clarity. These standardized procedures allow for a more streamlined permitting process.

The United Kingdom, Europe’s offshore wind leader, is moving toward an overall strategic—rather than site-specific—approach. This would allow offshore wind developers to offset their environmental impacts on a larger scale, granting developers access to larger infrastructure projects that can encourage large-scale renewable energy usage while avoiding detailed environmental assessments on a site-specific basis. This change aims to cut down the offshore permitting process from four years to one.

The US BOEM has recognized the need for more clarity and efficiency in the US regulatory processes and has taken steps to mitigate existing permitting bottlenecks. BOEM has proposed a Notice of Intent checklist for Environmental Impact Statements, a document that details the review process for any proposed offshore wind development project. This checklist would act as a resource to keep the process on track and avoid delays in NEPA reviews. This is a good start; although challenges remain, the United States has recognized the current obstacles impeding offshore wind deployment and is taking steps to mitigate them.

Cost inflation and deployment

Offshore wind has some unique advantages when compared to other renewables. It is the only variable baseload power generation technology, meaning it has a high utilization rate nearly on par with gas-fired combined cycle power plants. Offshore wind also enjoys relatively low hourly variability, especially when compared to solar photovoltaic systems.

Yet, offshore wind has still suffered from some of the problems plaguing other renewables—and the broader economy. Offshore wind costs have risen due to rising interest rates, higher labor expenses, and increased prices for steel, copper, and other relevant materials. Steel accounts for approximately 90 percent of the materials used for an offshore wind farm, and iron and steel prices remain well above pre-pandemic levels, although they have declined from record highs.

The offshore wind sector is also hurting from specific challenges. Steel prices in the United States are still subject to uncertainty stemming from Russia’s invasion of Ukraine removing supply from world markets, including Ukrainian manufacturing facilities. Moreover, Trump-era steel tariffs have not been fully lifted, and there is a chance that some of the tariffs that have been removed could return later in the year if the legislation’s October deadline to strike a US-EU deal is not met. Increased tariffs would hit offshore wind projects hard, dealing a further blow to the industry.

Limited port and vessel infrastructure also continues to constrain projects, while some segments of the supply chain, such as wind turbine installation vessels and skilled labo, could become part of a tug-of-war between US and European projects. Already, several offshore wind projects along the US East Coast are seeking to renegotiate contracts because of these headwinds. Renegotiation attempts have faced legal challenges from state regulators, including in Massachusetts.

On the positive side, procurement contracts, which are critical for offshore wind development, have provided credible and durable long-term demand signals, enhancing certainty for suppliers. The IRA has also incentivized manufacturers to invest in steel, blade, tower, and nacelle capacity, while regional transmission planning has been funded through the bill.

The way forward

To address the bottlenecks in issuing permits, the United States should learn from German and British offshore wind strategies by housing permitting authorities within a single agency and staffing regulatory bodies appropriately to enable large-scale, strategic approval processes. While these reforms may not be possible to implement at the national level, US states should consider adopting them to enable rapid deployment of offshore wind capacity.

Cost inflation remains a problem for US offshore wind. Steel prices remain elevated, there are a limited number of available service vessels, and transmission challenges will loom larger as projects move closer to deployment. However, in addition to the IRA, procurement contracts from states have helped incentivize project development. Ultimately, US offshore wind will require strong federal and state support if the ambitious targets to generate 30GW by 2030 are to be met.

Joseph Webster is a senior fellow at the Atlantic Council Global Energy Center. Elina Carpen is a program assistant at the Atlantic Council Global Energy Center. This article reflects their own personal opinions.

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Staff

Joseph Webster

Central Asia China

Staff

Elina Carpen

Program Assistant

Americas 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

EnergySource Jun 27, 2022

30 GW by 2030: Policies for expanding US offshore wind capacity

By Joseph Webster

The US’ goal of 30 gigawatts of offshore wind capacity by 2030 is ambitious. Attentive policymaking, from the highest levels of the federal government all the way down to local governments in affected communities, will be key.

Energy & Environment Energy Markets & Governance

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

Learn more about the Global Energy Center

Jörn Fleck and James Batchik: Europe is taking a hard look at itself

The post US offshore wind’s growing pains: Permitting and cost inflation appeared first on Atlantic Council.

The ‘de-risk’ is in the details: A look at Europe’s ambitious new economic security strategy

Atlantic Council experts — Thu, 22 Jun 2023 18:23:24 +0000

Don’t call it decoupling. This week, the European Commission released its European economic security strategy, an ambitious plan to intercede in the European economy to reduce security risks across supply chains, critical infrastructure, and digital technology. European Commission Executive Vice-President Margrethe Vestager underscored that the strategy will “de-risk” the European Union (EU) from threats, not “decouple” its economy. But from whom? While the strategy dodges a direct answer, the EU’s top trading partner in goods, China, is an understood top concern.

Read insights below from Atlantic Council experts on what’s in the strategy and what it reveals about Europe’s economic and geopolitical future.

Click to jump to an expert analysis:

Barbara C. Matthews: The EU is acting to decrease points of vulnerability for renewable energy

Charles Lichfield: While not mentioned, China is the central focus of the strategy

Sarah Bauerle Danzman: The road to an EU outbound investment mechanism will be rocky

Elmar Hellendoorn: The strategy seeks to be adaptable but also comprehensive

Europe is taking a hard look at itself

The European economic security strategy represents a welcome development not just for its contents but in how the European Commission is thinking about economic security—and itself.

Under a framework of “promote, protect, and partner,” the strategy sheds light on the commission’s approach to de-risking, the phrase du jour of today’s geopolitics. It proposes new assessments of vulnerabilities, strengthened rules on key areas like foreign direct investment and export controls, and new rules on outbound investment. It also recycles existing proposals—the Critical Raw Materials Act, Net-Zero Industry Act, and Cyber Resilience Act, for example. By themselves, these are not groundbreaking. But it would be a mistake to stop there. Taken together, the strategy is a welcome document that outlines how the commission sees its policies become larger than the sum of their parts.

The contents of the strategy notwithstanding, there are three takeaways about how Europe sees its economic future. First, it starts with knowing oneself. The strategy opens with a frank acknowledgement that Europe was “insufficiently prepared” for many of the challenges that the COVID-19 pandemic, Russia’s war in Ukraine, and challenges from unnamed—read: China—players posed to Europe. Second, the strategy acknowledges that the European market, its regulations, and cohesion is by itself a European strength that can “keep global supply chains open and shape standards.” Third, that there is a direct reference that the economic risks identified could threaten Europe’s national security is a small but notable addition. It shows a recognition of the convergence of the geopolitical and the economic.

However, the strategy also shows both the potential and the limitations of the commission. First, as much as the Berlaymont may be thinking geopolitically, the commission still relies on capitals across the continent to approve and implement new rules. Throughout the strategy, there are polite reminders for member states to implement or enforce existing or future rules. Second, and perhaps more crucially, it’s clear that the commission is increasingly out ahead of member states on issues of security, defense, and now economics. Many member states will have reservations, if not objections to some of the conclusions and proposals in the strategy. There is no shared consensus among member states about how to adequately defend themselves against China.

It’s important to remember that, as the strategy’s sentences, conjunctions, and punctuation will now be parsed and debated across the continent and the European Parliament, the strategy is not a roadmap that will solve all of Europe’s woes but an opening salvo.

—Jörn Fleck is the senior director of the Europe Center at the Atlantic Council.

—James Batchik is an assistant director at the Atlantic Council’s Europe Center.

Online Event Fri, June 23, 2023 • 10:30 am ET

Competition or cooperation: Debating a transatlantic de-risking strategy on China

Is a transatlantic agenda on China possible? EU and China experts unpack the US and EU approaches to China in an era of increasing geopolitical confrontation.

China Economy & Business Europe & Eurasia European Union

The EU is acting to decrease points of vulnerability for renewable energy

The newly announced European economic security strategy constitutes a shift beyond the EU’s previous “strategic autonomy” security priorities. It will likely generate friction with both China and the United States in the near term regarding key renewable energy resources.

Until this year, the EU’s main focus was to ensure that its capacity to pursue its strategic interests remain unconstrained. It sought to ensure that policy conflicts and tensions between the United States and other countries (such as China and Russia) did not adversely impact its own interests.

Now, the EU seeks actively to minimize “the risks arising from economic linkages that in past decades we viewed as benign.” Those past linkages include Russia (natural gas), China (automobile component and other industrial manufactured exports) and the United States (a deeply integrated, multidimensional trade relationship that includes a deep reliance on retail technology giants that dominate the twenty-first century). Following Russia’s illegal invasion of Ukraine in 2022, the EU effectively replaced Russia with the United States as the key external supplier of energy resources, even as it made great strides toward delivering an energy mix that, for the first time, is generated more from renewable sources (specifically, wind and solar) than from gas.

The new EU “de-risking” strategy now views none of these economic linkages as benign. It views concentrated economic relationships as a source of risk that must be managed through a diversification strategy that places alignment on key norms (such as democracy, decarbonization, and commitment to open economies) as the foundation for future engagement.

Europe’s successful shift in the last year toward renewable energy implies a sharp increase in demand by Europe for a range of energy inputs that are, at present, predominantly controlled by China. Not only does China “dominate all steps of solar panel production,” it also has long served as the “dominant or near-monopoly producer” of most critical minerals needed to produce modern technology and renewable energy components such as wind turbine parts. Europe’s demand for hydrogen and lithium are set to skyrocket in the next decade, increasing the importance of the forthcoming Critical Minerals Agreement negotiations with the United States. The EU is acting now to decrease these points of vulnerability by mobilizing significant financial resources to promote renewables developments across Africa, the Middle East, and Latin America, even as it prepares to implement its carbon tax later this year.

The European policy shift to “de-risking” holds the promise of aligned transatlantic policy priorities in which EU and US initiatives complement each other to provide an effective counterbalance to Chinese economic pressure globally across the resource-rich Global South. It also holds the risk that misalignment with the United States regarding resource access and digital policy will generate frictions that can be exploited by other countries. Successful execution of this policy will require more than checkbook diplomacy. It will require Washington and Brussels to focus on the larger strategic picture to avoid individual technical issues from derailing their strategic relationship.

—Barbara C. Matthews is a nonresident senior fellow at the Atlantic Council. She was the first US Treasury attaché to the EU with the Senate-confirmed diplomatic rank of minister-counselor.

While not mentioned, China is the central focus of the strategy

The seventeen-page long “communication” on a European economic security strategy does not mention China once. It does refer to Russia, but only in its scene-setting introduction. For the rest of the paper, economic risks stem only from phenomena, not countries. Third countries are the focus of the section following these risks, but this puts them in an exclusively positive light: to confront challenges to its economic security, Europe needs the broadest possible partnerships.

Can there be any purpose to a strategy that dares not mention which countries are causing the risks it is supposed to tackle? The answer is still yes.

The robust discussions that took place between European Commission President Ursula von der Leyen’s team and the European Council—representing the views of all twenty-seven member states—are well publicized. A critical mass of national capitals, though concerned about the consequences of Chinese economic practices, are keen to avoid falling into a ratchet of policies and partnerships leading to an anti-China coalition. This includes members who have long been calling for the EU to take a more hands-on approach on economic statecraft, such as France.

And yet, even under such constraints, the strategy gets many things right. Alongside the traditional calls for cooperation, it pushes for more structured dialogue with the private sector—something that has been lacking on economic security strategy so far. We should also remember that von der Leyen did get to set out her views on EU-China relations not too long ago. So even if China isn’t mentioned, we can be pretty sure it remains the central focus of the EU’s fledgling strategy.

—Charles Lichfield is the deputy director and C. Boyden Gray senior fellow, of the Atlantic Council’s GeoEconomics Center.

The road to an EU outbound investment mechanism will be rocky

This strategy makes clear that the commission is going to bat for outbound investment controls, likely tightly connected to the three emerging technologies most poised to transform war making capabilities—advanced semiconductors, quantum computing, and artificial intelligence. This position reflects a rapid evolution in the commission’s thinking; just last year it was less enthusiastic toward outbound controls when the United States first announced its intention to develop a tool to regulate such investments. Then it only agreed to “study the issue.” Despite the commission’s commitment to propose an outbound initiative by the end of 2023, the debate between the EU, member states, and the business community is likely to be fierce.

In the near term, the inclusion of outbound investment in the strategy has two important implications. First, it substantially increases the likelihood that the United States will move forward with its own mechanism—through an executive order—in the next couple of months. The Biden administration can now point to the document as evidence of a growing consensus among partners and allies to place narrow restrictions on outbound investments into key strategic technologies. Second, and in line with the recent Group of Seven (G7) communiqué on economic resiliency, it frames the issue of outbound regulation squarely around technology security and technology leakage rather than around broader policy objectives such as supply-chain diversification.

The road to an EU outbound investment mechanism will be rocky. The economic security strategy identifies technology security as an element of “economic security,” but the proliferation of dual-use technology has traditionally been viewed as a matter of national security—an area over which member states, rather than the commission, have competence. Moreover, the EU has traditionally—through both export control and inward screening policies—sought to develop tools that do not discriminate between foreign countries. If the EU maintains this policy principle, its outbound mechanism will likely look quite different from the United States’ plan to only focus on investments into entities operating in or owned by “countries of concern” such as China.

—Sarah Bauerle Danzman is a nonresident senior fellow with the GeoEconomics Center’s Economic Statecraft Initiative and associate professor of international studies at the Hamilton Lugar School for Global and International Studies, Indiana University Bloomington.

The strategy seeks to be adaptable but also comprehensive

The most important element of the document can be read between the lines: it is not so much about what the commission is going to do about economic security but how. Three key principles seem to be guiding the commission’s economic security strategy.

The first principle is strategic adaptability. The commission announces that it will constantly work toward a vision on economic security that will help to tie the different policy instruments together. As geopolitical circumstances are changing in unforeseeable and complex ways, the commission has wisely refrained from setting its economic security policy approach in stone. Adaptability and flexibility appear to be baked into the commission’s thinking on this issue.

The second principle is comprehensiveness. In the strategy, the commission clearly expresses the ambition to break through different policy silos. While it does sum up the different policy instruments the EU has to strengthen its economic security—ranging from foreign direct investment screening to cybersecurity—the underlying question is how it is going to coordinate the use of its economic statecraft toolkit to achieve a maximum result.

The third principle is cooperation. The commission also shows a certain humility in pointing out all the work ahead on economic security. Clearly, it needs the support of its member states, not only in terms of policy execution, but also in helping to fully understand the challenge. Also, the EU is going to align its diplomacy and economic security policy more, thus targeting countries that the EU can work with to achieve greater economic security. Lastly, in terms of further conceptualization of its strategic approach to economic security, the commission also seems to be reaching out to the wider private sector.

—Elmar Hellendoorn is a nonresident senior fellow with the Atlantic Council’s GeoEconomics Center.

The post The ‘de-risk’ is in the details: A look at Europe’s ambitious new economic security strategy appeared first on Atlantic Council.

Grant Shapps on UK energy security: ‘We must not be reliant on unreliable partners again’

Atlantic Council — Wed, 17 May 2023 21:28:45 +0000

Watch the event

Online Event Wed, May 17, 2023 • 3:00 pm ET

A conversation with the Rt. Hon. Grant Shapps MP

The Right Honorable Grant Shapps MP, UK Secretary of State for Energy Security and Net Zero, discusses initiatives at the Department of Energy Security and Net Zero to bolster energy security and achieve net zero carbon goals.

Energy & Environment Energy Markets & Governance Energy Transitions Europe & Eurasia

Event transcript

Uncorrected transcript: Check against delivery

Speaker

Grant Shapps
UK Secretary of State for Energy Security and Net Zero

Moderator

Richard Morningstar
Founding Chairman, Global Energy Center, Atlantic Council

RICHARD MORNINGSTAR: Good afternoon, everybody, and good evening for those of our friends in Europe who are—who are joining us today. I’m Dick Morningstar. I’m the founding chairman of the Atlantic Council’s Global Energy Center and, among other things, a former US ambassador to the European Union.

And it’s my honor to lead this discussion today on the United Kingdom’s energy priorities with Secretary and Member of Parliament Grant Shapps, who is the secretary of state for the Department of Energy Security and Net Zero.

And I guess to state the obvious, with Russia’s war in Ukraine and the ensuing energy crisis, that’s highlighted the risks of energy underinvestment and dependence on malign actors, and has demonstrated the need for a cohesive and a strategic approach to energy security and decarbonization. And I want to emphasize that the green transition and decarbonization relates directly to energy security because, among other things, it will reduce dependence on single actors like Russia.

And as part of the response to these challenges, the UK government has recently launched its Powering Up Britain plan, which outlines how the government will enhance energy security and deliver on its net-zero commitments. And it’s fascinating that the secretary’s title is secretary for the Department of Energy Security and Net Zero, which tells you how important Britain sees the net-zero commitments. But this comprehensive strategy aims to advance energy independence and economic security through a series of multi-pound investments to expand clean energy and to take critical steps to achieve the UK’s goal of zero emissions by 2050.

Today we’re lucky to have Secretary Shapps with us, who will speak on the priorities for implementing this initiative and the department’s plans, and we’ll get into a whole bunch of—a whole bunch of related issues.

Let me remind you we have both an in-person audience and a virtual audience. This is a public session and it’s on the record and that, unfortunately, we can only handle questions from the in-person audience. And so if you have questions there’s a microphone over to the right where you’ll be able to line up or get up and ask the question.

So let’s start. So with that, maybe first, Mr. Secretary, you could tell us about your trip. I realize you had an unfortunate delay at Heathrow Airport which lasted overnight. But he’s in great—you’re in great shape for the session this afternoon.

But what are you going to be doing here in Washington and how important do you think the US-British relationship is—the US-UK relationship—with respect to the topics we were talking about, energy security, the green transition? How can we all work together on this?

GRANT SHAPPS: Yeah. Well, Ambassador, first of all, it’s great to be here. It’s fantastic to be at Atlantic Council and brilliant to be discussing this issue, which is so high up both of our populations’ agendas and, in fact, many people throughout the world, obviously, as a consequence of what happened in Ukraine.

But, actually, on the way here we passed the old post office pavilion and that fantastic statue of Benjamin Franklin is just out to the front and to the right of it, and I was reminded that he was, of course, American British. He had an American mother and a British father.

RICHARD MORNINGSTAR: And lived in Paris.

GRANT SHAPPS: And lived in Paris, yes, amongst other places.

RICHARD MORNINGSTAR: Right. Yeah.

GRANT SHAPPS: And, obviously, was absolutely critical to—you know, one of the founding figures—central founding figures of the United States. But it did remind me of, you know, that sort of very, very close relationship and everyone will, at least somewhere in their minds, remember that he had that famous experiment. He was an energy pioneer because he put a kite up in 1752 and demonstrated lightning was electricity, which was news to many because it was unproven at the time.

But in 1757 he moved to the UK. He moved to London. I don’t know where Paris was in all of that but at some point he lived in London. The bit of this that struck me, he lived on a street called Craven Street, and Craven Street is right by where this new department for energy security and net zero has its new home and we’re about to move in there in the old war office right on Whitehall there.

So, I mean, you just kind of, you know, perhaps by a quirk of nature get the sense of, you know, our obvious history is stretching back but on the energy side of things throughout history pioneering so many of the big energy breakthroughs including nuclear power on the defense side, obviously, the Manhattan Project on the civil side, the UK created the first—the world’s first nuclear civil power station at Calder Hall in Cumbria.

It was producing a massive forty megawatts, actually, on the side because what it was really doing was producing plutonium at the time for our military nuclear program. But our histories are tied and our approaches to what’s happened with Putin, what’s happened in Ukraine, are tied—closely tied together as well.

And, you know, if you look at by a long way, by a long stretch, the United States has put the resource into, you know, helping to fight Putin’s evil war but the number-two country is the UK and, again, you know, we just share that natural instinct to always be the countries to be in defense of those freedoms and liberties.

But energy has become a sort of blackmail. Putin has used energy as a weapon of war to blackmail the West in the hope that we would all crumble. We haven’t. We have managed to see our way through the first very difficult winter, you know, various different ways. I mean, Germany had a pipeline, and a second one on its way, to have 47 percent of their gas was from Putin. The UK was much more fortunate. We didn’t have a gas pipeline. We only bought 4 percent of our gas. So it wasn’t such a big wrench. But nonetheless, we still suffered in our energy prices.

And so we know that our response for this year and going forward has to be the thing that you just mentioned, which is we can have renewable energy which splits us off from the gas reliance, from the hydrocarbons, and nuclear in a renaissance that is going to make us energy-independent. It’s popular at home. I know it’s popular here. It deals with a big concern, which is the cost of living for our citizens in both countries and once again, I mean, just sort of back to the start with Benjamin Franklin, you know, the two countries working closely together. I’ve come here directly from a meeting with your energy secretary, Jennifer Granholm, discussing precisely these issues and how we can work in much closer cooperation. And that’s our third meeting in three months to move this agenda forward. So there’s a lot of serious work going on.

But I think that’s the challenge that lays ahead of us—cheap, reliable energy that no despotic leader can prevent us from accessing in the future.

RICHARD MORNINGSTAR: So, you know, energy certainly is and should be part of the special relationship between the UK and the US. What are some—where can that cooperation take place? How can one and one make three?

GRANT SHAPPS: So I would say, first of all, the UK has had, in the last ten to fifteen years, a big move into renewables. So if you take offshore wind, for example, in the North Sea we have the world’s biggest wind farm. But as you—also in the North Sea we have the world’s second-biggest, the third-biggest. The fourth-biggest is being constructed, and that will then become the largest again. And we’ve got the world’s first floating and the largest floating wind farms. As well, we’ve installed a lot of solar. Surprisingly—here’s a stat that will amaze people. It amazes me even as I repeat it for the hundredth time. The UK produces as much solar power as France, despite France being twice the geographical mass, and also the weather in the UK not being quite as sunny as in France.

So, you know, we’ve managed to do a lot on renewables. We still need to go further. I think, in answer to your question, you have now mechanisms in place to do that transition to renewables with several different acts from Congress, including the Inflation Reduction Act. And so there’s a great—we’re seeing a great requirement for the skills and the knowledge and the technologies that have been built up over the last decade and a half, and we’re keen to work together on that.

And that’s just one example. Nuclear power, civil nuclear power, very obvious areas of deep cooperation, some of which already exist. There’s much, much more to do with natural obvious partners, for all the reasons we discussed.

RICHARD MORNINGSTAR: Do your conversations include cooperating on critical materials? I mean, one of the great concerns has been we don’t want a dependence on Russia to be—you know, we’ll get over the dependence on Russia, but then what about China? And is that an area of potential cooperation?

GRANT SHAPPS: Yeah, absolutely. Critical minerals are at the heart of actually every form of renewable power and also nuclear power. So, I mean, they are—without sourcing out the supply chain to critical minerals, we can’t make this transition. So it’s not—you know, working with the US, but also other countries; Canada is a good example with lots of minerals, but many others as well, to make sure that we are not—again, change of policy, different world. Who knows what will happen next, as the last few years have demonstrated? We must not be reliant on unreliable partners again.

And, you know, I go back to the very obvious and most extreme example with our German friends finding themselves so reliant on Putin, who’s turned out to be the least reliable interlocutor, whilst actually this last month closing down their nuclear power. They closed down their last reactor last month. And so, of course, critical minerals are at the heart of making sure that, you know, countries who share our values are able to secure the power that they need. So there’s some ideas that we’ve been discussing just in the last hour of my meeting here in Washington about how we further bring the world together to discuss this. Of course, we’ve been doing it at the G7 Energy Conference in Japan, in Sapporo, and elsewhere. But actually, that was one of the subjects which—watch this space. There’s going to be more on this very soon.

RICHARD MORNINGSTAR: You know, we talked a little bit even before we came in that there are somewhat different approaches in the US and the UK. You know, we have our IRA, which created a lot of angst, which I think is dissolving some on the continent. What’s Britain’s view towards the IRA and the various approaches?

GRANT SHAPPS: Well, the first thing to say is we’re very careful to call it “eye-rah.” We’ve renamed it, in the UK, for reasons of history that some will recognize.

RICHARD MORNINGSTAR: I guess so.

GRANT SHAPPS: So the Inflation Reduction Act. But I think—I think the fundamental issue is this: In the UK we have a political consensus around the need to secure national energy security. And that one of the ways to do that is you actually very accurate, I thought, summed up in your introduction, is to move to renewables so that we’re not reliant on hydrocarbons that all too often—not always. You know, we have not seen all the gas. You have a lot of LNG, and other places are good partners. But actually, all too often we end up too reliant on a single form of energy, and then the world changes geopolitically, and we end up in difficulty.

So in the UK, we have a political consensus that actually several years ago, and actually under this Conservative government which will sound odd to an American ear, we passed legislation that said we had to get to net zero by 2050. So that was a cross-parliament agreement. Just a small twist to that is they also legislated essentially that the energy secretary could go to jail if we don’t do it. So when I say I’m working on this night and day, I mean night in particular because that’s when you start to worry about this stuff. For truth, it would have to be for a contempt of court. It would have to be because I wasn’t seriously addressing the issues. But, nonetheless, we have that political consensus.

In the US, clearly it creates a big dividing line. And because it creates a big dividing line it seems to me—I mean, correct me if I’m wrong because I’m just saying this from observing the US political scene—Congress actually in the end sort of got to the same place. But not by using mandates and laws and—but instead by using tax breaks and, you know, on the other side of that, obviously having to raise the tax in the first place or add it to debt. But that’s the consensus that has come about and created not just the IRA but also some of the other large acts which have now passed.

Frankly, I think, on balance, the world needs to get to this position of energy security. So, you know, whatever wills—means to the ends, I think is right. There are one or two rough edges that we’ve been talking about, including critical minerals, which we’re working through. But I think the world will be a better place for the biggest economy in the world actually being, you know, in the driving seat as far as switching to renewables and more nuclear, which I think is a very big part in this story.

RICHARD MORNINGSTAR: Are you concerned about issues that—again, I think they’re beginning to dissolve some—but competition issues related to IRA or other, you know, issues that might put Britain or other countries at a disadvantage, or?

GRANT SHAPPS: Yeah. So there are a couple of parts of guidance which have now been issued, which have helped sort of take off some of these rough edges, as you know. And we’re just working with the administrations in London and in Washington to deal with the final parts of that jigsaw. But, as I mentioned in the kind of intro, the opportunity is not just at a global to have the world’s biggest economy actually moving towards this energy transition in a big way, but then also from an entirely national point of view to have so many businesses and organizations asking for assistance, help, experience by British expertise. And I think British companies coming here are doing it.

I mean, a lot of—a lot of time I spend talking to companies who are, you know, for example, going to the West Coast—which is where I’m going tomorrow, to California—because, you know, we’ve got, you know, gigawatts of offshore wind now and we want to get to fifty gigawatts in the next six-and-a-half years off our coasts. You know, California wants to—I think I saw their figure was forty gigawatts or forty-five, something like that. They need the expertise. So it’s a massive opportunity to work together and, you know, to provide goods and services to each other as well.

RICHARD MORNINGSTAR: Let’s talk a little bit about the EU. We’ve talked about the US-UK energy relationship and areas of cooperation and so forth. Post-Brexit relations with the EU, how closely do you work with Brussels on energy issues?

GRANT SHAPPS: Yeah. Well, let me be completely candid with you. They weren’t happy that we left the club. We wanted our independence. I didn’t actually happen to vote for Brexit personally, but I am a democrat and I believe in democratic outcomes. The country voted to leave. And actually, I was always torn on it because, you know—you know, to an American audience, I ask you: Would you—would you give up control over your borders, many of your laws, you know, finances? Although we weren’t in the euro itself. Answer, definitely no. You know, and actually, why would Britain do something like that as well? Which is gradually what the EU was becoming, ever more so.

So, yes, it’s been—I think it’s fair and candid to say it’s been a little bit tricky for a while. However, very, very pleased to report since Rishi Sunak became prime minister and he helped to settle the Northern Ireland protocol issue through this thing called the Windsor Framework, it’s been transformative. So just last month I was out in Belgium, for example, at a leaders summit on energy, to which Britain wasn’t actually invited last year. Actually, a number of other countries weren’t as well, so it wasn’t just us. But now we are very much more working together. I have constant contact with my French, you know, counterpart, my Belgian counterpart, my, you know, Netherlands, German, et cetera. So we are now working very, very closely.

The other thing which has changed is not just the Windsor Framework. This winter, when Putin was holding Europe in particular hostage to energy blackmail, Europe as in the EU, continental Europe, discovered that Britain, as ever, was the absolutely indispensable, reliable partner. France happened to have a lot of their nuclear power down over the summer, some scheduled, some not. They power most of their electricity from nuclear. Their fleet was down. We were exporting renewable energy to France through the interconnectors. And they saw that, you know, we left the EU but we didn’t leave Europe, and we’re still there as partners. And did so, actually, with the war in Ukraine, where, as I mentioned before, our response has, I think, been foremost in the European countries.

So, you know, very much better is the simple answer.

RICHARD MORNINGSTAR: Speaking of Ukraine—and I don’t know whether this is within your—you know, your area, but on sanctions questions, energy sanctions questions, are there any differences in approach between, you know—there’s sort of a consistent G7 approach, but looking behind—you know, behind the scenes, are the views towards sanctions pretty much consistent with the US, Britain, with the—Brussels and the member states, key member states?

GRANT SHAPPS: Yeah. I think—I think, actually, broadly speaking it’s been one of the surprising—I think people may have doubted before February 24 last year whether the West would come together and properly react to what Putin’s done. But I think beyond any shadow of a doubt, that’s what’s happened.

And I mean, in terms of the UK’s position, at the time I happened to be transport secretary. And you know, I made sure that we were the first to ban Russian aircraft in our skies, the first to ban Russian ships from our ports—and not just Russian ships, but ships that were being leased or had some funding behind them or were flagged or, you know, whatever else. And again, actually, one of the things about being able to make those policies independently is that we can be more fleet of foot, we can move faster. And we tried to do that through transport, but also through energy policies where I’d say we weren’t actually buying very much Russian hydrocarbon but we immediately suspended the sale—announced the suspension of the purchase, rather.

But I—you know, actually, frankly, the EU got there, slightly slower timescale but not critically. The US got there. I remember the transportation secretary, Pete Buttigieg, calling me and saying it’s going to be in the—I think it was in the State of the Union, actually, as I recall—it’s going to be in tonight’s State of the Union. I’ve been pushing to make sure that, you know, the same things that we had already done on transport were matched.

So, you know, I think actually the West has impressively moved in lockstep and that’s exactly as it should be.

RICHARD MORNINGSTAR: Well, you know, sanctions are never a zero-sum game. How do you think they’re working? Are you happy with how the energy sanctions are working with the price caps and other sanctions?

GRANT SHAPPS: Yeah. So I think you’re absolutely right. I think sanctions are rather like this. If you put a sanction here then, you know, the thing, whatever it is—it could be energy but it could be anything else—finds its way around that, you know, and if you just give it enough time a new avenue, a new pathway—it’s like business. It’s very—you know, it’s very enterprising and it will find its way around that sanction and I think we see evidence of that in the way that the Russian economy has responded over a period of time. I think we have to be honest about the limitations of that.

Having said that, when the world acts in unison I think it still matters. It matters hugely because—not just in the case of Putin, Russia, and Ukraine but also what other countries might think if we don’t respond convincingly and together.

So I have no doubt that oil still finds—somehow finds a way around. I know that there were many arguments in favor and against a cap and floor prices and all these other—these other things. The important thing, I think, is not the exact measure. I think the important thing is the cooperation in those measures and I think we’ve seen terrific cooperation.

RICHARD MORNINGSTAR: Right. And it’s, certainly, been better than not having them.

GRANT SHAPPS: Definitely. Oh, yeah.

RICHARD MORNINGSTAR: So, again, thinking about Ukraine, it’s been a pretty good—I think we all would agree, better than expected winter, part of it being luck, part of it being good policy. Concerns about next winter—how concerned are you?

GRANT SHAPPS: Well, as I say, I spend my day and nights thinking about these issues. But we got through the first winter and that will have been the hardest one because we had to divert or find replacement for all of that Russian hydrocarbon.

So logic tells you that winter 2023-24 should be better but we should not rest on our laurels and that is one of the reasons why, you know, I think, pay tribute to the United States the way that the US has responded with LNG, the way that we already had LNG ports and so we brought it into the UK and then exported to Europe, the way that Germany now has built new capacity to bring LNG and other countries now—the United Arab Emirates, for example, will be coming on stream, if not this year next year. So the world has found its way around these things.

What I think now is really important—and I’m going to be saying and doing more on it, and this is what I’ve been speaking with my American opposite number with today—is thinking about the more medium term. So in the UK, as in the US, we’ve allowed nuclear civil power to reduce as a proportion of our power partly because we both have oil and gas. It became unfashionable. There were lots of protests about it.

But, actually, we are reversing that policy. We want a quarter of our energy to be nuclear civil and we want to exploit not just the gigawatt size of it but also the small modular reactors, and, you know, there are many different designs from Rolls Royce to Westinghouse and others and we think the time has come for those things.

I’ve just set up something called Great British Nuclear to take this forward. I’ve appointed a minister in the British government in my department who for the first time ever is responsible as the minister for nuclear. We’ve never had somebody with that title and wakes up every day and that’s what he focuses on.

So I think, again, with caution, if last winter was OK then this winter will be but nothing is set in stone. We could have terrible weather or something else. We need to keep making sure that we make sure the markets work properly. The price of, you know, gas has fallen dramatically at the moment. Again, we have to keep an eye on these things. But the medium term is where my focus is shifting to because we need to get the energy mix right and secure in the long term.

RICHARD MORNINGSTAR: On nuclear, are you sensing a shift of opinion on nuclear? I mean, Britain and other places as well, the US and Europe, or at least certainly parts of Europe, other parts of the world. Do you believe that in 2050, when you need to be at net zero—unless you’ve gone to jail in the meantime—do you think that nuclear is going to be a major part of the clean-energy world?

GRANT SHAPPS: I do. And I think, to answer the first part of your question, yes, attitudes have changed tremendously. You know, for example, of all the nuclear reactors—we’re producing about 16 percent of our electricity through nuclear right now in the UK. It’s fairly similar to the US. Of all the reactors that are still operational right now in the UK, every single one of them was commissioned under a conservative government, under the Tory Party, my party.

Now, I’m not making that as a political point. I’m making it because it demonstrates the fact that this was a deeply politically divisive issue in the past. It isn’t now, and partly because of the war in Ukraine and the need for energy security, but also partly because of climate-change issues and the rest.

We have reattributed the taxonomy to say that nuclear power is clean power in order to get the finance into that area as well. So I think, yeah, I think there is a general acceptance. I think with things like—with technologies like small modular reactors, more countries who weren’t using nuclear civilly, for civil power before, I think are likely to in the future. And it’s becoming much more practical than it was in the early days because the technology has moved in in seventy years.

RICHARD MORNINGSTAR: Two more quick questions on nuclear come to mind. Is there cooperation today between either UK and US companies or UK and US laboratories on small modular reactors? And then I guess a somewhat unrelated question: Is the argument that nuclear development in the West is critical from a national-security standpoint, relating to things like nonproliferation, concern about how nuclear power may be used by, you know, Russia, China, maybe other countries, is that a salient argument? And also then the cooperation with the US

GRANT SHAPPS: Yes. Yeah. Well, on the cooperation front, yes. I’ll tell you openly, it’s one of the subjects we’ve been discussing today. Actually, I think there’s a really interesting part of this which harks back to one of your previous questions on the supply-chain side of things. We talked about supply chains of, you know, hydrocarbons. But actually there’s also a supply chain in uranium enrichment and so on and so forth. So there’s lots of work to go on there.

Both the UK and the US have pretty unique skills and knowledge in these areas. And very few countries in the world are in a position to carry out the enrichment and some of the processes that come after enrichment. We’re both signed up to nonproliferation. So it’s very important. The way this is done is internationally responsible. And again, I think it’s one of the very good reasons why the UK and the US should and are starting to work very closely together on nuclear.

And, you know, uranium has to be enriched to a very different level for nuclear and some of the SMRs, and then advanced modular reactor, AMR, technologies in particular to—if you want to turn it into a weapon at 80 or 90, 95 percent enriched, so that we’re talking about two very different things.

And I think some of these new technologies are incredibly exciting. I was with a British firm who are working on a Magnox system, which is technology which has been around for a while. But the advantage of Magnox is if you had a leak, it comes into the air and it freezes immediately if it’s anything less than 550 degrees C.

So there’s lots of very interesting work going on, lots of great science going on. And, of course, even way beyond that, I just—quick—we’ve talked about fission. If you just talk about fusion, I went with the prime minister when I launched the document you mentioned, Powering Up Britain, to Oxford, where we have a research center in Culham, and we stood next to the hottest place in, certainly, the solar system, ten times hotter than the Sun at Tokamak there. So, you know, it’s always twenty years away to get to fusion…

RICHARD MORNINGSTAR: You know, and I want to get to audience questions. If anybody has a question, please come up—come up to the microphone over there. I mean, I’ve got enough questions to last for the next hour and a half, but we’d like to—we’d like to get some questions.

While you’re going up, you know, it sounds like, you know, that you take—I think what we do—an all-of-the-above approach towards and maybe agnostic on technologies as to—as to how we’re going to achieve net zero. Do you have priorities? I mean, as you’re thinking about what you have to do, do you have a list of priorities like—and I’m not saying it’s this—but, like, nuclear first, or hydrogen second, and something else third? Or is it sort of like we’re going to look at all of these things and see how they develop?

GRANT SHAPPS: I do. But the overriding principle is we must never be in—we must never be driven by a single technology, right? If it’s oil and gas—and we went a long way to oil and gas, not least because we were producing a lot of it in the North Sea—then, as that starts to run down, we’re starting to import it, and then you start to get reliant. Or in France, nuclear. They have a terrific nuclear industry. They’re building two of our nuclear power stations at Hinkley Point and at Sizewell, and they’re running the rest. But actually, you know, as they would say, this summer a lot of them are down for scheduled and, unfortunately, some unscheduled maintenance, and suddenly they’re short in power. And so on and so forth: the wind doesn’t always blow, the sun doesn’t always shine. So we have the—you know, we produced last year—57 percent of our electricity in the last twelve months has come from renewables and nuclear together. That’s great. But if the sun’s not shining and the wind’s not blowing, you need to rely more on that nuclear, and so on and so forth. So—

RICHARD MORNINGSTAR: I though the sun always shined on the—

GRANT SHAPPS: Of course. I know, I know, I know. But amazingly, there are occasions. So I think, first of all, energy mix.

Secondly, you ask: To what extent are we directing that? Well, we have set out in a lot of detail how much of our energy we want to get from these different forms. So offshore wind, fifty gigawatts by 2030, in six-and-a-half years’ time. You know, we’re saying we want on hydrogen ten gigawatts, half—at least half of which has to be green rather than blue. We set out on nuclear twenty-four gigawatts into the future to get to a quarter of our power. So, yeah, we’re doing that.

And probably the most exciting thing—I just want to say this before we take the questions—carbon capture, utilization, and storage, CCUS—four initials that I bet actually if I polled at home in Britain most people won’t have heard of—could be a trillion-pound/trillion-dollar industry. And I’m very excited about that, not least because geographically or geology—from a geological point of view the North Sea, in fact in many cases where we took the oil and gas out of, has a lot of storage potential.

RICHARD MORNINGSTAR: That’s great.

Well, let’s get a question from the audience. If you could identify yourself and ask the question.

Q: Thank you. Mr. Secretary, I’m George Pickart with the General Electric Company. We’re very pleased to be deeply embedded in UK’s electricity sector, working across all of the technologies that you’ve mentioned whether it’s onshore or offshore wind, or nuclear SMR, grid equipment, technology, et cetera.

You couldn’t have teed up my question any better. You know, we’ve been spending a lot of time and investing a lot of money in how you decarbonize gas because we don’t see a future of the electricity system without that large rotating equipment on the grid. So the issue is, how do you produce that with fewer carbon emissions? And so we’re pursuing both expanding our hydrogen capability and also working with a number of different collaborators on carbon capture and storage.

And I wanted to commend you and your government for the strategy that you’ve put in place on carbon capture. We’re quite interested, as you probably know, in collaborating on the Net Zero Teesside project, and you’ve put together a very good vision, a strategy, the financial mechanisms, the funding. I think what’s missing, really, is sort of the timebound element of it. I just wondered if maybe you could tell us, do you expect a decision on these projects to go forward within the next year? And can we look forward to that?

GRANT SHAPPS: Yeah. So, well, I should explain. Thank you for the question. And thank you for what GE does, as well, because it’s a great partnership. It’s a very good example.

The strange thing is I spend my time going around the world to countries saying how have you done it, and that’s actually largely with the help of your businesses who have come in and invested in these renewables and much else. And that is a great—I mean, you know, we’re capitalists. We believe this is the way to bring the best technologies together, and then often re-export them as well. So, you know, thanks for that.

Secondly, on CCUS, in that Powering Up Britain document we announced a twenty-billion-pound initial program. This is track one of our CCUS clusters. And, as you mentioned, Teesside, which is in the northeast, and the northwest are the two kind of areas where this has developed. And then we’re going to have expansions to those, and there’s clusters in Scotland and also in Humber, also on the east coast. Track one expansion will be this year, and then we’re actually going to have track two as well. So that is—you know, the 20 billion is the first part of it over 20 years.

So we’re—and the reason, I should just explain, actually, Ambassador, to our audience. The reason that I’m saying all this, and so excited about it, and why the question is so relevant is that we know that by 2050 we will still need oil and gas. This isn’t just me saying this. This is because the IPCC, the—you know, the global sort of experts say that there will still be oil and gas being required. In which case, you got to deal with the CO2. We have enough space in the North Sea for seventy-eight billion tons of CO2. Now, what is seventy-eight billion tons? It’s fifteen billion elephants, well-fed ones. It’s two-hundred million St. Paul’s Cathedrals, for the British audience here online. It’s a lot of space. It would take probably one-hundred-years’ worth of British CO2 and one hundred years of all of European CO2, which we can bury under the North Sea.

So this is very much in line with the overall mission of both energy security and net zero. And, you know, projects which look to help with that are already getting our backing. So, I mean, I’m not quite sure on the project that GE’s particularly interested, but it may be that it’s, you know, track-one expansion or track-two path right now, I guess.

Q: Thank you.

GRANT SHAPPS: Thanks.

RICHARD MORNINGSTAR: Thank you.

I think we have two more questions that I see right now. And we’re running—we have about four or five minutes left. And I also think it’s important before we finish, I don’t know if 3:45 is an absolute cut off, but Ukraine reconstruction. And there’s a conference on the 21st to 25th, and your views on that. Maybe we take these two questions—why don’t we take the two questions and then answer them together, and then if you have any comments on Ukraine, and then we’ll call it day.

Q: Yeah, thank you very much, Mr. Secretary. My name Kevin Gundersen. I’m with Huntsman Corporation. And we are the world’s leading spray foam insulation company.

And in your remarks, you discussed many options for energy security. But your government has done the one thing that no other government has done, which is make insulation the centerpiece of its energy policy. When you talk about medium- and long-term solutions, we feel very strongly and are very supportive of what you are doing, that insulation is a short- and medium-term solution to the energy crisis. It’s a relatively old technology and people don’t really think about it, but it does work in lowering greenhouse gas emissions and lowering utility bills.

The British government has had various iterations in the past of insulation schemes. And given the amount of funding and the support this time around, what are you and the government doing to make sure that the execution of this program works this time around, given the importance of the issue at the moment?

RICHARD MORNINGSTAR: Thank you. Let’s have Lee’s question, and then maybe you can respond to that, and maybe say a little something on Ukraine.

Q: Thank you, Ambassador. Thank you so much, Mr. Secretary. My name is Lee Beck. I’m with the Clean Air Task Force. We’re a global climate organization.

Thank you so much for your fantastic remarks about technology optionality and next-generation technologies, carbon capture, nuclear, fusion. It’s really, really fantastic. And you said something really important, that oil and gas will likely be around still by 2050. COP26 saw the launch of the Global Methane Pledge. COP28 will be where we’re going to be really talking about the decarbonization and reducing emissions from the fossil fuel sector. What are—what is your vision for methane mitigation, one of the fastest ways to act on climate in the near term?

RICHARD MORNINGSTAR: Great, so I’d say let us—yeah, why don’t you just take those two and then if you could say a little bit about Ukraine.

GRANT SHAPPS: Sure. So, first of all, I love your point about insulation. I mean, the best energy is the energy you don’t have to use in the first place. And it’s kind of—the high energy bills that people are being paying has suddenly both changed the maths—or, math, as you would say—and it has also changed the—you know, made people have another fresh look at, even though the technology, as you rightly say, has by and large been around. But so I think it’s enormously important.

We’re always being pushed to go further, but it’s worth saying that when we came to power, this conservative administration, which is in 2010, only about 14—one-four—percent of homes were adequately insulated, A to C on an energy rating. It’s now just approaching half of homes. So we’ve done half the job. Right now, in terms of size and scale, we have twelve billion pounds in the current periods going into this, I think up till 2028. And we’re working on new ways to target that. So we’re about to launch something called the Great British Insulation Drive, which you’ll be hearing more of very soon.

But, yeah, massively important, obviously, when new homes go up they’re much better insulated. We have a lot of Victorian housing stock. And they were very good builders, the Victorians, but not very good at building well-insulated, warm buildings, necessarily. So, yeah, more to happen on that front.

I’m just furiously looking at my notes actually on methane, because I noticed a stat when I was having to think about this earlier, which I was blown away by, which was something like a 60 percent reduction in our methane. But I’m afraid I cannot spot the exact number right now. But that pledge from COP26—our 60 percent reduction is not from COP26, it’s from earlier than that—but that pledge is incredibly important. And we mustn’t lose sight of the fact that we will go without CO2, but there are many other forms of greenhouse gases, and there are a lot of different responses that we need to take.

The brilliant thing about all this stuff is, you know, again, Ukraine and the high prices has made us look differently at it. Energy security—national energy security—you know, in my case, I say it’s powering Britain from Britain, I always say. You know, it’s just the flipside of the coin of net zero. That’s why we named the department Energy Security and Net Zero. They’re actually the same thing. You know, to get there, to be really secure, you know, we need to go through that whole transition. So and that’s our stated direction.

And you very kindly asked about the Ukraine reconstruction conference. It’s in London this summer. I actually took over the presidency on behalf of the UK from the Swiss, who ran the conference last year. There’s a huge amount of activity going into that. I’m speaking to my Ukrainian counterparts. I know the whole world—the whole civilized world will be there to help and support Ukraine, which we must do because, in my view, Ukraine could be lost in two different ways. We could lose it because we don’t stick together, we don’t have these different sanctions, we don’t respond to the energy crisis. But we could equally lose it by allowing Ukraine to be destroyed, even if they win. And that would be completely and utterly unacceptable.

RICHARD MORNINGSTAR: And, just very briefly, because we have run out of time, how would you—how would you begin to approach Ukraine energy reconstruction? And, you know, with the potential of ultimately Ukraine becoming a real energy powerhouse in Europe?

GRANT SHAPPS: Yeah. Well, I think—I’ve been speaking—on a personal basis, I’ve been speaking to my opposite numbers. Initially Oleksandr Kubrakov, who was minister for reconstruction and infrastructure and transport, at the time, now deputy prime minister. And also my opposite—direct opposite number, and actually I’m speaking to them—the first thing I do when I get home is speaking to them again in advance of this conference as well. And Ukraine has huge potential assets. I mean, in the same way as they’re the breadbasket of the world, or certainly of Europe and perhaps Africa, they also have the potential to be both in renewable energy but also in modernized nuclear civil energy as well.

So, you know, we’re very keen to make sure for their sake, but also, I think, for the world’s sake, that they are assisted in being brought back to what they’ll need to be to rebuild that industry and rebuild the country’s economy as well. It’s very close work. I’ve been personally very committed to all this. I’ve had Ukrainians living in my house for the last year, a family of three, and their dog as well, Mad Max. So every time I’ve gone home, I’ve been reminded of how evil that war has been. And Britain, and I know America, are committed to Ukraine’s future.

RICHARD MORNINGSTAR: And I can assure you, everybody here, I think, is likewise committed.

You know, unfortunately, we have come to a close. I’ve been getting sort of dirty looks from our events staff because I think we’ve gone over time. But—and we could have—I think we could have gone for another hour or two. But it’s been great. And I really want to thank Secretary Shapps for joining us and offering his insights on Britain’s path forward on energy and climate—not just Britain; you know, looking at it from a more global standpoint. And I hope you’ll be visiting us many times and maybe come back to our Global Energy Forum.

But I also would like to thank all of you who joined us in studio, as well as those around the world who are watching this virtually. And I would remind everybody that there is a recording of this conversation that’s available or will be available on YouTube, Twitter, Facebook, and the Atlantic Council webpage.

I’d also like to thank those here who made the event possible: Olga Khakova, who’s the deputy director at the Energy Center responsible for European energy security; Katie Kenney; Paddy Ryan; Frank Willey; Max Zandi; and our events—wonderful events staff.

So please join us for future events, Atlantic Council events. We will be having our eighth annual—I’ve been here eight years, so I guess I started it the first year—eighth annual Central and Eastern European Energy Conference—Energy Security Conference. That takes place on June 15 in person and online, and there will be more information on that on the webpage. And just, you know, keep watching our webpage for events.

So, again, this was on the record, and take care. See you next time.

GRANT SHAPPS: Thank you very much.

Watch the event

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Russia’s invasion fails to prevent progress in Ukraine’s energy sector

Aura Sabadus — Tue, 09 May 2023 20:28:02 +0000

For the past seven months, Russia has been waging a campaign of airstrikes against Ukraine’s civilian energy infrastructure with the goal of plunging the country into darkness. These regular bombardments left millions without heating and electricity for much of the winter season but failed to break Ukraine’s spirit. Crucially, Russia has also been unable to disable the country’s energy system. On the contrary, recent months have witnessed a number of encouraging developments which promise to further integrate Ukraine into the wider European energy industry.

One of the most interesting but under-reported achievements so far in 2023 has been the connection of Ukraine’s first biomethane production plant. This facility is one of a series of similar projects that are expected to position Ukraine firmly at the center of Europe’s energy transition. Situated in northern Ukraine’s Chernihiv region, the plant connected to the gas distribution grid in early April. A further four plants are expected to follow suit before the end of the current year.

With more facilities in the pipeline, Ukraine could be producing up to three billion cubic meters of biomethane annually by 2030, which would represent 10% of the EU’s total targeted production. By 2050, Ukraine could scale up production sevenfold to reach an annual level representing around two-thirds of the country’s total prewar natural gas consumption.

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Since the biomethane molecule is similar to that of natural gas but non-polluting and fully compliant with decarbonization goals, investments to support production and transmission infrastructure are expected to be affordable. This can already be seen in a number of swift upgrades that have allowed existing Ukrainian power generation plants using biomass to undergo partial conversions to biomethane.

Soaring energy prices in the wake of Russia’s full-scale invasion of Ukraine and the blockade of Ukrainian grain exports have helped producers to fast-track their investments in this budding sector. With traditional export routes severely restricted by the Kremlin’s Black Sea grain blockade, some agricultural businesses have used their crops to produce biogas and biomethane. Meanwhile, with European electricity and gas prices reaching record levels last year against a backdrop of Russia’s invasion, biomethane production is now five times more profitable than grain production.

Analysts say Ukrainian-produced biomethane is cheaper for European buyers than volumes produced in EU countries. Thanks to support from DENA, the German biogas register operator, Ukraine will also soon be able to set up its own register, which should allow sellers to provide proof of origin for exported biomethane by the end of this year.

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Of course, much of Ukraine’s ability to scale up this segment of the energy industry will depend on how quickly the war ends and on the ability of producers to attract funding. There are signs, however, that international appetite to work with Ukrainian energy industry partners is already growing, even as Russia’s invasion continues.

At the beginning of May, Ukraine’s gas transmission system operator, GTSOU, said it had received interest from non-resident companies looking to import natural gas to the country and possibly store it in underground facilities over the summer months. Prior to the war, more than 100 non-resident companies had signed up to import and store gas in Ukraine. In 2020, for example, a third of the gas stored in Ukraine’s 30 bcm underground facilities belonged to foreign entities. Following the start of Russia’s full-scale invasion last year, this figure dropped to just 2%. However, the latest capacity bookings reported by GTSOU signal renewed international interest in injecting gas despite the ongoing war risk.

This interest is largely driven by a widening spread between current and winter prices, which means traders have an incentive to buy cheaply now hoping to sell at much higher prices later this winter. Storage facilities across the EU are also filling up fast, effectively prompting companies to turn to Ukraine’s vast facilities to store surplus volumes.

Undoubtedly, this will increase Europe’s overall security of supply, particularly during the winter months when gas can be withdrawn and used across the EU. One could argue that Ukraine’s comparatively cheaper storage and transmission tariffs, together with the work carried out both by GTSOU and the storage operator UTG in previous years to attract customers, have also been instrumental in attracting international interest.

Further progress in the storage sector now seems increasingly realistic. Discussions are currently underway at the government and private sector levels to issue war risk insurance for companies looking to store gas in Ukraine. This could provide an extra measure of safety for existing or new clients. Whatever format these insurance measures take, it seems clear that wartime Ukraine remains a critical energy partner for Europe, and will continue to play an important role in the continent’s complex energy transition.

Dr. Aura Sabadus is an energy journalist who writes about Eastern Europe, Turkey, and Ukraine for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. Her views are her own. You can follow her on Twitter @ASabadus.

If deployed judiciously, clean hydrogen can have a meaningful impact on lowering emissions in hard-to-electrify sectors, which require a chemical feedstock, long-duration energy storage, or extreme heat.

Long-haul trucking is a viable clean hydrogen offtaker

For most forms of transportation, growing economies of scale have given batteries an edge over hydrogen fuel cells. However, long-haul trucking—which accounts for 7 percent of transportation emissions—may be too high a fence for batteries to climb.

As a vehicle becomes heavier, its battery must expand proportionately in volume to provide the requisite power. Electric freight tractors use battery packs that are significantly heavier than the weight of diesel a truck typically carries, which decreases range and payload capacity while requiring more frequent charging. This is meaningful in the freight industry, where time is precious, and downtime can come at a cost of over $50 per hour before accounting for costs of charging. An electric long-haul truck takes thirty minutes to charge to only 70 percent capacity even with megawatt charging. In comparison, hydrogen re-fueling can be done quickly. Refueling a hydrogen truck takes ten minutes.

Hydrogen fuel cell trucks are therefore likely to edge out batteries for trips surpassing 180 miles and payloads above 24,000 pounds, according to an industry study.

The US Department of Energy estimates that total cost of ownership for hydrogen fuel cell long-haul vehicles will become affordable by 2030 thanks to new production tax credits for clean hydrogen. Furthermore, the department cites evidence that the long-haul trucking sector is willing to pay a premium for clean hydrogen. This outcome, however, is contingent on a buildout of refueling infrastructure along freight corridors. To boost demand, infrastructure could be built along freight lines that support high volumes of freight, such as near seaports. This can help medium-sized refueling stations reach their breakeven utilization rate. To do so, industry and policymakers must overcome a chicken-and-egg problem. The development of refueling infrastructure is critical to enable hydrogen-powered long-haul trucks, and—conversely—hydrogen refueling stations will rely on long-haul trucking for their income, as hydrogen uptake in transportation is likely to be confined to this sector.

California and Texas: Unlikely hydrogen trucking partners

California and Texas are important players in both green hydrogen and long-haul trucking.

Not only do the two states have the largest populations and economies in the country, but they also have outstanding green hydrogen potential.

Both California and Texas have excellent renewable resources, including solar and wind. The two states have deployed nearly 74 gigawatts of solar and wind capacity with another 36 GW in development.

Texas and California are the nation’s largest and second-largest renewables generators. As more renewable electricity production grows in these states, so will green hydrogen capacity—although there will be tensions between providing renewables for power generation or hydrogen.

Long-haul trucking is a natural use case for green hydrogen in both states. Texas and California are the country’s largest users of diesel for the transportation sector, consuming 633,000 barrels per day in 2021, or about 21 percent of total US diesel demand. Both states rely heavily on trucking to transport cargo from ports along the coast of California and Texas to destinations further inland. Indeed, Los Angeles, Long Beach, and Houston are the country’s first, second, and fifth-largest container ports by volume, respectively.

There is already evidence that Texas and California’s long-haul trucking sectors could see synergies between ports and green hydrogen production. California provides fiscal support for zero-emissions vehicles, plans to end the sale of fossil fuel-powered medium- and heavy-duty trucks by 2036, and continues to develop hydrogen refueling infrastructure. Tellingly, Hyundai Motor will soon operate thirty fuel cell electric trucks in California; Hyundai states this deployment will mark the largest commercial deployment of fuel cell electric trucks in the United States in the super-large vehicle class. In North Texas, Air Products and AES are teaming up to construct the country’s largest green hydrogen facility to service the trucking industry.

The trucking fleet is replaced very rapidly: the average lifespan of a super-large class truck is eight years, while the median truck on the road today is approximately six years old. In comparison, personal vehicles are replaced on average only every ten and a half years. Moreover, unlike the personal vehicle segment, most long-haul trucks are procured by fleet owners who pay very close attention to the total cost of ownership, not just the sticker price. If hydrogen-fuel trucks become more competitive than their diesel counterparts, there could be a relatively rapid adjustment.

Hydrogen: Here for the long-haul

Hydrogen’s technical and economic fundamentals are likely to improve as technology advances and the Inflation Reduction Act incentivizes investments in renewables. Owing to their renewables potential, large ports, and significant diesel demand, California and Texas are primed to lead the trucking market’s transformation. While trucking fleet turnover will take time, hydrogen appears poised to disrupt the US trucking market.

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

William Tobin is a program assistant at the Atlantic Council Global Energy Center.

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Joseph Webster

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EnergySource Mar 14, 2023

Harmonizing hydrogen ambitions and realities

By William Tobin, Joseph Webster

Hydrogen’s chemical properties determine its most optimal uses. Policymakers should orient deployment toward areas in which hydrogen makes the most sense as a tool for decarbonization and away from areas in which it does not.

Energy & Environment Energy Transitions

EnergySource Mar 9, 2023

Sub-Saharan green hydrogen as a catalyst for development

By Daniel Helmeci

Green hydrogen has the potential to turn sub-Saharan Africa’s abundant renewable resources into fuel for a sustainable economy. If supporting infrastructure can be built to harness this potential, the entire region could see the benefits.

Africa Energy & Environment

EnergySource Feb 14, 2023

Hydrogen in the MENA region: Priorities and steps forward

By Giampaolo Cantini

COP27 marked a major escalation in the MENA region’s hydrogen ambitions. With several international partnerships now underway, sustained support and forward-thinking policymaking will be key.

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The post Green hydrogen: Loaded up and (long-haul) trucking appeared first on Atlantic Council.

China’s wind industrial policy “succeeded” – but at what cost?

Joseph Webster — Mon, 01 May 2023 17:57:46 +0000

The Chinese wind industry’s expansion is an undeniably impressive story. The world’s second-largest economy is the world’s largest onshore and offshore wind market in terms of both generation and capacity. China is not only firmly embedded across wind energy value chains—particularly in the mining and processing of rare earth elements—but it is also at the forefront of developing the world’s largest and most efficient wind turbines.

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.

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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

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

Lithium drives the energy transition. Will Chile’s plan to nationalize production be a speed bump?

Ignacia Ulloa Peters, William Tobin — Sat, 29 Apr 2023 00:37:16 +0000

Chilean President Gabriel Boric caused a jolt on April 20 when he announced plans to partially nationalize his country’s lithium industry. This decision would grant the government 51 percent control of the country’s lithium production via a state-owned company created to oversee and participate in the mineral’s entire production cycle. The announcement generated controversy in Chile and abroad, with a range of key players speaking in favor or against the initiative. While it is true that instances of nationalization of natural resources often result in debilitated industries, Chile’s strong institutions, recognition of the imperative to partner with private industry, and previous success with mineral nationalization ventures create a positive outlook for the country’s ability to deliver. While this may be the only path forward for the lithium industry to progress, policymakers should exercise caution with similar approaches to other industries.

Chile is one of the highest-volume lithium producers in the world, producing 26 percent of global supply in 2021, and possesses the world’s largest proven reserves. With the energy transition underway and demand for the metal estimated to increase by 450 percent through 2050, the country is uniquely positioned to benefit from a technologically and commercially mature lithium industry that, to date, has struggled to grow.

While the nationalization of resources in Latin America regularly raises alarms within demand centers and investor groups, Chile has demonstrated success in nationalizing its other abundant mineral resource—copper. Codelco, Chile’s state-owned copper company, has high technical expertise and standards with its main issues deriving from its misfortune of declining resources, not from mismanagement. Chile currently ranks thirty-fourth and thirty-third on the Atlantic Council’s Freedom and Prosperity Indexes, respectively, reflecting its institutions’ strong commitment to transparency, accountability, and integrity in economic, political, and legal spheres. While Codelco’s past success could steward the creation of Chile’s state-owned lithium business, there is limited precedent that this approach could benefit other industries.

Opponents of the initiative argue that the move could jeopardize foreign direct investment in lithium development in the country and ‘kill the golden goose’ for Chile’s economic diversification. However, the decision to nationalize could deliver overdue clarity and provide transparent foundations upon which industry development can proceed, providing businesses and investors with a degree of certainty for future operations and arguably more predictability than had existed previously. Boric has stressed that no existing contracts will be altered without being the “fruit of an agreement” with SQM or Albemarle, the two existing lithium mine operators—and that existing contracts will otherwise be respected.

This announcement extends beyond national economics. Boric’s administration designed the proposal to directly address longstanding grievances, such as inequality and water rights, that were highlighted during Chile’s Estallido Social in 2019. While Chilean state-owned enterprises have a complicated history concerning the well-being of local communities, this plan’s priority and primary purpose is to ensure that the population benefits from the lithium boom.

For instance, Chilean Minister of Mining Marcela Hernando announced that private companies that want to take advantage of lithium must do so by direct lithium extraction (DLE) and not through brine evaporation, a system that involves an ecologic loss of two million liters of water for each ton of lithium carbonate produced. This comes in direct response to Chile’s decades-long drought, which has led to anxiety from local communities, particularly in the Atacama Desert, regarding lithium brine extraction’s intense water use. Interestingly, DLE technology companies have said that state support could prove beneficial for growing this technology in Chile’s lithium operations.

The expertise and infrastructure of existing private-sector enterprises will be a continuing feature of Chile’s lithium industry for the foreseeable future.

Provided that the national lithium company will partner with private lithium firms already operating, this initiative is also set to enhance the public-private partnership model, which according to the administration is key to the successful implementation of the national lithium strategy. In fact, it is necessary to include the private sector in this venture, as the process of identifying reserves, as well as progressing from brine to lithium carbonate—the product that is exported—is technologically intensive. The expertise and infrastructure of existing private-sector enterprises will be a continuing feature of Chile’s lithium industry for the foreseeable future.

In this scenario, the United States has the unique opportunity to collaborate with Chile to make the most of its natural resources while identifying ways to establish regional supply chain partnerships. As one of the United States’ free-trade agreement partners in the region, Chile represents a strong partner to promote the diversification of supply chains for raw materials associated with the manufacturing of electric vehicle batteries, in line with the goals of the Inflation Reduction Act.

More broadly, Chile has the potential to participate as a valued partner in creating a more robust, diverse, and resilient global supply chain ecosystem as the new energy system develops. To realize this vision, Washington should not treat Chile’s nationalization of lithium as an impediment, but rather distinguish it from other nationalization trends in the region. Engagement with Chile in building this partnership should focus on maximizing the value of the country’s resources. By the same token, Chile’s inclusion in these partnerships will be part and parcel of ensuring that it feels it is obtaining the best deal from its resources for its economy and citizens, a precursor for obtaining the political consensus for its lithium industry to bring critical supplies to global markets.

Existing mechanisms such as the Americas Partnership for Economic Prosperity and the Minerals Security Partnership present ideal fora to engage with Chile through remaking those supply chains. These channels can be utilized to facilitate private-sector-public-sector interactions between lithium industry participants and the government of Chile as well as the new national business.

Chile’s national lithium strategy, if successful, could serve as a model for natural resource exploitation across the region. However, it is too early to extrapolate this historically successful approach of nationalization from mining to other industries. Such international collaboration, and facilitation of public-private partnerships, may yet facilitate the sustainable and equitable development of this particular industry that has struggled to scale.

Ignacia Ulloa Peters is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

William Tobin is a program assistant at the Atlantic Council Global Energy Center, where he focuses on energy and climate policy.

The post Lithium drives the energy transition. Will Chile’s plan to nationalize production be a speed bump? appeared first on Atlantic Council.

Decarbonization solutions for addressing Europe’s green industrial policy challenge

Transform Europe Initiative — Tue, 18 Apr 2023 18:55:38 +0000

On March 20, the Atlantic Council co-hosted a high-level workshop on “Decarbonization solutions for addressing Europe’s green industrial policy challenge” in Paris with the German Council on Foreign Relations (DGAP) and Groupe d’études geopolitiques (GEG). The event was the second in a series of six (the first was held in Berlin in January) which aim to bring together policymakers, analysts, and the private sector to discuss decarbonization strategies in Europe.

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.

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Ukrainian victory “could help ensure Europe’s future energy security”

Diane Francis — Fri, 14 Apr 2023 23:37:20 +0000

Ukraine could become the next European energy powerhouse, with enough natural gas reserves to replace Russian exports to Europe as well as enormous potential in hydrogen and renewable energy. However, development of the country’s energy sector has been impeded by Russian invasions in 2014 and 2022.

Oleksiy Chernyshov, who serves as CEO of Ukraine’s state-owned energy giant Naftogaz, believes Ukrainian victory in the current war with Russia could help ensure Europe’s future energy security. “In terms of overall reserves, Ukraine is second or third in size among European countries after Norway and the United Kingdom,” he says. This estimate does not include undersea gas potential in the Black Sea off Crimea, where preliminary drilling some years ago by Western multinationals indicated “enormous” deposits.

Ukraine has continued to expand production since the onset of Russia’s full-scale invasion in February 2022, with the country set to become self-sufficient in natural gas this year. Looking ahead, Chernyshov believes Ukraine’s domestic gas production can be further increased to replace Russian gas exports to Europe. “Theoretically, we can double or triple the production of natural gas even without Crimea, but we need big investment to do so. We need partners to increase the speed.”

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There was good news for Naftogaz in mid-April when The Hague Arbitration Tribunal ruled that Russia must pay the company $5 billion in compensation for some of the energy assets it unlawfully expropriated following the Russian military occupation of Crimea in 2014. Chernyshov describes the ruling as a “key victory” and says refusal to pay will result in court actions to seize Russian assets around the world. Billions more in claims are pending concerning Crimea’s offshore gas potential as well as Russian seizures of energy assets in other regions of Ukraine.

Today’s war in Ukraine is not just a fight against the resurgent authoritarian imperialism of Putin’s Russia. Due to the country’s vast gas, hydrogen, renewable, and nuclear power potential, Chernyshov argues that liberating Ukraine will also help guarantee energy security for the whole of Europe.

At present, about 80% of Ukraine’s natural gas production is located at sites in the Poltava and Kharkiv regions in the northeast of the country, which are under Ukrainian government control. The remainder is produced in western Ukraine close to Lviv. Military realities create significant risks, with some production sites less than 50 kilometers from the fighting. Total Ukrainian gas production is currently estimated at 18.5 billion cubic meters per year, with 13.5 billion produced by Naftogaz and 5 billion by other producers. Chernyzhov notes that this is more than any other country in Europe except Norway, which produces 100 billion cubic meters annually.

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Despite the ongoing war between the two countries, Russian gas continues to flow through Ukraine’s transit pipeline network to EU markets. However, with European customers increasingly looking elsewhere for their energy supplies, annual volumes have fallen to around 14.5 billion cubic meters.

Another major Ukrainian energy asset is the country’s natural gas storage capacity, consisting of underground facilities that were first developed during the Soviet era. “This is the biggest storage in Europe, is safe from attack, and could be used to store supplies from all over the world for use in European countries. Ukraine could be Europe’s energy bank,” says Chernyshov. “This would help provide energy security to landlocked countries like Austria, Slovakia, the Czech Republic, and others that have no sea access.”

Ukraine has asked the European Union to provide war risk insurance for this storage capacity in order to increase its use to pre-war levels. “Our storage is certified and in full compliance with the most recent European regulations,” notes the Naftogaz CEO. “The only thing missing is additional guarantees for commercial companies so that thousands will come back and utilize this capacity. This will allow Europeans to bank energy and save money.”

In addition to the country’s sizable untapped gas reserves, Ukraine’s other key energy advantage is likely to be hydrogen production, predicts Chernyshov. “This requires electricity and clean water, which Ukraine has in abundance. Ukraine is and will be a serious net exporter of electricity, but you cannot store it unless you convert it into hydrogen. And Ukraine has huge pipelines to Europe which can transfer hydrogen or anything in gas form. Hydrogen production is not cheap, but many countries want to get involved after our victory.”

Ukraine’s large land base and favorable climate also provide extensive opportunities for major wind and solar power projects. Chernyshov says the country’s enormous energy potential underlines Ukraine’s importance as a strategic partner for the EU. “Everyone must stop treating Ukraine as country that will require constant assistance in the energy sector. In fact, we are positioned to become an energy hub for Europe.”

Diane Francis is a nonresident senior fellow at the Atlantic Council’s Eurasia Center, editor-at-large with the National Post in Canada, author of ten books, and author of a newsletter on America.

Isabel Bernhard — Fri, 31 Mar 2023 21:57:15 +0000

US President Joe Biden and his Argentine counterpart Alberto Fernández met on Wednesday in a discreet but strategically significant White House visit. Both sides’ official readouts listed a litany of topics covered: Argentina’s debt relief, democracy, food security, technology, exports, and Russia’s war in Ukraine. Yet in doing so, Biden and Fernández sidestepped significant discussion—at least in what they revealed publicly—of two related themes crucial for US-Argentina relations in the long run: lithium and China.

The US-Argentina relationship is increasingly characterized by mutual interest in developing lithium deposits and in defining China’s role in Argentina, in the latter case both in the area of China’s growing lithium investments and in other areas. Wednesday’s meeting coincided with the two hundredth anniversary of bilateral ties, but for this long-standing partnership to continue to grow, each side will have to clearly articulate its national interests and find consensus on those important topics.

Argentina, with one of the world’s largest lithium reserves, has received renewed attention considering lithium’s importance in electric vehicle and grid storage batteries, essential technologies that will be needed at large scale for an energy transition. The country has over twenty-eight lithium projects under exploration, including thirteen ongoing or announced projects with Chinese investment since 2018. Two of the thirteen Chinese projects are valued at or above one billion dollars, a significant promise of funds at a time when Argentina’s economy is contracting.

The Biden administration has also set its sights on lithium acquisition, naming the mineral as a strategic component of its proposed “Made in America” supply chain. Because of this domestic focus and particularly constraints in the 2022 Inflation Reduction Act, the United States has thus far been unable to accommodate Argentina’s efforts at greater bilateral lithium collaboration. If current trends continue, Argentine lithium could be largely channeled either toward Argentine national development or Chinese economic and energy growth, leaving the United States out of this critical mineral market. The Biden-Fernández conversation was a missed opportunity to demonstrate greater US flexibility on lithium sourcing and underscore how US and Argentine interests align on this theme.

Beyond lithium investments, the interest the United States and Argentina share in defining China’s role in Argentina was another key topic left publicly unsaid, even if the ideal scope of Chinese engagement differs for each country. For the United States, in an age of geopolitical competition, any US ally’s engagement with China draws increased scrutiny. Over the past year, attention has turned to Argentina’s agreement with China to build a nuclear power plant and its participation in Beijing’s Belt and Road Initiative.

For Argentina, China remains a strong trade and investment partner, and the country’s public and private sectors are strongly focused on deepening opportunities for exports. In future encounters, Biden and Fernández—or other top officials from the respective countries—should dedicate part of their discussions to further parsing the other’s posture on Chinese engagement. Hearing Argentina’s rationales for engaging with China first-hand would greatly help the United States craft competitive alternatives that fulfill US and Argentine interests.

Fernández may be seeking a second four-year term in October. In an election year, voters are looking for tangible deliverables, which he will not receive from this week’s Biden meeting alone. Without substantive bilateral engagement on two crucial long-term topics, Fernández will return to Argentina with limited guarantees for the future, independent of how discussions develop around restructuring the country’s International Monetary Fund loan. Ultimately, managing Argentina’s critical mineral resources and triangulating between Beijing and Washington will be a long-term challenge for whoever the country’s next president may be.

Isabel Bernhard is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

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Can hydrogen fuel reduce aviation’s climate impact?

Joseph Webster — Thu, 23 Mar 2023 12:00:00 +0000

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As the United States looks to reduce its greenhouse gas emissions, lowering its carbon footprint will require an all-of-the-above strategy across multiple sectors, including the aviation sector. Reducing the aviation sector’s greenhouse gas emissions will demand a transition to new energy resources, including liquid hydrogen fuel, which has emerged as a promising alternative to conventional jet fuel. Existing clean energy options for aviation, such as batteries and sustainable aviation fuel (SAF), suffer from technical limitations and limited supply, respectively, and will have only niche roles to play in the transition. And while clean ammonia may ultimately play a role in the systematic decarbonization of the aviation sector, the overwhelming majority of technical aviation experts believe that liquid hydrogen will ultimately be adopted by the industry. Given these conditions, it is imperative that policymakers closely examine liquid hydrogen’s role in aviation decarbonization.

Several challenges will need addressing over the next ten years or more before the industry can begin to convert to, or partially switch to, hydrogen. Engineers must design planes to accommodate hydrogen; hydrogen-fuel infrastructure, although growing in the United States, must expand further to support hydrogen jet fuel needs at scale; and additional hydrogen uses, such as long-haul trucking, would improve the economic case. This issue brief examines these challenges, and the policy solutions needed for including aviation in the nascent hydrogen economy and energy transition. Hydrogen has developed rapidly over the past five years, moving from an afterthought to a top-of-mind decarbonization solution. In another five or ten years, hydrogen aviation could move from a distant prospect to an emerging reality.

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Decarbonization solutions for addressing Europe’s green industrial policy challenge

Transform Europe Initiative — Mon, 20 Mar 2023 10:00:00 +0000

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

Vice Chair, Scowcroft Center for Strategy and Security

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

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.

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.

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

The energy and climate challenge: How Europe can achieve decarbonization

Transform Europe Initiative — Tue, 14 Mar 2023 20:52:22 +0000

A week before the Franco-German Summit in January, the Atlantic Council proudly co-hosted with the German Council on Foreign Relations (DGAP) “A Grand Bargain for Europe’s energy and climate challenge,” a workshop on the European Union’s energy and climate policy from a geopolitical perspective. Distinguished guests at the workshop included H.E Laurence Boone, Minister of State for Europe for the French Foreign Ministry; Sven Giegold, State Secretary for the German Ministry of Economic Affairs and Climate Action; and Jörg Kukies, State Secretary for Financial Market Policy and European Policy for the German Federal Ministry of Finance. In addition to these guests, the Atlantic Council and DGAP were honored to host experts from EU institutions, EU member state governments, academia, and the private sector.

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.

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.

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

Harmonizing hydrogen ambitions and realities

William Tobin, Joseph Webster — Tue, 14 Mar 2023 15:52:45 +0000

Hydrogen will play a vital role in the deep decarbonization of the global economy. In a net-zero world, estimates like those provided by the International Renewable Energy Association (IRENA) and the Hydrogen Council forecast the chemical will supply between 12 and 20 percent of world final energy demand.

For this reason, hydrogen is gaining increased attention from policymakers and the public. While altogether a welcome development, it also comes with risks. The reason for this is simple: hydrogen is an energy carrier, not a primary fuel, and its production requires energy. For this reason, the process of devoting financial and clean energy resources to create hydrogen for applications where it is not optimal will detract from carbon abatement efforts, particularly when investments and energy are devoted to make clean hydrogen for applications which are more efficiently electrified.

The bottom of the ladder

Hydrogen is versatile, and its properties are ideal for the decarbonization of many vital economic processes which cannot easily be electrified, especially in industries such as refining, steel, and cement. Nonetheless, there are many applications which do not draw on hydrogen’s physical strengths, which policymakers should be wary of:

Liquefaction for exports. Liquefying hydrogen will be too energy intensive per unit of energy, and therefore too expensive, to justify transporting the liquid product. Converting a fuel (wind, solar, water energy, natural gas, etc.) to electricity, from electricity to hydrogen, and then from hydrogen to liquified hydrogen will result in a roundtrip efficiency (the efficiency derived from dividing the energy carried in the primary fuel by the energy present in the resultant product) of less than 40 percent, even before factoring in boil-off and regasification. This figure decreases substantially if hydrogen imports are destined for electricity generation.

Compounding these disadvantages, the amount of energy which can be transported via hydrogen, even in liquid form, is 40 percent that of an equivalent volume of liquid natural gas.

Finally, the export and import of liquid hydrogen will largely not be able to repurpose existing liquefied natural gas (LNG) terminals. Hydrogen embrittlement will require new storage tanks, piping, pumps, and valves, while new, higher-capacity compressors will be needed to achieve a liquified temperature of −253 degrees Celsius, as opposed to −162 degrees Celsius for natural gas. These expensive and time-consuming refurbishments would severely harm project economics.
Baseload thermal power generation. It is unlikely that converting electricity or natural gas to hydrogen and then to electricity will be economically viable, except in limited circumstances, such as long-term storage. Utilizing hydrogen for power generation exhibits poor roundtrip efficiency. The maximum achievable roundtrip efficiency for power-to-power hydrogen applications is 29 percent, per a study published in the International Journal of Hydrogen Energy, and between 18 and 46 percent, per a study published in Nature Energy. For reference, a combined-cycle natural gas plant can operate at efficiencies ranging from 45 to 60 percent. Co-firing natural gas with hydrogen or using a 100-percent blend of hydrogen in gas turbines may have value for inter-seasonal storage applications, however.
Domestic heating. Electrifying heat via heat pumps is highly efficient, while blending hydrogen into residential gas distribution pipelines for heating is far less so. In the United Kingdom, a meta-study by Oxford’s Jan Rosenow of thirty-two independent studies found that hydrogen for space and hot water heating results in higher energy system costs; leads to more significant environmental impacts, including greater land use requirements; and requires about five times more electricity to heat a home than a heat pump. Michael Liebreich, the founder of Bloomberg New Energy Finance, calculates that obtaining the equivalent of 70 gigawatts (GW) of residential heat via hydrogen would require 150 GW of renewable electricity. Conversely, obtaining that same amount of residential heat via heat pumps would require only 26 GW of renewable electricity.

A study on hydrogen by the UK Parliament found “hydrogen could play a role in domestic heating, but the extent of its potential is still uncertain and looks likely to be limited rather than widespread.”
Mid- to low-temperature industrial process heat. These applications should be electrified to the greatest feasible extent. Technologies like industrial heat pumps show considerable promise.
Ground transportation (light transportation, trains, and buses). Batteries are more efficient, converting 80-90 percent of stored electricity to traction. This compares to 40-60 percent for hydrogen fuel cells, not accounting for the fact that hydrogen already needed to be converted from electricity or another feedstock. Batteries are also more advanced on the cost curve than fuel cells, will likely be able to deliver improved range, and enjoy incumbency advantages via more developed infrastructure. Moreover, in applications for these vehicles with fixed routes where fuel cells might make sense due to the availability of refueling infrastructure, electrical lines will be able to deliver better results at more competitive prices. However, hydrogen vehicles could play a pivotal role in certain heavy-duty markets, if batteries are unable to meet weight-to-volume requirements which enable them to power these vehicles as innovation progresses.

Key hydrogen applications

While hydrogen has limitations, it will have an important role to play in the decarbonization of key applications. Hydrogen burns at a higher temperature (2182 degrees Celsius) than natural gas (1937 degrees Celsius), yet combustion of hydrogen produces only water. Hydrogen is also an ideal solution for industrial applications such as steel, which is responsible for 7-9 percent of global greenhouse gas emissions.

Chemicals. The first priority for building the market for low- to zero- carbon hydrogen should be to decarbonize existing hydrogen applications. This begins with refining—where hydrogen is used for hydrotreating and hydrocracking, which are essential to process heavy sour crude oil—and chemicals, with an emphasis on nitrogen-based fertilizer for which hydrogen is used to produce ammonia.

Today, the demand for hydrogen totals about 100 million tons per annum. Today, less than one million tons per annum are derived from “low-carbon” sources of hydrogen production, although this could scale to 16-24 million tons per annum by 2030 if all projects in the pipeline today were completed.
Steel. Hydrogen is essential to decarbonizing steel. Through a process called the direct reduction of iron, which uses hydrogen to reduce iron instead of coke, green steel can be made, bypassing the dirty blast-furnace-basic oxygen furnace (BF-BOF) process, in oversimplistic terms. While electrochemical substitute processes are on the horizon, they are not yet technologically mature.
Long-duration energy storage. Unlike batteries, which store electricity electrochemically in a galvanic cell, hydrogen is a chemical energy storage solution which can play a role in integrating the electrical grid by storing energy for long periods of time, eventually being converted back to electricity via combustion or by using fuel cells. The use of hydrogen for short-term “grid balancing”—the production of hydrogen during periods of high electricity production for use when production drops—competes with batteries, which store energy better per unit of volume and are achieving manufacturing scale already. However, the production of hydrogen with the express intent to fill protracted gaps in firm electricity generation is more cost-effective than using valuable battery storage for this purpose. Batteries are more economically employed for short-term storage, balancing daily ebbs in renewable generation.

A mix of uncertainty and necessity

One area to watch is decarbonizing heavy-duty vehicles, such as for mining and construction applications, whose requirements may differ from long-haul trucking. The best pathway to decarbonize haul trucks, for instance, is uncertain due to the weight-to-volume ratio for batteries approaching the scale needed to power these applications. Companies such as First Mode are trialing hydrogen haul trucks for mine sites and have fielded models which deliver more power than diesel predecessors.

Other hard-to-abate sectors similarly pose substantial amounts of uncertainty, with no clear candidate for the best pathway for decarbonization. This includes aviation, where hydrogen may yet emerge as a viable pathway for enabling low-emission flights, at least in certain contexts. This also includes shipping, for which methanol—a hydrogen carrier—may be a leading solution.

In any case, universal electrification is not possible with currently available technologies. Hydrogen will remain an irreplaceable building block of a net-zero energy system, and policymakers should continue to value it as such. But everything that can be electrified should be, leaving clean hydrogen for the most economically viable and carbon-intensive applications, allowing us to accelerate deployment where it is most needed.

William Tobin is a program assistant at the Atlantic Council Global Energy Center.

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

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Sullivan quoted in Arab News on Saudi Arabia’s carbon capture

jjoyner — Mon, 13 Mar 2023 16:21:24 +0000

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Banks quoted in The New Republic on the impacts of the IRA

mzandi — Fri, 10 Mar 2023 19:31:25 +0000

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Clean industrial policies: A space for EU-US collaboration

Théophile Pouget-Abadie, Francis Shin, Jonah Allen — Fri, 10 Mar 2023 14:47:35 +0000

Upon the passing of the US Inflation Reduction Act (IRA) into law last summer, a wave of panic shook European capitals over concerns that European green industries would relocate to the United States. The tension is understandable: while navigating an unprecedented energy crisis and a war at its border, Europe is finding its clean industries increasingly squeezed by US—and Chinese—industrial power.

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

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Théophile Pouget-Abadie

Nonresident Fellow

Civil Society Climate Change & Climate Action

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Francis Shin

Research Assistant

Europe Center

Economic Sanctions Europe & Eurasia

Fellow

Jonah Allen

Nonresident Fellow

Civil Society Climate Change & Climate Action

EnergySource Mar 6, 2023

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

By Jennifer Lee

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.

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

Sub-Saharan green hydrogen as a catalyst for development

Daniel Helmeci — Thu, 09 Mar 2023 15:53:11 +0000

Breakthroughs at COP27 led to greater international support for the MENA region’s unique potential for producing cost-effective green hydrogen. Multiple financing agreements and strategic partnerships between MENA states and potential European buyers signaled the region’s interest in long-term cooperation on developing hydrogen infrastructure and production capacity.

As Europe drives investment into the MENA region, green hydrogen’s potential in sub-Saharan African nations like South Africa, Namibia, and Kenya risks being overlooked as a driver of needed sustainable energy and economic development. Partially due to the effects of COVID-19, the population without access to electricity in sub-Saharan Africa rose in 2020 for the first time since 2013. Currently, the region accounts for 77 percent of the global population without access to electricity, up from 74 percent prior to the pandemic. Energy demand is set to rise dramatically over the next 30 years, as the region’s current population of 1.18 billion is expected to double to over 2.2 billion by 2050.

But supporting sub-Saharan sustainable energy development is not only a pressing facet of a just global energy transition; it would also be a mutually beneficial investment decision. The average long-term practical yield for a photovoltaic solar energy installation in the region is 4.34 kWh/kWp/day, significantly higher than Europe’s 3.44 kWh/kWp/day. Nearly 30 percent of the region is capable of producing over 5 kWh/kWp/day of photovoltaic output, with some of the strongest concentrations of solar irradiation in Namibia, South Africa, Botswana, and Ethiopia. Sub-Saharan wind energy potential is also strong, particularly along the coasts of Namibia, South Africa, and Kenya. If successfully developed, renewable energy capacity could produce economically viable green hydrogen in Africa under €2 per kilogram by 2030.

South Africa signaled its intention to develop green hydrogen at scale with the release of the South African Hydrogen Society Roadmap (HSRM) in February 2022. The HSRM outlined four catalytic demonstration zones designed to lay the groundwork for long-term decarbonization of industry and transportation as well as the creation of a robust export market for green hydrogen and green ammonia.

In cooperation with Hydrogen Council members Anglo American and ENGIE, South African private and public sector operators are pursuing the development of a centralized hydrogen valley known as the Platinum Valley Initiative (PVI). The valley aims to connect three hubs—Johannesburg, Durban, and Limpopo—with a projected aggregated demand of 184 kilotons (kt) of green hydrogen by 2030. The initial viability study projected that the PVI could add between $4-9 billion to South African GDP by 2050 in addition to creating between 14,000-30,000 direct and indirect jobs annually. The nine currently proposed projects would contribute to decarbonization efforts spanning the transport, industrial, and mining sectors.

In addition to HSRM and PVI, South Africa signed a Just Energy Transition Partnership (JETP) agreement with France, Germany, the United Kingdom, and the United States in November 2021. At COP27, US Special Presidential Envoy for Climate John Kerry and South African President Cyril Ramaphosa announced the endorsement of the $8.5-billion JETP investment plan. Expanding the transportation and energy potential of green hydrogen is a key component of the investment strategy.

To the west, Namibia is also expanding its development goals for green hydrogen with a focus on Southern Corridor Development Initiative (SCDI). Following the hydrogen valley model, the SCDI is a partnership between the Namibian Green Hydrogen Council and the German firm Hyphen Hydrogen Energy. The project is expected to produce 300,000 tons of green hydrogen by 2030 from 5-6 gigawatts (GW) of installed renewable energy capacity. The Namibian Port Authority (Namport) is a critical component of the SCDI scheme, already laying the groundwork with Hyphen and the Port of Rotterdam to identify needed export infrastructure.

Before an export market can develop, however, Namibia’s existing energy woes must be addressed. In 2022, only 56 percent of Namibians had access to electricity, and the nation imported 60-70 percent of its electricity demand. Hyphen says its planned projects will generate 1.5-2 terawatt-hours of surplus electricity per year, nearly equal to Namibia’s purchases from the South African Power Pool (SAPP) regional electricity network. Hyphen’s development contract is only a fraction of the 26,000 square kilometers reserved by the government for green hydrogen development. As more projects are announced, renewable energy costs will decrease, and additional electricity supply should be available to both meet domestic demand and contribute to the decarbonization of the SAPP.

Already leading the continent in geothermal energy capacity, Kenya announced a slate of investment partnerships on the sidelines of COP27 for the growth of an East African green hydrogen hub. Fortescue Future Industries (FFI), an Australian firm with a global green hydrogen and ammonia portfolio, won the rights to develop a 300-megawatt (MW) green hydrogen and ammonia plant over the next three years.

Kenya’s development of renewable energy capacity has been a blessing for the country, nearly doubling electricity access from 32 percent in 2013 to 75 percent in 2022. Kenya Electricity Generating Company’s (KenGen) geothermal infrastructure is responsible for 70 percent of that growth, and the state-owned firm announced an additional $2-billion investment in new geothermal plants in 2021. As geothermal energy continues to expand, new solar and wind projects can exclusively produce green hydrogen and its derivatives without shortchanging residential, commercial, or industrial electricity demand.

As electrolyzer costs continue to decrease and sub-Saharan Africa’s renewable energy capacity grows, developing a robust green hydrogen and ammonia economy across the region could serve as an economic and energy development boon. Before that vision can be achieved, however, the inequities between nations and energy networks within the region must be addressed through cooperation and international support. Of the forty-eight countries in the region, twenty-four have electricity grids which service less than half of their national populations; eight have grids which reach less than 20 percent of citizens. This broad range of energy system reach complicates viability assessments for green hydrogen and other sustainable energy sources when focusing on sub-Saharan Africa as a whole. Instead, development potential in specific nations like South Africa, Namibia, and Kenya should be the focus of near-term support, with the goal of expanding successful programs and investments across the region over the next 30 years.

As sustainable energy markets develop in regional leaders throughout the decade, regional partnerships like the African Green Hydrogen Alliance should expand their membership. Angola, Mozambique, Botswana, Tanzania, and Ethiopia all possess reasonable wind and solar resources and form a corridor along the southern and eastern coasts of Africa, a prime opportunity for domestic development of green hydrogen and export to Asian buyers.

Regional leaders should pursue strategies to support the expansion of electricity grids and sustainable energy in neighboring nations. Adapting previous strategies like the Mozambique Transmission Company’s (MOTRACO) cross-border interconnection project—which linked transmission networks from South Africa, Mozambique, and Eswatini for aluminum smelting—may be a way to connect large-scale utility grids, which would bolster each nation’s ability to produce cost-effective green hydrogen on a consistent basis. International financing agreements like Just Energy Transition Partnerships (JETPs) or initiatives like Power Africa should support the long-term goal of leveling electricity access and energy networks across the region, building from lessons learned from existing agreements with South Africa. While concrete strategies for developing sustainable energy in energy-insecure sub-Saharan countries remain undefined, identifying early avenues of support is a critical step in harnessing the potential 50 million tons of regional green hydrogen capacity by 2035, according to a recent report from the European Investment Bank.

Kenya, Namibia, and South Africa are well positioned to expand their production capacity over the next ten years while gradually expanding green hydrogen markets to neighboring nations and setting the foundation for future export markets to Europe and Asia. If done correctly, the African Green Hydrogen Alliance partners could set favorable regulatory environments for the region and leverage their supply on international markets. Green hydrogen has unique potential to fuel the sustainable development of the transportation networks, industrial bases, and commercial enterprises of sub-Saharan nations while also strengthening their relationship with international trading partners.

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

EnergySource Feb 14, 2023

Hydrogen in the MENA region: Priorities and steps forward

By Giampaolo Cantini

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Energy & Environment Energy Transitions

EnergySource Feb 2, 2023

Realizing North Africa’s green hydrogen potential

By Daniel Helmeci

North Africa could be a global hub for green hydrogen production. Europe would be able to advance its own net-zero future while supporting North African development by promoting investment and collaboration in the sector.

Energy & Environment Energy Markets & Governance

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

Learn more about the Global Energy Center

The post Sub-Saharan green hydrogen as a catalyst for development appeared first on Atlantic Council.

Khakova quoted in the New York Times on US-EU climate relations

mzandi — Wed, 08 Mar 2023 19:23:13 +0000

Women Leaders in Energy Fellow

The post Khakova quoted in the New York Times on US-EU climate relations appeared first on Atlantic Council.

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

Jennifer Lee — Mon, 06 Mar 2023 20:00:00 +0000

Tensions from the US-China tech war have spilled over into green tech and climate efforts. Reports last month suggested Beijing has revised export/import guidelines to restrict the export of solar panel equipment (not the panels themselves). China produces and exports the most solar panels in the world and dominates the solar panel supply chain; the top ten suppliers of solar PV manufacturing equipment reside in China, and Chinese producers make up at least 80 percent of every step in the solar panel manufacturing process.

Notably, the move to restrict the export of equipment used to make key technology (here, solar panels) mirrors US actions to do the same with semiconductors. This mirroring tactic aligns with Beijing’s typical tit-for-tat approach when reacting to contentious events with the United States in recent years. As US-China geopolitical hostilities hit green tech sectors, intense competition brings both advantages and drawbacks for the industry.

The pretty…

Bottlenecks and vulnerabilities revealed by the COVID-19 pandemic have contributed to a global impulse to on-, re-, and friend-shore supply chains, resulting in increased investment in core technologies. The Biden administration has ramped up spending on semiconductors and STEM education, as well as batteries and their related components. Not only have American green tech sectors received greater policy prioritization, but they will also gain from new funding initiatives and from investments into STEM-related human capital and infrastructure. Moreover, a diversified tech supply chain would reduce geopolitical leverage of third-party countries, like China, in the medium to long term.

Additionally, recognizing supply chain dominance by countries of concern has the benefit of spurring research into and development of alternate technologies to reduce dependence on vulnerable supply chains. China’s supremacy in the production of silicon—the key critical mineral used in commercial solar panels currently—helps justify researching and commercializing other materials to produce solar panels, such as perovskites (though Chinese firms still play a major role in developing the technology) and US-led cadmium-telluride.

…and the ugly

China watchers have traditionally pointed to climate as an area for cooperation with China even during heightened tensions, but increasingly geopolitics have pushed environmental efforts towards competition. Secretary Raimondo’s November 30 speech on US-China relations mentioned competition twenty-six times, whereas cooperation appeared only six times. Democrats’ initial rush to decouple from China’s domestic clean energy industries temporarily strained relations with allies, while Republicans like Rep. Cathy McMorris Rodgers want to slow down the clean energy transition for fear of overreliance on China (and then focus on outcompeting China)—both strategies prioritize geopolitical competition over mitigating climate change. As Ilaria Marzocco noted, national security motivations for developing these technologies are eclipsing climate change needs.

Escalating even non-tech US-China tensions could threaten progress on climate efforts and green tech development. Conflict between the two, such as over a flashpoint like Taiwan, could distract these giants and force green tech advancements to take a back seat to conventional security priorities. Following Nancy Pelosi’s visit to Taiwan, China suspended the high-level US-China bilateral climate talks (though the talks resumed in November). Further straining the relationship could jeopardize green tech deployment and emissions reductions as the United States and China exchange blows.

Looking ahead: Pushing the pretty and mitigating the ugly

The Inflation Reduction Act (IRA) dedicates billions to funding clean energy initiatives. Prompt implementation of the different financing mechanisms will allow green tech companies to access the benefits of competition. Already, the Environmental Protection Agency has made progress; on February 14, it released guidelines for the IRA’s Greenhouse Gas Reduction Fund, of which $7 billion targets solar power deployment through the Zero-Emissions Technology Fund Competition. It expects to start accepting proposals this summer. Ensuring follow-through on implementation of US industrial policies will tackle the classic climate problem of failing to put commitments into practice and reduce the pain of supply chain reorientation.

Policymakers also need to guard against counterproductive fallout from tech tensions. The Biden administration has additional tech restrictions planned, buoyed by bipartisan support for countering China across multiple sectors. Beijing could respond in-kind with restrictions of its own going beyond solar panel equipment; China also dominates wind power supply chains, for example, and Beijing has taken issue with the Ford-CATL deal over concerns it could share core battery technology with the US company. Biden’s potential outbound investment executive order has been anticipated for several months, though, so it would not come as a surprise to Beijing. Clear communication with Chinese counterparts about US policy changes—when appropriate—can help dampen the reaction to competitive policies.

Meanwhile, like how Pelosi’s Taiwan visit suspended high-level US-China climate change talks for months, mitigating risks across other areas of the relationship will help insulate green tech from the negative effects of geopolitical competition. Sustaining bilateral dialogues and cooperating on other areas of mutual interest —for example, governance of AI-powered weapons, illicit fentanyl trade, nuclear threats from North Korea and Iran—can counter some of the spillover of rising tensions into the green tech sector.

China and the United States represent the top two individual emitters, together making up nearly 40 percent of global CO₂ emissions. A healthy level of competition can catalyze innovation and uptake of clean energy and secures supply chains, but officials should take care not to escalate to where antagonism between the green tech powerhouses would slow down development and cut off markets around the world from accessing the best tools to combat emissions. How the two governments manage their relationship and their domestic policies affects economic outcomes for green tech companies as well as global climate security outcomes.

Jennifer Lee is a member of this year’s Women Leaders in Energy and Climate Fellowship at the Atlantic Council. She is an associate at the Scowcroft Group.

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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

EnergySource Feb 14, 2023

Hydrogen in the MENA region: Priorities and steps forward

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Energy & Environment Energy Transitions

Learn more about the Global Energy Center

Women Leaders in Energy Fellow

The post Beauty and the beast: Implications of the US-China tech war on climate and energy appeared first on Atlantic Council.

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

Sharmila Bellur — Tue, 21 Feb 2023 16:52:08 +0000

Despite contributing the least to greenhouse gas emissions, sub-Saharan Africa is the region most affected by climate change, with key development sectors already experiencing widespread loss and damage attributable to human-induced climate change. Africa’s annual temperature has risen consistently over the years, increasing at an average rate of 0.13 degrees Celsius per decade since 1910, accelerating to 0.29 degrees Celsius per decade since 1981. And with these rising temperatures have come increased frequency and severity of climate events like erratic precipitation, extreme weather events, slow-onset changes such as desert locust swarms, and rising seas. These impacts pose threats to agricultural and industrial output as well as people’s health and livelihoods.

570 million people in the region, or 48 percent, lack access to electricity, while 900 million people, or 83 percent, lack access to clean cooking. This leaves the unserved hooked to polluting and fossil-based alternatives to meet basic energy needs, further impacting the region’s ability to grapple with climate change. Productive use appliances (PUAs) powered by renewables can play a critical role in reducing carbon emissions and mitigating the effects of climate change, while enabling a wide range of climate adaptation and resilience activities.

Productive use appliances are energy-using, productivity-increasing, and income-generating devices designed for specific economic activities within agriculture and small and medium enterprises. Some common examples of PUAs include solar water pumps for irrigation; cold storage for preservation of food; solar cookstoves; poultry lighting, egg incubators and milking machines for livestock; and grain mills for small-scale food processing. Renewable energy sources, such as solar and wind, powering grids, off-grid appliances, and productive loads connected to mini-grids, offer a sustainable and accessible solution to meeting the energy needs for PUAs.

The benefits of PUAs in sub-Saharan Africa

Adoption of productive uses is a significant leap up the energy ladder as increased use of electricity helps unlock productivity and results in increased incomes. With increased incomes, households can afford more appliances, like refrigerators and electricity for cooking, that provide health benefits and time savings. PUAs can serve as loads that enhance the viability of off-grid, mini-grid, and utility service, helping reduce energy costs and improve the quality of supply. They can also help create local jobs in areas such as manufacturing, installation, maintenance, and repair. This not only provides employment but also strengthens the local economy. By improving livelihoods and food security, PUAs can help to reduce poverty and increase economic growth.

Climate mitigation, adaptation, and resilience

By reducing the use of fossil fuels and the associated greenhouse gas emissions, the productive use of renewable energy appliances helps mitigate and adapt to the changing climate. For example, a solar-powered water pump can provide farmers with access to irrigation even during times of drought, reducing the need for diesel-powered pumps that contribute to greenhouse gas emissions and helping communities combat food insecurity. Similarly, using a solar-powered refrigerator for food storage can help reduce emissions from traditional refrigeration systems that rely on refrigerants with high global warming potential. They also provide communities with access to cold storage for food and medicine, which can be critical during times of extreme weather and power outages.

Finally, the productive use of renewable energy appliances can help build resilience to the impacts of climate change. By reducing dependence on fossil fuels, communities can become more self-sufficient and less vulnerable to price spikes and supply disruptions. Additionally, renewable energy systems can be designed to be modular, scalable, and circular, allowing communities to adapt to changing energy needs over time.

Challenges and solutions

Despite the numerous benefits, much of its potential is yet to realized. For example, over 5.4 million small-holder farmers could use solar water pumps in sub-Saharan Africa, but less than 10 percent of them do so. This is due to constraints that impact both demand and supply of PUAs: the high, potentially prohibitive cost of PUAs and electricity supply; the patchy quality and reliability of supply, especially grid-based supply; the dearth of PUAs themselves; the lack of mechanisms to identify demand; and limited access to finance for end users and PUA suppliers.

To address these constraints, several solutions are being tested and have proven successful that can be unleashed to scale PUAs in sub-Saharan Africa:

Ensure that PUAs are available. Innovation, supply chain expansion, and customer targeting of PUAs is increasing uptake. For example, focused efforts in promoting solar cooling in Nigeria to fishing communities for better storage of fish, a valuable commodity, resulted in significant benefits. However, it is necessary to develop and enforce consistent quality standards for PUAs to prevent market spoilage, along with harm to consumers and the environment.
Provide access to finance for small businesses, end users, and providers of energy services. Results-based financing, grants, and subsidies are being leveraged to bring the private sector into underserved markets and address affordability constraints of end users. Pay-as-you-go (PAYGo) payment mechanisms, which are already prevalent in the distributed energy resource (DER) sector, enable end users to repay over a period of time, reducing affordability constraints. In order to create financing interventions that effectively support both the demand and supply of PUAs, it is necessary to assess the constraints that PUA end users and energy service and appliance providers face when accessing finance.
Support business development. End users need to make informed equipment and appliance purchasing decisions, have the technical skills to operate new equipment, and develop the entrepreneurial and business skills to manage business operations so that they capitalize on the PUAs. Additionally, it is crucial to provide access to markets through complementary services such as transportation and communication infrastructure. This will enable the production and sale of goods and services produced through the use of PUAs.
Provide sufficient electricity supply. Creating new sources of power, expanding transmission and distribution to increase supply and serve more areas, and connecting more customers are important for advancing access in the region.

It is crucial for sub-Saharan Africa to shift towards low-carbon energy sources to decrease the amount of greenhouse gases released into the atmosphere, as well as to build the region’s adaptive and resilience capacity. But this must be done in a way that supports the growth and progress of the continent and provides energy access to the millions of Africans who currently lack it. Productive use appliances powered by renewable energy show promise for fulfilling these diverse priorities.

Sharmila Bellur is a member of this year’s Women Leaders in Energy and Climate Fellowship at the Atlantic Council. She is a sustainable development consultant at the World Bank.

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Sharmila Bellur

EnergySource Feb 14, 2023

Hydrogen in the MENA region: Priorities and steps forward

By Giampaolo Cantini

COP27 marked a major escalation in the MENA region’s hydrogen ambitions. With several international partnerships now underway, sustained support and forward-thinking policymaking will be key.

Energy & Environment Energy Transitions

EnergySource Feb 2, 2023

Realizing North Africa’s green hydrogen potential

By Daniel Helmeci

Energy & Environment Energy Markets & Governance

EnergySource Jan 31, 2023

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

By Robert F. Ichord, Jr.

Africa Energy & Environment

Learn more about the Global Energy Center

The post The power of renewables: Productive use appliances as climate change solutions in sub-Saharan Africa appeared first on Atlantic Council.

Hydrogen in the MENA region: Priorities and steps forward

Giampaolo Cantini — Tue, 14 Feb 2023 17:29:33 +0000

A number of announcements made recently concerning plans on green hydrogen development in the MENA region are set to advance the idea of a future pattern of energy interdependence, particularly in hydrogen, with Europe. Most of these plans are still undergoing feasibility studies, but some are closer to operation.

If fully implemented, such projects, might act as a catalyst for more investments in hydrogen production and infrastructure in the region and for the process of demand creation that remains at the core of the future of hydrogen development.

Furthermore, the potential in the MENA goes well beyond the region itself and its relationship with Europe. Some Gulf countries are set to export green hydrogen products to Asia and their sovereign funds and renewables companies are looking at hydrogen investments in several African countries.

The implications of the MENA region’s commitment to renewables development and to hydrogen in particular are thus wide-ranging and should be supported at the policy and operational level by, among others, the EU, the multilateral finance development institutions, and other international partners.

Many projects were announced at COP27. Egypt, the host country, was the main protagonist: 9 memoranda of understanding (MoUs) on feasibility studies on production of green hydrogen and green ammonia were signed. Such products would mostly be exported to European and Asian markets. If turned into investment decisions and implemented fully, the nine projects are supposed to be worth around $83 billion and to produce collectively 7.6 million tons of green ammonia and 2.7 million tons of green hydrogen per year, when fully operational. Also at COP27, the Egyptian authorities and a consortium of local and international investors announced the commissioning of the first phase of what is supposed to become the first integrated green hydrogen plant in Africa.

The most noticeable development at a political level in the field of hydrogen development regarded EU-Egypt cooperation, when the President of the European Commission von der Leyen and Egypt’s President al-Sisi issued a Joint Statement on the EU-Egypt Renewable Hydrogen Partnership and the Vice President of the European Commission and its Energy Commissioner signed a MoU, with the Egyptian Ministers of Oil/Petroleum and Electricity/Renewables, to establish a strategic partnership on renewable hydrogen. The two sides agreed to set up an EU-Egypt Hydrogen Coordination Group and to organize an annual meeting of a Business Forum that would include industrial and energy players.

Furthermore, on November 9, Egypt’s President and Belgium’s Prime Minister launched a new international platform on hydrogen, named the “Global Renewable Hydrogen Forum”.

After COP27, seven more MoUs were signed by the relevant Egyptian agencies with various investors to conduct feasibility studies on new projects with a view to setting up facilities to produce green hydrogen and its derivatives.

Egypt is not the only Arab country to move dynamically on this front. Governments, sovereign funds, and industrial players in Saudi Arabia, the United Arab Emirates, Oman, and Morocco are acting quickly and boldly.

Saudi Arabia, which launched a comprehensive Saudi Green Initiative in 2021, is planning a substantial development of green hydrogen and green ammonia production centered around NEOM, a new city and area to be developed in the northwestern corner of the country. If fully implemented, the project would set up the world’s largest utility green hydrogen facility. The Green Initiative also includes thirteen renewable energy projects, with a combined capacity of 11.3 GW that would help reduce some 20 million tons of carbon emissions per year.

Oman launched recently a new Strategy on Green Hydrogen that foresees $140 billion in investment by 2050, targeting an annual production of 1-1.25 megatons (MT) of green hydrogen by 2030, rising to 3.25-3.75 MT by 2040 and 7.5-8.5 MT by 2050. Oman is also working on a project to establish a green steel plant fed by hydrogen, with an annual production of 5 million tons. Such product would be exported to other Middle Eastern countries as well as to Europe, Japan, and other Asian markets.

The UAE, the host of COP28 in 2023, is also very active through different channels: at COP27 it announced a joint initiative (denominated “PACE”, Partnership to Accelerate Transition to Clean Energy) with the United States, with the aim to “catalyze $100 billion in financing, investment, and other support and to deploy globally 100 gigawatts (GW) of clean energy by 2035 to advance the energy transition and maximize climate benefits.” The UAE is also in the process of developing green hydrogen within its borders and abroad, mainly through Masdar, a key player with plans stretching from Africa to Central Asia.

Qatar has launched a project for establishing the largest blue ammonia facility worldwide and is very active in acquisitions in international renewables companies. Its sovereign fund QIA is also considering support to projects in Egypt, for developing green ammonia and green fuel for navigation.

At a regional level, according to the recently issued IEA report “Renewables 2022”, rapid growth in wind and solar will see renewables capacity across MENA rise faster than expected earlier. Such capacity is indeed set to triple to reach 45 GW in five years, with a significant upward revision from the IEA’s 2021 report (that estimated a capacity of 32 GW to be reached between 2021 and 2026). The IEA expects Saudi Arabia, the UAE, Israel, Oman, Morocco, and Egypt to account for 85 percent of renewable capacity growth in the region between 2022 and 2027.

Underlying most of these efforts is the goal, especially for gas-producing countries, to push ahead with renewables projects with the aim to liberate, in the short-medium term, gas resources for export, in light of the European quest for diversification of gas supplies and of the global energy crunch.

Two trends should thus be monitored over the coming months and years:

In spite of the harsh debate at COP27 on the role of oil and gas in the transition, including the claims by most fossil fuel-producing (or would-be producing) countries in MENA (and in Africa) on the need to continue to invest in oil and gas, these same countries are already investing to a significant extent in renewables development. This may not be occurring at the pace necessary, without a common strategy and with a number of uncertainties, but nonetheless signifies a rising level of ambition.
The idea of interconnecting these countries with European and Asian markets for exporting green renewables appears to gradually be taking shape, initially through the export of blue and green ammonia and, at a later stage, green hydrogen through converted or dedicated infrastructure. The initiatives jointly launched by the EU and Egypt at COP27 hopefully will advance this aim.

Giampaolo Cantini is a nonresident senior fellow at the Atlantic Council Global Energy Center.

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EnergySource Feb 2, 2023

Realizing North Africa’s green hydrogen potential

By Daniel Helmeci

Energy & Environment Energy Markets & Governance

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

EnergySource Oct 4, 2022

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TotalEnergies’ CEO: Europe should pass its own green subsidies to compete with the US

Katherine Walla — Fri, 10 Feb 2023 20:03:02 +0000

Since the passage of the Inflation Reduction Act (IRA), the United States is becoming a “land of excellence” when it comes to green energies and infrastructures, said Patrick Pouyanné, chairman and chief executive officer of French oil major TotalEnergies.

“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.

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#BritainDebrief – How does the Western price cap on oil work? | A Debrief from Eddie Fishman

Ben Judah — Fri, 03 Feb 2023 13:54:07 +0000

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?

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Derentz quoted in Development Aid on renewable energy investments in Southeast Asia

mzandi — Thu, 02 Feb 2023 20:15:35 +0000

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Realizing North Africa’s green hydrogen potential

Daniel Helmeci — Thu, 02 Feb 2023 15:39:23 +0000

The energy shocks of 2022 catalyzed Europe’s search for alternative supplies of natural gas, shifting reliance away from Russian pipeline supplies towards liquefied natural gas (LNG) imports from overseas partners. New gas ventures in the Middle East and North Africa continue to sprout up but centering the region’s energy development around Europe’s energy crisis could exacerbate existing energy inequalities if gas production facilities become stranded assets as Europe transitions away from fossil fuel imports. Instead of focusing relationships on supplying natural gas capacity to meet short-term demand spikes, Europe and North Africa should strive to develop the region’s green energy potential as a driver of domestic development and a powerful export commodity for European buyers in search of low-carbon energy imports.

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.

EnergySource Jan 31, 2023

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By Robert F. Ichord, Jr.

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.

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Blakemore quoted in Roll Call on Chinese EV battery demand

jjoyner — Mon, 30 Jan 2023 16:26:00 +0000

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Russia is losing the energy war as Putin’s winter gas attack backfires

Aura Sabadus — Fri, 27 Jan 2023 19:16:14 +0000

Vladimir Putin expected to use gas exports this winter to blackmail Europe and weaken Western support for Ukraine. Instead, this tactic appears to have backfired disastrously and critically undermined Russia’s position on European energy markets.

In September 2022, I anticipated that Putin’s plan to cut gas supplies to Europe and leave consumers to freeze would fail. With the cold season now almost over, this prediction has so far turned out to be correct. Contrary to the Kremlin’s expectations, Western consumers not only stayed warm in their homes; many European companies have actually been turning to Ukraine to place surplus gas volumes in local storage facilities.

Admittedly, Europe has been lucky. Demand and supply have been balanced because consumption remained muted thanks to unseasonably mild temperatures and falling industrial demand. Meanwhile, there have been sufficient alternative deliveries of liquefied natural gas (LNG) from the global market amid a lack of competition from China, which has been struggling with the aftermath of the Covid pandemic.

Much was also due to the resilience of European markets, which responded promptly to Russia’s decision to cut gas supplies to a trickle in 2022, forcing gas prices to reach record levels. Far from breaking Europe’s resolve, Putin’s energy war against the EU has shocked the bloc into fast-tracking its energy transition, completing projects which had been long overdue or forgotten and seeking alternative supplies to plug the gaping Russian shortfall.

With Russia’s share of European imports plummeting from 40% to less than 10% towards the end of 2022, European companies turned to global LNG markets, sourcing 96.3 million tons in 2022, up from 56.3 million tons the year before. Thanks to a raft of policies mandating storage targets, most underground facilities reached 90% fullness or higher by the start of the heating season on October 1, overshooting the target by ten percentage points. This means that as winter comes to an end, storage facilities remain at some of their highest levels and gas prices have fallen to a 16-month low.

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There are still lingering risks. An unexpected cold snap later in February or the early weeks of spring, a steep recovery in Chinese demand, or the possibility of a major escalation in Ukraine could spook markets and lead to more volatility or price spikes. Despite these potential threats, European energy markets are now clearly better prepared to absorb potential shocks.

Europe has been working to expand its LNG importing capacity, which is set to increase by no less than 20% this year. Undoubtedly, much will also depend on the availability of LNG supplies globally. However, the fact that Germany managed to commission three LNG terminals within less than a year to replace lost Russian pipeline imports points to the extraordinary ability of European markets to respond in the face of formidable challenges.

Projects that have been long delayed or forgotten have not only been resurrected but also promptly completed. For example, after many years of hesitation, Bulgaria managed to bring an interconnector with Greece into commercial operation that allows the Bulgarians to tap alternative Caspian gas and LNG. Meanwhile, Germany and France established bidirectional gas flows, which will allow not only Germany to export gas to France, but also to import from this direction. Even Romania, which had long been averse to exporting domestically produced gas, has seen some volumes shipped physically to neighbouring Bulgaria.

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Putin’s energy war against Europe has served as a catalyst for renewable projects. With the permitting process fast-tracked across the EU, installations of solar panels and heat pumps had one of their best years to date. Solar capacity shot up by 41.4GW or 25% year-on-year to 208.9GW in 2022 and is set to grow even faster in 2023.

Russian imports of coal and oil were also hit by a raft of European sanctions as EU consumers stopped taking coal and seaborne oil in the second half of 2022. This meant that Russia’s share in EU imports of coal and oil dropped to less than 15% in 2022, compared to over 45% for coal and 25% for oil the previous year, according to the latest Eurostat figures.

There are now signs that Europe’s large economies may be staving off recession and indications that energy markets are regaining an even keel, but the same cannot be said about Russia’s own gas sector. Russia’s total gas output fell 12% in 2021 to the lowest level since 1990. The situation is even worse for state producer Gazprom, whose production fell year-on-year by 20% in 2022, the largest annual drop in the company’s history. Gazprom managed to increase gas exports to China by 5.4bcm but lost most of its 140bcm European market. It also took a hit on the domestic Russian market, losing market share to independent producers in 2022.

Gazprom may now be looking to partially revive its fortunes by using Turkey as a back door. It plans to sell gas to the Turkish gas incumbent BOTAS, which would then sell it on to Europe as whitewashed Turkish gas. This might allow Moscow to recover at least some of the losses incurred in 2022. At the same time, the fundamental nature of the shifts that have taken place over the past twelve months mean Russia now has little hope of returning to its formerly dominant position in Europe’s energy markets.

Dr. Aura Sabadus is a senior energy journalist who writes about Eastern Europe, Turkey, and Ukraine for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. Her views are her own. You can follow her on Twitter @ASabadus.

Atlantic Council — Sun, 15 Jan 2023 14:53:08 +0000

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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.

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

Atlantic Council — Sun, 15 Jan 2023 14:00:15 +0000

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2023 Global Energy Forum

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.

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The lessons of COP27 and how they can apply to COP28

Atlantic Council — Sun, 15 Jan 2023 13:20:31 +0000

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2023 Global Energy Forum

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.

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

Atlantic Council — Sun, 15 Jan 2023 12:02:17 +0000

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2023 Global Energy Forum

Africa Americas Energy & Environment Energy Markets & Governance

Event transcript

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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.

Dispatch from Abu Dhabi: How to reduce carbon emissions without blocking progress

Frederick Kempe — Sat, 14 Jan 2023 18:01:29 +0000

This article was updated on January 16 to reflect the fact that the Abu Dhabi National Oil Company and Masdar, where Sultan Al Jaber serves as CEO and chairman, respectively, are sponsors of the Atlantic Council’s Global Energy Forum.

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.

Highlights from Abu Dhabi as policy leaders gathered for the Global Energy Forum

Atlantic Council — Sat, 14 Jan 2023 14:07:45 +0000

Call it a double whammy: The two-hit blow to the global energy system—dealt by the COVID-19 pandemic and Russia’s war in Ukraine—is wreaking havoc, bringing uncertainty about the future of energy security and the pace of the energy transition.

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

JANUARY 15, 2023 | 8:30 AM WASHINGTON | 5:30 PM ABU DHABI

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

“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.

At the #ACEnergyForum in Abu Dhabi, Commissioner for Energy @KadriSimson explains Europe’s three-pillar strategy to get rid of its dangerous dependence on Russian fossil fuels.

The first pillar is to diversify supply routes.

Learn more: https://t.co/pE56Irkjte pic.twitter.com/P56w7FoVIM
— Atlantic Council (@AtlanticCouncil) January 15, 2023

JANUARY 15, 2023 | 7:15 AM WASHINGTON | 4:15 PM ABU DHABI

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.

Global Energy Forum

‘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

JANUARY 15, 2023 | 7:00 AM WASHINGTON | 4:00 PM ABU DHABI

The next steps to harnessing hydrogen’s potential

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.

JANUARY 15, 2023 | 5:30 AM WASHINGTON | 2:30 PM ABU DHABI

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

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.

JANUARY 15, 2023 | 5:30 AM WASHINGTON | 2:30 PM ABU DHABI

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

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.

JANUARY 15, 2023 | 5:00 AM WASHINGTON | 2:00 PM ABU DHABI

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.”

The geopolitics of energy in the 21st century could look a lot like the 20th century, warns @amoshochstein.

Instead of a few countries controlling oil supply, we could now have one or a couple countries controlling supply chains for wind, solar, electric vehicles, and chips. pic.twitter.com/RM2rdHV6hd
— Atlantic Council (@AtlanticCouncil) January 15, 2023

Read the full transcript

Global Energy Forum

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

JANUARY 15, 2023 | 2:30 AM WASHINGTON | 11:30 AM ABU DHABI

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

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.

JANUARY 15, 2023 | 1:00 AM WASHINGTON | 10:00 AM ABU DHABI

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

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.

JANUARY 15, 2023 | 12:15 AM WASHINGTON | 9:15 AM ABU DHABI

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

“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.

Nobody is living by a law to hit 2050 net zero, said @ClimateEnvoy @JohnKerry today at @ACGlobalEnergy Forum.

“There’s no law. People are doing it because they are exercising a sense of public responsibility,” he added.

Learn more: https://t.co/c1a8XrhORa #ACEnergyForum pic.twitter.com/NkeIDZbiMD
— Atlantic Council (@AtlanticCouncil) January 15, 2023

Global Energy Forum

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

JANUARY 15, 2023 | 12:00 AM WASHINGTON | 9:00 AM ABU DHABI

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

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.

Global Energy Forum

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

JANUARY 14, 2023 | 7:30 AM ET WASHINGTON | 4:30 PM ABU DHABI

How the UAE could tackle the tricky business of climate diplomacy

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.

JANUARY 14, 2023 | 6:15 AM ET WASHINGTON | 3:15 PM ABU DHABI

The role of natural gas vs. renewables sparks debate

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.

JANUARY 14, 2023 | 5:15 AM ET WASHINGTON | 2:15 PM ABU DHABI

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

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

JANUARY 14, 2023 | 2:00 AM ET WASHINGTON | 11:00 AM ABU DHABI

What will it take to solve the energy trilemma?

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

JANUARY 14, 2023 | 1:30 AM ET WASHINGTON | 10:30 AM ABU DHABI

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.

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

A timely discussion today at #ACEnergyForum on oil price fluctuation with @amoshochstein and @_HadleyGamble. #oott

Tune in: https://t.co/94JdHyRRTR https://t.co/0KTl9xE1Gk
— Global Energy Center (@ACGlobalEnergy) January 14, 2023

JANUARY 14, 2023 | 1:00 AM ET WASHINGTON | 10:00 AM ABU DHABI

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

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.”

JANUARY 14, 2023 | 12:45 AM ET WASHINGTON | 9:45 AM ABU DHABI

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.

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

JANUARY 14, 2023 | 12:30 AM ET WASHINGTON | 9:30 AM ABU DHABI

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.

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

H.E. Dr. Sultan Al Jaber outlined his vision for #COP28UAE earlier today at #ACEnergyForum:

“We want it to be a practical COP. A COP of action. A COP for all. A COP that raises ambition and moves from goals to actually getting it done.”

Watch more: https://t.co/V0Y0DwZSBf pic.twitter.com/nVtQ5ilhki
— Atlantic Council (@AtlanticCouncil) January 14, 2023

JANUARY 13, 2023 | 3:00 PM WASHINGTON | JANUARY 14, 2023 | 12:00 AM ABU DHABI

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)

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.

How to finance a sustainable and just energy transition

Atlantic Council — Sat, 14 Jan 2023 13:26:28 +0000

Watch the full event

2023 Global Energy Forum

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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.

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Why accessible and affordable gas plays a role in helping countries reach climate goals and expand renewable energy

Atlantic Council — Sat, 14 Jan 2023 11:22:34 +0000

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2023 Global Energy Forum

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.

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

Daniel Malloy — Sat, 14 Jan 2023 07:07:34 +0000

This article was updated on January 16 to reflect the fact that the Abu Dhabi National Oil Company, where Sultan Al Jaber serves as CEO, is a sponsor of the Atlantic Council’s Global Energy Forum.

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 and COP28 President-Delegate Sultan Al Jaber. 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.”

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.

Al Jaber called for tripling renewable energy generation by 2030, more than doubling low-carbon hydrogen production, and supercharging investment in agriculture technology and smart water use. “And we need to do all this in an accelerated time frame against a fast-approaching deadline,” he said.

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2023 Global Energy Forum

Africa Americas Energy & Environment Energy Markets & Governance

Though the UAE is one of the world’s top oil producers and a member of the OPEC cartel, it has also made a fifty-billion-dollar investment in renewables and clean technology. Al Jaber, who also serves as group CEO of the Abu Dhabi National Oil Company, which is a sponsor of the Global Energy Forum, pointedly noted that 70 percent of the country’s economy is outside the oil and gas sector.

But the world still has an enormous thirst for hydrocarbons, a fact proven once again over the past year with the disruptions caused by Russia’s war in Ukraine. So, Al Jaber said, climate mitigation must include the fossil-fuel industry working to reduce carbon and methane emissions.

This kind of work requires the “breaking of silos” said Frederick Kempe, the CEO of the Atlantic Council, as he opened the Global Energy Forum. “I’m confident that Dr. Sultan is more than capable of rising to the opportunity of a new energy pragmatism which brings the climate and energy communities together in the name of shared action,” Kempe added.

After leaders at COP27 in Egypt agreed to the first-ever loss and damage fund to support countries of the Global South that are the most affected by climate change, Al Jaber said financing for this fund must double to forty billion dollars a year by 2025—with each taxpayer dollar matched by two or three from private capital. That will require, he said, “inclusive reform of the multilateral development banks and international financial institutions.”

Al Jaber will be at the forefront of climate diplomacy as the Persian Gulf state of ten million people assumes its place under a global spotlight this year, with the future of the planet on the line.

“The UAE approaches this task with humility, a clear sense of responsibility, and a great sense of urgency,” he said.

Daniel Malloy is the deputy managing editor at the Atlantic Council.

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H.E. Dr. Sultan Al Jaber on the COP28 agenda, how to transform climate progress, and the role of fossil fuels

Atlantic Council — Sat, 14 Jan 2023 06:54:05 +0000

On January 14, 2023 at the Atlantic Council’s Global Energy Forum, H.E. Dr. Sultan Al Jaber, UAE minister of industry and advanced technology and special envoy for climate change, called for a transformational shift in the race to combat the climate crisis. Below are his remarks as delivered at the forum, which took place just days after Al Jaber was designated the COP28 president.

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2023 Global Energy Forum

Africa Americas Energy & Environment Energy Markets & Governance

Good morning. Your excellencies, distinguished guests, ladies and gentlemen, dear friends, welcome to the United Arab Emirates, to Abu Dhabi, and to the seventh Atlantic Council Global Energy Forum.

And thank you, Fred, for your kind introduction. Thank you for your leadership, for your partnership, and for making sure that we always have the right mix of expertise participating in this very important forum.

And as the opening event of Abu Dhabi Sustainability Week, this forum helps set the energy agenda for the year ahead. And as the UAE prepares to host COP28, the Emirates Climate Conference this year carries a very special significance.

The UAE approaches this task with humility, a clear sense of responsibility, and a great sense of urgency. Like all countries around the world, the UAE is exposed to the risks of climate change. We have always considered environmental stewardship as an integral part of our economy and view climate action as central to the successful development of our nation.

We are proud to be the host country of the International Renewable Energy Agency, IRENA; the first country in our region to commit to the Paris agreement; the first in the region to submit a nationally determined contribution; and the first to set out a roadmap to net zero. And we will continue to focus on this very important journey.

More than eighteen years ago, His Highness Sheikh Mohamed bin Zayed Al Nahyan, the president of the United Arab Emirates, had a long-term vision of the future, and he took a bold step when he decided to establish Masdar. This was our first major practical, proactive move into the energy transition. Under His Highness’ guidance, Masdar has grown to become one of the largest renewable energy investors in the world and is aiming for a hundred-gigawatt portfolio by 2030.

Over the last fifteen years, the UAE has invested a total of fifty billion US dollars in renewable energy and clean tech globally and plans to invest another fifty billion US dollars in the years ahead. And beyond investing in new energies, it was His Highness who said there will be a time when we load the last barrel of oil. And he continued: If our plans are the investments today are right, it will be a moment of celebration.

This call to action by His Highness at the World Government Summit in 2015 clearly underscored his vision for sustainable development delivered by economic diversification and enabled by a rapid transition of our energy systems. And today, over 70 percent of our economy is generated outside the oil and gas sector. And as the founding CEO and chairman of Masdar, and the MD and CEO of ADNOC, I will continue to follow our leadership’s vision and guidance in making today’s energy cleaner while advancing and continuing to invest in the clean energies of tomorrow.

And we will use our experience, our ambition, and deep and rich network of partnerships to inform our approach to COP28. During the course of the year ahead, we will work very closely with COP27 Egyptian presidency, the UNFCCC Secretariat, and of course all relevant parties to build on and accelerate progress made before us.

Yet, we must be honest with ourselves about how much progress we have actually achieved, and how much further and faster we truly need to go. Of course, we have collectively achieved major milestones along our journey. In Glasgow, 90 percent of the world’s economies committed to net zero by 2050. Sharm El Sheikh elevated the voices of the Global South, put loss and damage firmly on the agenda, and started to address reforming the climate finance system. COP28 will have particular significance, as it will mark the first global stock-take, a comprehensive assessment of progress against the goals of the Paris agreement.

And we don’t need to wait for the stock-take to know what it will actually say. We are way off track. We are way off track. The world is playing catch-up when it comes to the key Paris goal of holding global temperatures down to 1.5 degrees, 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 security.

Ladies and gentlemen, there is no other way to really address our climate challenge. We need to make transformational progress. And for that to happen, we must be prepared. We must be prepared to transform the process with the support of all parties and stakeholders.

We want COP28 to transform systems and accelerate 2030 trajectories through game-changing partnerships, game-changing solutions, and real tangible outcomes. We want it to be a COP of solidarity that bridges Global North and South and includes public and private sectors, scientists and civil society, women, and youth. And we want it to be a practical COP, a COP of action, a COP for all, a COP that raises ambition and moves from goals to actually getting it done across mitigation, adaptation, loss and damage, and, of course, finance.

Allow me to elaborate on those points one by one. On mitigation, we know that many of the—we know many of the solutions do exist: scaling renewables and nuclear and hydrogen and carbon capture and energy efficiency and, of course, the least carbon-intensive oil and gas as well as new technologies yet to be developed and deployed.

Wind and solar added record growth of 550 gigawatts between 2020 and 2022 and are on course to grow more over the next five years than over the last twenty combined. The market is actually telling us something here. The market is telling us something. We are at a turning point in history.

Low-carbon growth is the future, but we must get there much faster. We must triple renewable energy generation from eight to twenty-three terawatt hours by 2030. We must more than double low-carbon hydrogen production to at least 180 million tons for hard-to-abate sectors. We also need to transform our food and our agriculture systems because we know that agriculture accounts for one-third of global emissions.

Much greater investment in agri-tech, smarter water use, and food production is needed to transform this critical sector, alongside many other sectors, and we need to do all this in an accelerated time frame. Again, it’s a fast-approaching deadline.

Let me just add this. Our world is on its way to being home to 9.7 billion people by 2050 and will have to produce 30 percent more energy than what is available today. We, and as long as the world still uses hydrocarbons, we must ensure they are the least carbon intensive possible.

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

On adaptation, the number-one priority is very clear. We must do more to protect our most vulnerable communities and our most critical systems from extreme weather and biodiversity loss.

We must protect our rain forests and invest in nature-based solutions like mangroves that act as powerful carbon sinks while protecting coastlines and preserving natural ecosystems.

We must ensure that our global food system is resilient to the changing weather patterns that threaten farmers around the world, and to enable this progress we must double adaptation finance for the Global South to forty billion dollars annually by 2025.

On climate finance, we simply need more. We need it to be more affordable. We need it to be much more accessible. We need to ensure that every concessional dollar is matched by two or three dollars of private capital.

To make this happen, we need to answer the call from the international community for inclusive reform of the multilateral development banks and international financial institutions. In fact, that is a critical success factor. And to encourage this process the UAE, as chair of the World Bank-IMF Development Committee, intends to play a proactive, supportive, and facilitating role.

And on loss and damage, we need to help the most vulnerable to rebuild after climate-related disasters. Together with the international community, we must build on the progress made in Sharm El Sheikh and fully operationalize the loss-and-damage fund.

Distinguished delegates, dear friends, as an ambitious young nation that continues to evolve, the UAE has grown through partnerships, opened up to new ideas, and learned many, many lessons along the way. We don’t claim to have all the answers, but we believe we have something valuable that we can contribute. At the crossroads of north and south, east and west, we will listen. We will engage with all those who wants to engage. We will listen and we will engage with those who want to engage. We will build bridges and we will pursue global consensus in this very important collective effort.

Together with the high-level champion Her Excellency Razan Mubarak and the youth champion Her Excellency Shamma Mazrui, we will work very closely with the UNFCCC to move from ambition to real action. And we will mobilize the private sector and all other sectors to deliver greater, more meaningful impact.

So let me extend an open invitation to all parties across government, private sector, and civil society: cooperate, collaborate, share your ideas, and talk to us. I am here to listen, and I am here to engage. We can only succeed if we have an open and constructive dialogue. Let us together create a paradigm shift for tangible progress. And let us remember that reaching net-zero emissions will deliver the biggest market transformation with the greatest economic and human promise since the first industrial revolution.

I urge all parties to help make COP28 a COP of concrete outcomes and practical solutions. We are united by our common goal. We are united by our common humanity. And we look forward to hosting you all in the United Arab Emirates, where together we can ensure sustainable development for this generation and all generations to come. Thank you.

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The 2023 Global Energy Agenda

Landon Derentz, Christine Suh, Ameya Hadap, Paul Kielstra (Editors) — Fri, 13 Jan 2023 20:01:00 +0000

In 2022, Russia’s invasion of Ukraine undermined the global energy system’s return to pre-COVID-19 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.

Foreword

The 2023 Global Energy Agenda

By Frederick Kempe

Last year in this space, I wrote that the world seemed to be in a holding pattern, as we worked together to exit the pandemic while keeping decarbonization targets within sight. The decarbonization imperative remains, but this year’s challenge is now focused on how new geopolitical threats will shape the energy future, precipitated by Russia’s invasion of Ukraine in February 2022. We can only accomplish the energy transition if we, at the same time, pay renewed attention to energy security.

It may seem expedient to treat Russian aggression as the immediate, near-term threat, while deferring the need for climate action. However, both challenges must be met simultaneously.

Although the energy future remains uncertain, many countries, especially those like Germany and Italy that were deeply dependent on Russian energy supplies, have started to chart a new path toward energy security through clean energy sources and more reliable and resilient supply chains. Even as we recognize the need for reliable and affordable energy, it was encouraging at COP27 to see the world come together once again to reiterate commitments to a sustainable and equitable energy transition.

In its third edition, the Global Energy Agenda has again taken the pulse of the global energy policy community, including contributions from leaders in governments, the private sector, and expert communities.

This year, their survey responses revealed new insights into the connections between geopolitics and energy security, the balance between the energy transition and fossil fuels, and challenges and opportunities along the path to net-zero. Respondents tended to vote together as blocs based on their geographic locations, their industries within the energy sector, and their views on the speed at which the energy transition will occur.

We noticed a few major changes between last year’s Global Energy Agenda survey and this year’s. Most interestingly, but not surprising, nearly half (47 percent) of respondents now believe that the greatest geopolitical risk is posed by conflict with a major energy producer, in contrast to last year, in which respondents were far more divided on their assessment of geopolitical risk with only 26 percent choosing a major cyberattack as the great risk.

There was also cautious optimism among respondents in their views of the likelihood of achieving net-zero by 2050. This year, 45 percent believe it likely that the world will attain net-zero by 2050, with 55 percent disagreeing. Although the hopeful still constitute a minority, their numbers are up from 27 percent last year. Meanwhile, a slight majority of 51 percent think that reaching net-zero would have at most a limited negative effect on GDP, or even a positive one.

The essays in this publication give voice to diverse perspectives. Coming from different segments of the global energy landscape, the authors naturally put forth divergent views on the future of their sector. But if there is a common thread among them, it is that now is the time to leverage today’s energy crisis for faster progress.

As Winston Churchill said while working to form the United Nations after World War II, “Never let a good crisis go to waste.”

In last year’s Global Energy Agenda, I wrote that “the course that we chart to net-zero must be steady but also ambitious enough to meet the challenge.” And after Davos last year, I wrote that I am going “short” on pessimism and “long” on optimism.

I think that’s the right note to hit in a year that will culminate with COP28. hosted by the United Arab Emirates, which will be colored by attainable, pragmatic solutions to achieve the inclusive and sustainable energy outcomes the world so urgently needs.

Frederick Kempe is the President and Chief Executive Officer of the Atlantic Council.

Introduction

In 2022, as the world was learning to cope with COVID-19 and its deadly toll, Russia’s invasion of Ukraine shattered hopes in the West for a return to normalcy. Over the course of the year, the unprovoked attack and Russia’s weaponization of natural gas rapidly reshaped interdependent energy systems around the world.

Although the humanitarian devastation and mass casualties caused by the war—including the displacement of millions of Ukrainians—have radically surpassed the economic and political challenges imposed on the global energy system, the ongoing energy crisis has and will continue to have far-reaching consequences.

With energy prices retreating from multiyear highs, an apparent calm has settled on the broader market outlook. On the horizon, however, stirs a more complicated future, as the energy crisis complicates the probability of a smooth transition.

Around the world, volatility from higher energy and food prices is further shrinking household budgets already stretched thin, forcing many people to choose between heating their homes and feeding their families. The International Energy Agency’s (IEA) 2022 World Energy Outlook estimates that seventy-five million people who have recently gained access to clean energy are likely to lose the ability to pay for extended electricity services, and a hundred million may no longer be able to afford clean cooking solutions.¹ Price and economic pressures associated with today’s energy crisis mean that “the number of people without access to modern energy is rising for the first time in decades.”²

Beyond these immediate impacts, the severe constriction of Russian natural gas flow to Europe has raised the question of the war’s long-term effects on the global energy transition and the overall fight against climate change. To make up for the void left by the near shutoff of Russian gas supplies, Europe has turned to the use of carbon-intensive coal and oil to generate electricity, a response criticized by some climate advocates as shortsighted in the face of worsening droughts, extreme heat, rising oceans, and other effects of planetary warming. The current surge in carbon-intensive fossil energy use, however, appears transitory. Laying bare just how tightly interconnected national security is to energy security, policies advanced in Washington and Brussels are emblematic of the urgency with which lawmakers are seeking to decouple their economies from reliance on foreign oil and gas imports. If anything, the war has heightened the urgency around accelerating low-carbon energy deployment as a critical tool for shoring up countries’ energy security.

The European Union’s RePowerEU strategy is expressly designed to make the continent “independent from Russian fossil fuels well before 2030” by empowering a clean energy economy anchored in deployment of renewable energy and energy efficiency.³ This comes in addition to the EU’s continued progress on its Fit for 55 plan to reduce emissions by 55 percent by 2030 compared to 2005 levels. The United States, meanwhile, is working to rapidly implement the nation’s most significant piece of climate legislation, the Inflation Reduction Act, which aims to reduce the country’s carbon emissions by 40 percent by 2030 compared to 2005 levels. As with all major legislation, the law has its detractors, but Congress’s incentive-laden approach, with its ample support for consumers and corporations, likely means the statute has staying power. And considering the United States’ status as the world’s largest economy, Washington’s massive investment in clean energy and corresponding supply chains will reverberate globally.

The 2023 Global Energy Agenda survey and expert perspectives

Given this context, it is unsurprising that energy leaders head into 2023 with a completely different outlook than a year prior. To gain insights into their thinking, the Atlantic Council conducted its third annual survey for its 2023 Global Energy Agenda. The survey was conducted from October 14 to November 23, a window that overlapped with the 2022 United Nations Climate Change Conference, widely known as COP27. This report distills the survey responses, drawing on the insights of energy stakeholders from more than fifty countries, and representing a variety of fields associated with the sector. An appendix provides additional demographic details. As with last year’s survey, the 2023 Global Energy Agenda continues a tradition of employing various questions and insights from prior years’ results and analyses to help hone key findings.

To complement our survey analysis, the Atlantic Council Global Energy Center invited global experts, corporate leaders, and government officials to con- tribute essays for this Global Energy Agenda to provide deeper insights into issues facing the energy sector and the world’s prospects for the energy transition. Our contributors span the globe and represent a diverse array of perspectives from energy leaders. The essays cover topics ranging from critical mineral supplies to advanced nuclear power to climate diplomacy, and altogether set the energy agenda for the year ahead as the world looks for a meaningful commitment to climate action on the road to COP28.

In this year’s edition, our analysis draws distinctions where significant differences existed between groups based on respondents’ geographic region; which industry they work in within the energy sector (oil and gas, nuclear power, renewables, etc.); and their views on when the world will reach peak oil demand. The latter group is further subdivided to provide key insights into those who see an accelerated energy transition (“energy transition bulls”) and those who predict a more enduring role for oil and gas in the global energy mix (“energy transition bears”). These categories tend to vote together as blocs in their responses throughout the survey.

Collectively, the survey results and expert essays that compose the 2023 Global Energy Agenda have yielded the following key insights.

The crisis in Europe is dusting off the playbook for geopolitics and energy

Russia’s war in Ukraine has recalibrated the contemporary wisdom on geopolitical risk that existed just a year ago. In the fall 2021 survey, which was conducted only a few months before Russia’s February 2022 invasion, the most frequently mentioned geopolitical risk facing the energy sector was a major cyberattack; however, at only about a quarter of respondents, there was no strong consensus. Additionally, a conflict including a major energy producer was at the top of the risk list for only 17 percent of respondents, despite mounting concerns in Western security circles at the time the survey was taken that Russia was preparing for an armed incursion into Ukraine.

Naturally, in our fall 2022 survey, nearly half of respondents say that the Russia-Ukraine war is the top risk. Representing one-tenth of global oil and gas supply in 2020, Russia has historically served as a meaningful contributor to global energy trade, making it impossible to divorce the Kremlin’s decision to invade Ukraine from the stability of global energy markets, especially in a moment of increased fragility in the wake of the pandemic. The consequences of this political gamesmanship on energy policy and trade are on par with the 1973 Arab oil embargo and 1979 oil crisis. The marked effect on energy prices, however, is expected to be temporary, according to survey respondents: a notable contingent sees oil demand ebbing in the next decade. This expectation is perhaps an indicator as to why just 23 percent believe that geopolitical leverage will be the primary cause of price volatility come 2030.

Midcentury net-zero optimism is on the rise

There is little consensus on the means of achieving net-zero emissions by 2050, but the number of respondents that see the world meeting its zero-emission aims by midcentury is rapidly growing. Although still in the minority, the percentage of survey respondents that believe net zero is within reach in the next thirty years has spiked to 45 percent, a sizable increase from only 27 percent of participants predicting this outcome one year ago. In recent years, the concept of a net-zero energy system has unquestionably gained traction in political and industry circles around the world. Even dedicated oil-producing countries such as the United Arab Emirates and Saudi Arabia have set net-zero benchmarks—2050 and 2060, respectively—with the Kingdom closely associating net-zero goals with its aims of promoting key domestic policies such as the circular carbon economy framework. Interestingly, however, optimism for a net-zero future is most subdued among those working in zero-carbon sectors (i.e., renewables, nuclear, and advanced energy technologies), with 73 percent responding that it is “unlikely” that the world will reach net-zero by 2050, higher than those in oil and gas (62 percent).

Global North-South divide on achieving the clean energy transition

While political will is widely recognized as the predominant obstacle to reaching net-zero emissions among those surveyed, the cost of clean energy and access to capital meaningfully weighs on those outside of the North American and European continents. A number of respondents from emerging markets, for example, view insufficient resources as another major factor hindering progress. This is consistent with perspectives on the overall energy transition as well, where Europeans and Americans see broad macroeconomic trends, such as recession risk or inflation, as the principal headwinds, while those in developing countries more frequently cite a lack of government investment. These perspectives underscore a growing debate within the United Nations Framework Convention on Climate Change (UNFCCC). During COP27 in Sharm el Sheikh, Egypt, the Global South found success in drawing a renewed focus on how climate change is impacting developing nations, ultimately enabling the introduction of “loss and damage” into a formal negotiation process. Efforts to address inequities in financing billions of dollars in clean energy infrastructure, which will be necessary to avoid the worst impacts of climate change, will remain in focus during COP28.

Natural gas’ appeal is ebbing in its most substantial near-term market

The roughly even division between those who see a long-term future for natural gas and those predicting a limited one remains consistent year-on-year, but with greater geographic variations. Of those surveyed, the majority see natural gas remaining a dominant—if not predominant—feature of the global energy mix. The vast majority of those remaining (40 percent of the total), think that natural gas will act as a long-term bridge fuel before disappearing. Only 3 percent see a minimal role for gas. While broadly consistent with last year’s analysis, Europeans—likely influenced by Russia’s weaponization of the resource—are increasingly resolute to wean their market from natural gas: now 49 percent say that the fuel will have a permanent role, down from 58 percent last year. Meanwhile, in the Middle East and North Africa—and, to a lesser extent, the United States—the anticipation that natural gas will remain a permanent fixture of the energy mix is growing, up to 40 percent from just 30 percent the prior year.

Taken together, we hope 2023 Global Energy Agenda survey responses, analysis, and essays will lay out the contours of the current energy system, assess the events and trends that will shape the energy system in 2023, inform fact-based debate and analysis about the best path forward, and set the shared energy agenda for the year.

Chapter 1: Geopolitics and energy security

Essays

Why today’s global energy crisis promises to be a turning point toward a cleaner and more secure future

By Fatih Birol

Post-war outlook on Russia as an energy power

By John E. Herbst

The geopolitics of energy

By Richard L. Morningstar

A precarious phase of war and Russian energy leverage

by Helima Croft

Nuclear energy is vital to ensuring energy security and an affordable, sustainable, and resilient energy system now and for the future

By Sama Bilbao y León

Russia’s invasion of Ukraine last February dramatically transformed political risk perceptions within the energy sector in 2022, surmounting even the most pressing global challenges from recent years, including the pandemic. Of course, current events often weigh heavily on public perception.

When the 2022 Global Energy Agenda survey was conducted in late 2021, the cyberattack on the Colonial Pipeline—which crippled fuel supply along much of the East Coast of the United States—had occurred recently and was front-of-mind for many respondents, while the specter of Russian aggression was still a distant-seeming possibility. It was therefore unsurprising that a military conflict was not a top concern among survey participants at the time, while the most frequently cited risk—according to 26 percent of respondents—was a major cyberattack.

Having now witnessed the brutality of Russia’s attack on Ukraine and the subsequent fallout impacting all facets of the global energy system, roughly half of the respondents name the war’s continuation or escalation as the dominant energy risk in geopolitics. Meanwhile, concern over cyberattacks to the energy system dropped by half, from 26 percent to 13 percent. Arguably, this decline is more of a testament to the enormous magnitude of the war’s impact on energy geopolitics rather than a diminishment in cyberattack risk.

Compared to the prior year’s response, however, most topics did not see drastic change in the face of Russia’s war. For instance, the percentage of respondents who envision a conflict in the South or East China Seas as the predominant risk rose from 7 percent last year to 10 percent this year. Additionally, trade-related disruptions still command roughly one tenth of respondents as well, shifting from 11 percent to 8 percent. It is worth noting that China and trade watchers represent well-defined communities with long-standing convictions regarding the risks and opportunities in their respective areas of expertise, lending some credence to why these respondents may be comparatively unmoved by the conflict in Ukraine in their assessment of future risks.

Meanwhile, two old worries fell off the radar of energy risks: Nord Stream 2 and COVID-19, after being collectively named by 17 percent of respondents as top concerns for the 2022 outlook. With one of the two Nord Stream 2 strings sabotaged in September 2022, the absence of the pipeline’s ranking this year is self-evident. COVID-19, in contrast, elicits deeper reflection. While generally there appears to be broad societal appreciation that the virus remains a feature of modern life, especially as China experiences a resurgence in infections resulting from the easing of Beijing’s zero-COVID policy, the fact that respondents no longer see the pandemic as a global risk illustrates how accustomed society has grown to the “new normal.”

Overall, other facets of the global geopolitical landscape may simply be outmatched now by Russia’s corrosive foreign policy and the irreparable harm it has brought to the stability of Europe. As the apex risk of 2022, it is worth diving deeper into how enduring Russia’s role will be in the European ecosystem and, by proximity, in the stability of the transatlantic partnership. Given the established history of energy trade between Russia as an exporter and European countries as consumers, understanding the perspective of survey respondents provides a glimpse into how the energy community sees Europe’s relationship with Moscow adjusting in coming years.

Even before February 2022, Russia had reduced energy exports to European customers in a presumed effort to exert political leverage. When the invasion started, sales contracted further and in response, European countries enacted a series of policies to reduce Russian oil and gas revenues. This includes the December 5, 2022, EU ban on Russian crude imports, a Group of Seven (G7) price cap on Russian seaborne exports, and a pending EU ban on Russian petroleum products, which is slated to go into effect on February 5, 2023. And while higher global prices enabled Russia to continue earning revenue from fossil fuel trading with European countries in 2022, the drop in European market share is significant. In 2021, Russia provided 40 percent of non-EU gas imports to the EU; by the fall of 2022, Russia’s share of EU imports had fallen to 7.5 percent.⁴ In the first half of 2022, Russian oil imports to the EU also declined.⁵

If survey respondents are right, the initial disruption to these markets will last through the end of this decade. The majority of respondents say that Russian exports to Europe of oil (58 percent of respondents) and gas (55 percent of respondents) will decrease substantially by 2030. Europe-based respondents are even more likely to forecast reduced fossil fuel imports from Russia. The horrors inflicted on Ukraine have forced a seismic shift in thinking about the costs—financial, social, and geopolitical—of energy security. There is less consensus, however, on how these events will shape the global energy transition. While respondents resoundingly agree that the war in Ukraine and Europe’s anticipated pivot away from Russia will have an impact on climate action, there is an equally stark divide on whether it is a headwind or tailwind for a zero-emissions future. Nearly 60 percent say it will accelerate the energy transition, while 40 percent say the war will impede it.

There are merits to both perspectives, of course, which are explored in more detail by our essay authors in this chapter. The war has highlighted the need for greater energy security, which could lead to increased investment in indigenous clean energy resources. However, the development of capacity from renewables and nuclear energy will take time, and the need to replace Russian gas is likely to lead to a boost to conventional energy resources in the face of few immediate alternatives for European importers, not to mention the corresponding implications for emerging markets that cannot financially compete with Europe for supply.

Leadership insight

Why today’s global energy crisis promises to be a turning point toward a cleaner and more secure future

By Fatih Birol

Russia’s invasion of Ukraine in February has thrown energy markets into turmoil, setting off the first truly global energy crisis, with impacts that will be felt for years to come. International trading routes and investment flows that had built up over decades are being profoundly reshaped. Households, businesses, and entire economies are struggling to pay for food and energy, leading to rising poverty and insecurity. Geopolitical risks are on the rise.

Despite these major difficulties, I’m optimistic about the long-term effects of the current crisis on the global energy sector. Thanks to the policy responses by many governments around the world, the crisis is set to accelerate our transition to an energy system that is not only cleaner, but more affordable and secure.

In our recent World Energy Outlook 2022, the International Energy Agency’s (IEA) analysis shows that for the first time ever, today’s prevailing government policies will result in a distinct peak in global demand for fossil fuels in the coming years as clean energy technologies expand. In this scenario, coal’s recent crisis-driven rebound is temporary, and its use falls back within the next few years; natural gas demand reaches a plateau by the end of the decade; and rising sales of electric vehicles mean that oil demand levels off in the mid-2030s before ebbing slightly to midcentury. This is nothing short of historic. Ever since the start of the Industrial Revolution in the 18th century, fossil fuel use and economic growth have risen in tandem. Now, they are parting ways. However, the transition to clean energy is not yet happening quickly enough to avoid severe impacts from climate change.

What we do see is increasing ambition and action around the world to accelerate the transition. While a lot of public attention has focused on the short-term measures many governments have taken to shield consumers and businesses from higher energy prices, many of those same governments are also taking longer-term steps to address the underlying fragilities of our energy systems.

The most notable responses include the US Inflation Reduction Act, the European Union’s Fit for 55 package and REPowerEU plan, Japan’s Green Transformation (GX) program, South Korea’s aim to increase the share of nuclear and renewables in its energy mix, and ambitious clean energy targets in China and India. The Inflation Reduction Act alone puts close to $400 billion on the table in the form of tax incentives, subsidies, and support for technologies ranging from hydrogen to solar to carbon capture—and this will mobilize far more in private sector investment. Taken together, these new measures by governments worldwide are set to help propel global clean energy investment to more than $2 trillion a year by 2030, a rise of more than 50 percent from today.

How has the current crisis accelerated these moves? With the droughts and floods we’ve witnessed in recent years highlighting the growing impacts of climate change, the environmental case for clean energy needed no reinforcement. But today’s soaring energy prices have made the economic arguments in favor of cost-competitive and affordable clean technologies stronger than ever. Now, with the war in Ukraine, the energy security case for clean energy has come to the fore, with countries recognizing the risks of relying too heavily on imported fossil fuels.

This alignment of economic, climate, and security priorities is moving the dial toward a better outcome for the world’s people and for the planet. If all countries achieve their current national climate pledges on time and in full, IEA analysis shows that it would limit the rise in global average temperatures to 1.7 degrees Celsius. The increasingly robust clean energy plans we’re seeing provide grounds for optimism that countries can move closer to delivering the concrete policies and implementation needed to make these ambitious pledges a reality. However, there still remains an “implementation gap” between today’s policy settings—which would most likely lead to a temperature rise of around 2.5 degrees Celsius, far too high to avoid severe climate risks—and what’s needed to achieve national climate pledges.

And we need even greater ambition and stronger implementation to reach net zero globally by 2050 and have a chance of stabilizing the temperature rise at around 1.5 degrees Celsius. This would require doubling global clean energy investments from the current projected level to around $4 trillion a year by 2030.

We can accomplish this faster progress if strong action is taken immediately. Investments in clean electricity and electrification, along with an expanded and modernized grid, offer clear and cost-effective opportunities to cut emissions more rapidly while bringing down electricity costs. Maintaining today’s growth rates for deployment of solar PV, wind, electric vehicles, and batteries requires supportive policies not just in the early leading markets for these technologies but across the world.

A major concern that demands urgent attention is the uneven distribution of clean energy investment around the world. If China is excluded, then the amount being invested in clean energy each year in emerging and developing economies has remained flat since the Paris Agreement in 2015.The cost of capital for a solar PV plant in 2021 in key emerging economies is between two and three times higher than in advanced economies. Today’s rising borrowing costs risk further exacerbating this divide.

International efforts, especially from multilateral development banks, are needed to step up climate finance in developing and emerging markets, and to tackle the perceived risks that deter investors. There is immense value in broad national transition strategies such as Just Energy Transition Partnerships, like the one announced by Indonesia and a group of leading economies at the G20 Summit in November, that integrate international support and ambitious national policy actions, while also providing safeguards for energy security and the social consequences of change.

What is undeniable is that energy markets and policies are changing dramatically before our eyes as a result of the war in Ukraine. And these aren’t just short-term blips, but changes that will play out for decades to come. I am convinced that when we look back, we will see 2022 as a historic turning point towards a cleaner, more secure, and more affordable energy system.

Fatih Birol is the executive director of the International Energy Agency.

Leadership insight

Post-war outlook on Russia as an energy power

By John E. Herbst

In the winter of 2005-2006, one year after the Orange Revolution, Moscow shut off the gas to Ukraine in an effort to punish Ukraine for rejecting Putin’s candidate for president, Viktor Yanukovych. Ultimately, Russia’s actions successfully coerced newly elected President Victor Yushchenko to accept a corrupt deal for the delivery of gas in the future. That did little to inhibit Moscow from shutting off the gas to Ukraine a second time in 2009.

As ambassador to Ukraine in 2005, I had warned of these very scenarios, sending formal messages back to Washington regarding the legitimacy of Moscow’s hints of shutting off gas supplies to Europe. Yet, European energy dependence on Moscow only grew after gas cutoffs to Ukraine, starting with the gas pipeline Nord Stream 1, which stretches from Russian to Germany and became operational in 2011.

Even after Moscow seized Crimea and began its hybrid war in eastern Ukraine, German Chancellor Angela Merkel in 2015 increased this dependence by signing a deal to construct another gas pipeline—Nord Stream 2—to bring more Russian gas to Germany. Plans to certify and put into operation this controversial pipeline proceeded throughout 2021, despite clear Russian manipulation of gas supply for political gain and its military buildup on Ukraine’s border in preparation for the massive invasion of February 2022.⁶ Only Moscow’s “annexation” of Ukraine’s occupied Luhansk and Donetsk Oblasts and then the invasion definitively stopped Nord Stream 2. The pipelines were ultimately sabotaged in September 2022.

All of this is a reminder that in the normal scheme of things, political economy trumps economics. Nearly forty years of growing European dependence on Russian hydrocarbons began with the opening of the Urengoi-Pomary-Uzhgorod pipeline in 1984. The economics of this growing dependence was obvious. Russia had major supplies, it was relatively nearby, and Russian hydrocarbons could be delivered by pipeline. While the early 1980s were still characterized by tense East-West relations, Gorbachev became the Soviet First Secretary in 1985; those relations warmed quickly; and six years later the Soviet Union collapsed. In the 1990s, a principal goal of the United States and its allies was to bring Russia fully into the international community, including membership in the International Monetary Fund (1992); the Group of Seven (G7), which became the G8 (1998); and the World Trade Organization (2012). In short, the clear improvement of political relations provided the right framework for closer economic ties.

This background is essential for considering what Russia’s role will be in world energy markets after its war of aggression against Ukraine ends. The answer to that question begins by asking how the war will conclude. This article is based on the presumption that US and Western aid either continues and even increases, in which case Ukraine will succeed in driving Russian forces out of all, or most, of its territory and negotiating a stable peace, even if some key questions, such as the status of Crimea, are left for future resolution. The second question is what sort of Russia emerges from this defeat. If it is a Russia seething with resentment—of the kind that characterizes major Russian media today—then the prospect of improved relations and growing economic ties is minute. The West would have to treat that Russia with great caution. But if it is a Russia recognizing that the invasion of Ukraine was illegitimate; that imperial polices to dominate its neighbors are a dispensable relic; and that Russia can only prosper if it empowers its people and seeks, in the twenty-year-old words of Russian analyst Dmitri Trenin, to become a normal country truly integrated into the international system, the circumstances will be very different.⁷

Before Moscow’s February invasion, the EU received approximately 40 percent of its gas sup- plies (plus more than 50 percent of its gas imports) and 25 percent of its oil from Russia.⁸ By October, approximately 9 percent of gas consumed in Europe (and 18 percent of gas imports) came from Russia, including gas going to Turkey and other non-EU members in the Balkans.⁹ Oil dependence also dropped in the fall of 2022 to 14.4 percent from over 24 percent in the previous year.¹⁰

Moscow’s oil future is also clouded by its declining reserves, which were 7 percent lower in 2020 than in 1991, and Russia’s Finance Ministry is projecting that 2023 production will drop by 7 to 8 percent.¹¹ Moscow’s ability to maintain its natural gas system and to find new supplies of oil and gas are also being hindered by the effective export controls introduced by the West since the February invasion. Russia needs Western technology to access harder-to-reach oil and gas.

In a postwar world, those controls will stay in place if Moscow is still perceived as a potentially aggressive actor. If the Kremlin makes a clear break with its past, those controls will begin to unwind, but, as a precaution, only over time. But they will come off—which will be good for Russian oil and gas production—and at the same time, the West, albeit with a certain degree of caution, will be looking for new economic opportunities with Russia and for ways to promote its reintegration into the global economy.

But Europe’s move to alternate supplies of gas, including decisions to build liquefied natural gas terminals, means that, in the future, Europe will have less need for Russia’s pipeline-supplied gas. Developments here will be determined by economic factors. But Moscow might be able to build on its ongoing energy relationships with countries, like Turkey and non-EU Balkan states, whose oil and gas purchases are not limited by sanctions. It may also do the same with landlocked EU states—Slovakia, Hungary, and the Czech Republic—that have received sanctions exemptions that allow them to purchase Russian oil and gas via pipelines. Similarly, Russia could continue its energy relationship with Bulgaria, which has an EU exemption to purchase Russian oil through 2024.¹²

Moscow, of course, will be able to market its hydrocarbons to China, India, and other customers, but transaction costs are likely to be higher than they were with Europe. The headwinds facing Russia’s oil and gas industry, even in the more optimistic scenario, are the reasons some observers believe Russia will drop from being a “strategic petrostate” to a “reduced energy power.”¹³

Ambassador John E. Herbst (ret.) is senior director of the Atlantic Council’s Eurasia Center and the former US ambassador to Ukraine.

Leadership insight

The geopolitics of energy

By Richard L. Morningstar

The world of energy changed on February 24, 2022. Moscow’s gas cutoffs, which aim to divide the West and break support for Ukraine, are the culmination of a strategy that has manufactured an energy crisis in Europe. Few knew then the depraved depths of the Kremlin’s plans. Now it is abundantly clear, as is the continuing importance of energy geopolitics.

The stakes of the great energy game are extremely high. Oil and gas exports provide revenue for the Kremlin to sustain its brutal and prolonged war—now approaching the one-year mark. Russian energy exports also undercut Western efforts to isolate Moscow, as the country pivots to new customers in the developing world. Moreover, the Kremlin’s increasing threats to cut supply could generate fresh chaos within already fragile global energy markets, and empower populist, pro-Russian sympathizers in democratic societies.

Such is the geopolitics of energy, the gray area between markets and power politics. Those in Europe who thought they knew Moscow best believed Russia would be a reliable supplier, because it had a business interest in keeping gas flowing. Economic interdependence—it was thought—would make Russia a normal European country.

But those who knew Moscow better understood the Kremlin has other interests, twisted and irrational as they may be. They understood energy is not just a market. It is power. By supplying low-cost gas to Europe, fueling the continent’s industry, and powering economic growth, Moscow had leverage. The European Union’s dependence on Russia enabled an autocracy to influence European politics and impose energy dysfunction on a democratic union.

Moscow did not maximize the economic benefits of this relationship. That was not the point. The point was to place Russia at the center of Europe’s economy—and therefore, its politics. This inoculated Moscow from the political consequences of its aggressive foreign policy, exemplified by the tepid reaction to the 2014 annexation of Crimea and invasion of the Donbas. Because of Russia’s energy—some thought—Moscow was too important not to have a seat at the table of global politics. Yet, last year may be remembered as the twilight for Russian energy leverage. After accounting for 40 percent of EU gas consumption, by the end of 2022, the continent was getting less than 8 percent of its gas from Moscow. Europe, nevertheless, is getting by. Moscow’s strategy is not working, and its ability to wield energy chaos as a geopolitical weapon is waning. EU aspirations to carry out a green transformation of its economic system have become an economic and security necessity, with the soaring cost of fossil fuels providing pressing incentives to decarbonize.

There is no better catalyst for the energy transition than the weaponization of oil and gas supply. Europe’s climate ambition has been galvanized by the crisis, increasing its 2030 emissions reduction target beyond “Fit for 55.” Europe needs to urgently degasify its industry to stay competitive as production costs become tied to LNG prices. Now, even the highest-hanging fruit for decarbonization, the hard-to-abate sectors, are immediate priorities for the continent.

Europe is determined to move rapidly and never be in a position of energy dependence again. Decoupling its economy from fossil fuel imports, through locally generated clean energy, is the surest way to do so. If Europe is successful in accelerating its green transformation, Russia’s days as an energy superpower will soon be behind it.

A page will have been turned—but not completely. Even as the global energy system transitions to a net-zero economy, the geopolitics of energy are not going away.

The geopolitical might once enjoyed by fossil fuel producers is shifting toward countries that produce clean energy metals and technologies. Russia’s influence over global hydrocarbon systems pales in comparison to China’s command of global critical mineral supply chains. In addition, energy is becoming a high-tech industry. As it does, intellectual property and complex manufacturing capacity will become a key factor in geostrategic energy competition among major powers. Ensuring that this competition is managed productively to combat the shared threat of climate change is the challenge of our time.

As the transition gathers momentum, it is paramount that policymakers heed the lessons offered by the current energy crisis and not allow old dependencies to be replaced by new ones. Diversifying sources and technologies remains the most tried-and-true method for neutralizing energy’s geopolitical power.

The geopolitics of energy are transforming, but they are not going away. Those who ignore this unwavering dynamic of the global energy system do so at their own peril.

Ambassador Richard L. Morningstar (ret.) is the founding chairman of the Atlantic Council Global Energy Center. He has served as the US ambassador to the Republic of Azerbaijan, as US ambassador to the European Union, and as the secretary of state’s special envoy for Eurasian energy.

Partner perspective

A precarious phase of war and Russian energy leverage

by Helima Croft

As the war in Ukraine enters its second year, a key question for market participants is whether Russia’s disruptive power is diminishing or whether it still has the capacity to cause significant pain for Western consumers by curtailing energy supplies. Has Moscow already played all of its strong cards by turning off the gas taps to much of Europe and in turn providing the catalyst for countries like Germany to seek new sources of supply and fast-track the buildout of critical liquefied natural gas infrastructure? Does President Vladimir Putin have any real economic option but to continue to sell oil at depressed prices in order to maintain the principal funding stream for his war machine? Or, have energy markets merely entered a fleeting period of calm as the Russian president prepares for another brutal winter campaign—with energy as an essential weapon—to test the resolve of the West to continue providing military and financial support for Kyiv?

From the start of the conflict, Western leaders signaled a clear concern about higher energy prices through sanction carve-outs and long lead timelines for the implementation of coercive measures such as the EU ban on seaborne oil imports. Russia has already made good on its threats to disrupt gas supplies, with piped flows to Europe currently down over 85 percent year-over-year. Gas has long been a weapon of choice for the Kremlin, given Europe’s high dependence on Russian supplies as well as its more modest revenue-generator role. Certainly, the remaining Russian gas flows through Ukraine would seem to be at elevated risk for curtailment, especially given the ongoing aerial bombardment of Ukraine’s energy infrastructure. With storage levels in Europe remaining relatively robust amid warmer weather and new sources of supply, the real challenge for the continent on the gas side could come toward the tail end of 2023 in the next storage-filling season, with no additional Russian volumes likely forthcoming.

Oil is a trickier card for Putin to play because of its centrality to state coffers. The architects of the Group of Seven (G7) price cap plan essentially wagered that Russia would have no option but to keep supplying that market at the $60 price point if it wanted to continue with the war effort. And yet, Putin at least continues to mount a rhetorical resistance to the price cap, pledging to cut supplies to any customer that participates in the plan from February onwards. India will likely be a key test case of Russian resolve to see this pledge through, as the country has emerged as the principal purchaser of distressed Urals barrels no longer welcome in the West. While Prime Minister Narendra Modi and Petroleum Minister Hardeep Singh Puri have publicly voiced opposition to the G7 plan, its refiners are still largely dependent on Western service providers to obtain their cargoes. Early indications are that these customers are continuing to avail themselves of Western services and therefore are presumably signing the requisite attestation that they were purchasing the barrels at or below the $60 cap.

There is certainly scope for Russia to engage in some symbolic export suspensions in order to create doubt about the viability of the G7 effort and attempt to drive oil prices higher. Unlike with gas, however, we think that Russian leadership will be much more strategic with their oil curtailments given the clear revenue imperative. Deputy Prime Minister Alexander Novak’s comments about a 5-7 percent reduction seemingly signals that supply restrictions will be deployed more like a scalpel than a blunt instrument. Moreover, a scenario could arise where the Kremlin seeks to rebrand disruptions due to compliance challenges and service provider problems as a deliberate policy choice. At the time of writing, we estimate that seaborne exports have fallen over 20 percent month-over-month in December, with lost flows primarily coming from Urals and East Siberia Pacific Ocean grades.

A crucial test for markets will come after the February 5 EU ban on the importation of Russian refined products. We have consistently maintained that the products ban will be more difficult to mitigate than the seaborne oil embargo. Asia has been the key release valve for crude, with India taking over 900,000 barrels per day more compared to historical levels. Even then, both China and India have seen month-over-month decreases in crude volumes last month following the embargo. There is no India market equivalent for seaborne diesel shipments, so a mass switch in crude supply like the one we saw with Asian refiners following the invasion is less likely. Moreover, replacing displaced product imports in Europe will also be more difficult given tight product markets; 500,000 barrels per day of diesel imports were still coming from Russia into the EU in October.

Another concerning scenario would be for Russia to disrupt oil supplies from other producers through sabotage or interference in internal affairs. There have already been a number of suspicious Caspian Pipeline Consortium (CPC) pipeline outages. In March 2022, loadings of Kazakh crude from the CPC were suspended at the Russian port of Novorossiysk, with Russian officials citing weather-related damage to loading berths as the cause for the weeks-long outages. However, senior energy officials from other governments have suggested that Moscow may have had an active hand in the CPC outage as part of a test run of its asymmetric disruptive capabilities. Hence, we would put CPC flows close to the top of a 2023 risk list.

Similarly, leading security experts contend that Russia has the ability to disrupt supplies from countries where the Federal Security Service (FSB) and Kremlin-linked mercenary groups maintain a significant presence, such as Iraq, Algeria, and Libya. Given that Washington has strongly signaled an aversion to higher oil prices, and has gone to quite extraordinary lengths to keep a lid on them, there remains an elevated risk that Putin will seek to exploit this pain point in 2023, even if it is principally through asymmetric action. Moreover, a case could be made that Moscow’s peak leverage point may be in the coming cold months, and once the green shoots of spring appear, many in the West may conclude that the worst is over from an economic warfare standpoint. Hence, our view is that we may be entering a particularly precarious phase in the conflict and that Putin may endeavor to demonstrate that he is not a spent force.

Helima Croft is the head of global commodity strategy and MENA Research at RBC Capital Markets, LLC. RBC Capital Markets, LLC, is a sponsor of the 2023 Atlantic Council Global Energy Forum.

Leadership insight

Nuclear energy is vital to ensuring energy security and an affordable, sustainable, and resilient energy system now and for the future

By Sama Bilbao y León

We keep hearing “Nuclear energy is back.”

I dare say nuclear energy has been here all along.

What is back is the recognition that nuclear energy is an essential element of our existing energy systems, with enormous positive impacts in terms of carbon-free electricity, energy independence, and accessible and affordable power. What is perhaps new is the realization from governments, large energy users, the finance community, the media, and the public that nuclear energy needs to play a greater role in the clean energy systems of the future if we are serious about reaching the Paris Agreement goals in a cost-effective and socially equitable manner.

Today, more than four hundred nuclear power reactors in thirty-two countries on every continent are quietly operating in the background, providing people across the world with 24/7 low-carbon energy, independent of geopolitical pressures, the weather, or the season. They have an incredibly small footprint, in terms of land, fuel, and raw material use, as well as the lowest lifecycle impacts of all electricity generation options.¹⁴

Nuclear energy is today the second-largest source of low-carbon electricity—the largest in OECD countries—and over the past fifty years, the use of nuclear power has reduced CO2 emissions by over 70 metric gigatons—nearly two years’ worth of global energy-related emissions.

Events during the second half of 2021 and the first half of 2022 have brought energy security firmly to the top of the political agenda. While the current energy crisis has been prompted by a series of extraordinary events, the vulnerability of many energy systems has long been predicted. Energy woes in many parts of the world are the result of decades of short-sighted policies, lack of investment in basic infrastructure, and dysfunctional energy markets. This has allowed the premature shutdown of nuclear power plants and an overreliance on intermittent renewables solely backed up by fossil fuels.

When the price of oil on world markets increased dramatically in 1973, several major energy importers reviewed their energy policies and took steps to reduce their vulnerability to political and economic uncertainties. Many countries rapidly adopted nuclear power for electricity generation, with construction starting on almost 200 gigawatts (GW) of nuclear power plants in the decade that followed. Although almost 50 years have passed since then, the lessons learned are now more pertinent than ever, with geopolitical, economic, and availability implications for countries that rely on energy imports.

Despite enormous investment in renewable energy and the carefree perception of much of the Western world that we are making progress in addressing climate change, the percentage of electricity that comes from low-carbon sources today (37 percent) is almost unchanged from the mid-1980s.¹⁵ Currently only countries that produce most of their electricity from hydropower, geothermal, or nuclear energy, or a combination of the three, have successfully decarbonized their electricity grids. With global electricity use expanding by at least 50 percent by 2050, and the global population projected to increase to almost ten billion, it is crucial to use cost-effective and proven solutions that provide secure access to 24/7 low-carbon electricity to everyone.

Historically, nuclear energy has proven to be the fastest way to increase populations’ access to low-carbon electricity, and a catalyst for socioeconomic development. Thanks to its energy density, nuclear energy is immune to severe fuel market fluctuations. It can also operate for at least sixty to eighty years, making nuclear one of the most affordable, secure, 24/7 energy sources currently available. It also generates thousands of long- term, high-pay, quality jobs, along with substantial socioeconomic spillover in local, national, and regional economies.

Beyond electricity, which accounts for only one-fifth of total energy use, nuclear enables the rapid decarbonization of the entire economy via dispatchable low-carbon heat. This heat is ideal for industrial processes, district heating, or hydro- gen and synthetic fuel production.

Ambitious yet realistic net-zero climate scenarios performed by reputable independent organizations such as the Intergovernmental Panel on Climate Change and the United Nations Economic Commission for Europe forecast a need for 1250 GW of nuclear capacity by 2050.

If we are to keep the Paris Agreement’s 1.5-degree Celsius target within reach—in a cost-effective and socially equitable manner—we urgently need significantly more nuclear energy. New build rates for nuclear need to ramp up to 50 GW per year over the next ten years and stabilize at that level through 2050.

Now more than ever, it is crucial for governments to put in place clear and pragmatic policy actions to facilitate and accelerate the deployment of nuclear energy. Such actions include establishing a level playing field for all low-carbon technologies and reforming energy and electricity markets to recognize the security and reliability of nuclear power. It is also very important to recognize nuclear energy as one of the investable technologies under the various environmental, social, and governance (ESG) and sustainable finance frameworks across the world.

Once the value of nuclear power is fully recognized by policies and markets as a way to provide price stability as well as long-term predictability of revenue, investment will flow into new nuclear energy projects and incentivize the development of stable supply chains.

When facing the challenge of COVID-19, the pharmaceutical community rallied researchers, regulators, policymakers, and industry, uniting them and enabling them to find a way to deliver lifesaving vaccines in record time. This energy crisis presents a similar opportunity, and nuclear is uniquely placed to contribute significantly to both clean electricity and non-electrical uses by 2050. To achieve this, the nuclear industry and decision-makers all need to work together with a fast-track “Apollo-style” program mindset.

We have less than thirty years to reach net zero. Nuclear energy offers a golden opportunity to build a cleaner, more equitable world, in which everyone has secure access to clean abundant 24/7 energy and a high quality of life.

Sama Bilbao y León is director general of the World Nuclear Association.

Chapter 2: The pursuit of market stability

Essays

It’s time to focus on making lasting carbon reductions

By Majid Jafar

Financing a sustainable and inclusive energy transition with an eye toward COP28

By Bernard Mensah

Tackling the global energy crisis in 2023 requires a greater emphasis on energy security

By Steven Kobos

Road to COP28: Why the growth of nuclear must be part of the net-zero solution

By H.E. Mohamed Al Hammadi

Electrification and decarbonization: the UAE as a springboard for action for 2023’s top two priorities

By Roger Martella

Since the onset of the pandemic, energy markets have experienced significant volatility, a trend that, under the current geopolitical climate, was sustained throughout 2022. And while oil and gas prices often garner the most headlines, the past year was unique in that electricity prices witnessed wild swings as well; at one point, European power prices reached the equivalent of $1,000 per barrel of oil.¹⁶ However, for the United States and, especially, for Europe, the underlying cause of what might previously be considered unfathomable power market prices points to an imbalance in the natural gas market.

While the increase in global natural gas and crude oil prices predates Russia’s invasion of Ukraine, there was an undeniable price spike after February 24, 2022. Following the invasion, a combination of constrained supply and international sanctions against Russia further affected prices, with the cost of natural gas in early autumn rising higher due to European efforts to fill its storage facilities before winter, including through imports of US liquefied natural gas (LNG). These challenging market conditions were com- pounded by weather-induced demand following record-busting summer heatwaves, including one that saw temperatures in the United Kingdom soar 36 degrees Fahrenheit (20 degrees Celsius) above normal for the country.¹⁷ As the war in Ukraine carries on, it is no surprise that, among survey respondents, the dominant explanation for price volatility in 2022 is the use of energy for political leverage, cited by 49 percent of respondents.

The events of 2022 illustrate how instability in conventional energy markets can weigh on the global economy and impact the public debate about how best to pursue an inclusive and equitable energy transition. Global upheaval in natural gas trade over 2022, however, did little to dissuade respondents of natural gas’ utility to global market stability. Respondents to the 2022 survey continue to see a long-term role for natural gas, consistent with the perspective of respondents in 2021. In fact, the majority (56 percent) believe that natural gas has a permanent future in the energy mix, although many also predict total consumption will decline somewhat. Meanwhile, among those who say the world will phase out gas, almost all think that the process will take decades.

While general consensus about the role of natural gas has not extensively changed over the past two years, the most recent survey did reveal pronounced geographic shifts. MENA respondents are now more likely than last year’s respondents from the same region to see gas as a destination fuel with a permanently large share of the market. The proportion of Europeans predicting that status for gas dropped markedly, from 15 percent to 6 percent, and now, for the first time, more than half believe that the fuel will eventually be phased out. The supply shock of 2022 may not just have an effect on the Russian market for gas in the region; from a European perspective, it could reduce the market overall.

Moving forward, the turmoil of 2022 has led to little change in the perception of the primary driver of energy price changes in the coming decade: about a third of respondents see unpredictable market fundamentals as the top cause of energy price volatility. As in the prior year, however, those who see a global shift away from fossil energy occurring in rapid fashion (energy transition bulls) more often point to the risk of countries seeking geopolitical leverage as the primary market driver. On the other hand, those who are skeptical of the world’s ability to wean itself from reliance on oil and gas (energy transition bears) more frequently point to a lack of investment due to environmental, social, and governance (ESG) factors and unpredictable market fundamentals, which they see as the leading cause of greater energy price volatility in the decade ahead. Interestingly, the total number of respondents citing use of energy for geopolitical leverage declined by six percentage points to 23 percent, a change that perhaps reflects the view that Russia’s shift from speculative to active hostility results in its diminished ability to leverage energy for geopolitical gain.

Starker differences in opinion emerge when looking at survey data through an industry lens (i.e., oil and gas respondents versus those from zero-emission industries such as renewables and nuclear). While about a third of both groups think that unpredictable fundamentals will be the biggest driver of volatility, their other responses diverge. Survey participants that work in the oil and gas industry reject the idea that profit seeking will be a leading issue in markets. Instead, they assert that green-driven underinvestment will play a more substantial role than even market fundamentals. Respondents working in clean energy see geopolitics as a major cause of market uncertainty, and one in six respondents also point to producer profit seeking.

Even assuming those in the clean energy sector are correct and the risk is diminishing, as 2023 progresses and Russia’s aggression persists, policymakers and the private sector would be wise to consider how to mitigate the geopolitical risks of energy. As our essay authors in this chapter explain, the antidote is investment.

Investing in the old energy system and the new is not an either-or proposition. New oil and gas projects are needed to avoid geopolitically motivated volatility and ensure as smooth an energy transition as possible. Stable energy markets are needed to guarantee societal buy-in for the transition and avoid empowering anti-decarbonization populists. Longer-term investments in clean technologies and their supply chains can maximize the geopolitical benefits of distributed energy production and avoid future supply shocks. In all cases, the diversification of all facets of the energy system is key.

Partner perspective

It’s time to focus on making lasting carbon reductions

For years, policymakers focused on novel solutions to tackle one leg of the energy trilemma—pushing renewables at the cost of hydrocarbons. 2022 taught us that real cuts to carbon emissions require reliability and affordability to also be in balance.

By Majid Jafar

The year 2022 will be remembered as one of economic pain and missed opportunities, as the first truly global energy crisis took hold. After years of pushing renewable energy projects at the cost of oil and gas development, almost every government from Europe to the Americas has found itself reversing some of those policies or putting them on hold to overcome the crisis. In turn, policymakers have turned to energy producers from Venezuela to the Middle East and North Africa to boost energy flows and even reopened old coal-fired plants.

In the United States, the Biden administration, which has promised a clean energy revolution, called for a suspension of gasoline taxes, and lobbied Saudi Arabia to pump more oil. In Germany, concerns that the Mittelstand would not be able to keep the lights on sent leaders scrambling to secure supplies of liquefied natural gas (LNG) on world markets, pricing out developing countries. And in the United Kingdom, mothballed coal power plants were restarted as policymakers urged residents to lower their thermostats in a bid to cut energy demand.

The biggest lesson in this human-made crisis is that the path to the carbon transition is just as important as the destination itself. Policies that glossed over the importance of resilience in the energy system meant supply shortfalls quickly had massive economic and political impact. That may ultimately hamper long-term efforts to make lasting reductions in the world’s carbon footprint, which is the ultimate goal.

The International Energy Agency estimates that, to reach net-zero emissions by 2050, annual investment in energy supply must reach $5 trillion a year; the energy crisis, and the chaotic response to it, may have dampened enthusiasm for that level of investment.

Like good health, it was easy to forget about energy supply when it was plentiful, but it became central as soon as shortages began in 2021. In the case of energy supply, however, shortfalls are experienced more like a heart attack to the economy.

Investment shortfall

Sadly, this was a predictable and preventable crisis. For years, an estimated $300-billion shortfall in investment in oil and gas has been met with warnings of impending shortages. On average, the world loses four to five million barrels a year from natural decline in existing oil fields, even if demand were steady. Significant investment is needed to maintain production levels, but that investment wasn’t being made to scale.

Worse, the focus on climate-lulled policymakers into believing that oil and gas will be obsolete, leading financial markets to shy away from long-term investments in the sector. This was common across the energy system: underinvestment in nuclear power, for example, meant even further energy supply shortfalls.

Investment in renewables did not keep pace with the lost energy supply either. In 2021, 13.5 percent of global primary energy came from renewable technologies, representing double-digit growth over recent years, but far from replacing any other source of energy. More significantly, two-thirds of that total actually came from existing hydropower, biomass, and other sources which have been impacted by drought and other weather challenges. Most projections agree that renewable energy sources will remain just one part of the energy mix.

The third major challenge has been the shutdown of nuclear power plants in Europe and the commensurate increased reliance on coal in some countries, which proved self-defeating just as energy demand rose in the post-COVID recovery period. As nuclear is phased out from some European countries, the United States, Japan, and others have taken a renewed interest in nuclear. However, it may take years to bring the next generation of reactors online.

By 2022, years of chronic underinvestment across the energy spectrum and rapidly growing demand, particularly from the developing world, turned a supply imbalance into a global crisis. The conflict in Ukraine simply accelerated the crisis just as demand began to spike due to the global economic recovery.

Putting the developing world up front

Nowhere will these factors have a bigger impact than in the developing world, where many view the energy crisis as a problem created elsewhere that they must now pay for. Policymakers in the developing world say they will ultimately bear the biggest burden in tackling the effects of climate change, despite having had a small, even negligible, role in creating it.

Unlike the rich world, developing countries face a notably different set of considerations. As energy demand in the developing world climbs at double digit rates, current systems remain highly centralized and inefficient. Traditional regulation has been ineffective, and basic access to energy remains limited, with many suppliers operating at a net loss. Many consumers are subsidized, but subsidies aren’t always well targeted, and can often lead to inefficient consumption patterns. Ultimately, the ability to pay for new infrastructure is limited.

With barely a fraction of the carbon footprint of developed countries, developing countries in Africa and Asia say they are being forced to give up access to traditional low-cost energy supplies just as they enter a stage of rapid growth. With more than one billion people still lacking access to basic electricity service, the pressure to eschew traditional energy systems risks dampening badly needed economic growth. The result, especially in the developing world, is an increase in energy poverty even as demand continues to rise.

It behooves policymakers to enable the developing world to move to lower carbon emitting fuels such as natural gas, as well as solar power, to begin the process of cutting emissions without burdening their economies with major costs they cannot afford.

Taking a more holistic view

There is another path forward to a more sustainable world. The global energy crisis has lent credence to the concept of the energy trilemma, which encourages a holistic view of the energy system to bring about real change to the system. The trilemma posits that healthy energy systems must be in careful balance with supply availability, affordability, and sustainability to work efficiently. Fundamentally, climate change is a matter of emissions, not of energy consumption. To reduce the world’s carbon footprint, we must cut carbon emissions for a given amount of energy consumed. Many policies in recent years have targeted energy production, effectively starving the world of supply even as demand continued to rise.

Maintaining this balance in the context of the energy transition is challenging as trade-offs between equally critical priorities become clear. By balancing resilience and affordability with sustainability, policymakers can ensure that the carbon transition process continues and the effects bring about true change.

Finding balance in the trilemma also helps clarify priorities and defines long-term roadmaps. For example, ensuring energy resilience, especially with cleaner burning natural gas, to avoid future supply shocks as energy systems are electrified will be crucial. Similarly, hydrogen from natural gas or electrolysis will further reinforce resilience in the system. So, too, will an embrace of modern nuclear power.

Finally, a more holistic view of the trilemma enables greater predictability in the energy system even as renewable energy adds further uncertainty due its intermittent nature. Spurring investment in resilience will require steadily extending measures with more certainty about which energy sources can be used, for how long, and for what purpose.

Politicians and policymakers, particularly in the West, must now confidently stand before voters to champion a more balanced energy system that includes oil and gas, nuclear power, and renewables. The net result of this balance is that real cuts in emissions will take hold; investment in renewables will continue, but not at the cost of resilience and balance.

The energy shock of 2022 will change the world in countless ways. But it can also be a moment to trigger smarter policy and the investment needed to resolve the conflict between resilient energy supply and lower carbon emissions.

Majid Jafar is the chief executive officer of Crescent Petroleum and a member of the Atlantic Council’s International Advisory Board. Crescent Petroleum is a sponsor of the 2023 Atlantic Council Global Energy Forum.

Partner perspective

Financing a sustainable and inclusive energy transition with an eye toward COP28

By Bernard Mensah

Climate change demands an urgent call to action. Identifying the problem—or indeed the solution—is the easy part. We must slash carbon emissions to maintain a livable planet.

Taking the goals set out in the Paris Agreement as the aspirational baseline, COP27 highlighted that there remain large ambition, policy, and implementation gaps. Crucially, COP27 underlined a lack of alignment between developed and developing countries regarding the best way forward with factors beyond climate coming into play. Before the climate talks even began, host nation Egypt said soaring food and fuel prices combined with ballooning foreign debt complicated its climate ambition.¹⁸

This lack of alignment across countries means that we are, at best, currently on a slow route to victory. However, finance can play a critical role in accelerating the path forward. Finding the right balance and interplay between public and private finance will be a key catalyst. And importantly, innovation in finance can help ensure a just transition that allows the developed and developing worlds to be better aligned towards our shared goals.

The needs are vast: worldwide, 770 million people still live without access to electricity.¹⁹ Alongside the expansion of renewables, significant investment will be needed to build sustainable grid capacity, introduce electric vehicles, and produce green hydrogen for industrial use.

According to a report commissioned by the governments of Egypt and the United Kingdom ahead of COP27, cutting carbon emissions, strengthening climate resilience, and dealing with historical loss and damage resulting from climate change will require an estimated total annual investment in developing countries (excluding China) of $1 trillion by 2025 and over $2 trillion by 2030.²⁰ While the bulk of that finance must come from the private sector, governments can enhance the effectiveness of each dollar of private capital raised.

For example, investors’ perception of risk is far higher in emerging markets. According to the International Energy Agency, the cost of capital for a solar project can be as low as 2.6 percent in Europe and as high as 10 percent in India— and that was before the recent Federal Reserve interest rate hikes.²¹ Arguably, on a climate risk-adjusted basis, this risk premium is much too high and leads, therefore, to a suboptimal allocation of resources and a slower route to our destination.

There are several ways governments can play a part in reducing this risk premium:

• Regulation. The UK is a world leader in off-shore wind, with around 13 gigawatts installed.²² Alongside its island geography, “contracts for difference” play a critical role in the UK’s regulatory framework. These incentivize private investment by providing revenue certainty, while being awarded through an auction system to keep costs down.
• Pricing. Carbon pricing tilts the market away from heavy emitters, but there are just seventy carbon taxes or emissions trading schemes worldwide, counting all country, city, and regional initiatives.²³ Most of these schemes currently price carbon below the $75 a ton the International Monetary Fund believes is necessary to limit global warming to 1.5 to 2 degrees Celsius above pre-industrial levels.²⁴
• Subsidy. The Inflation Reduction Act, the largest climate investment in US history, provides a range of green incentives, including tax credits for companies that build sources of clean energy, as well as extending and bolstering tax credits for the purchase of electric vehicles.

Public investment can also reduce the risk premium on private capital. The Just Energy Transition Partnerships—in which rich countries club together to speed the transition away from coal in developing nations—offer a model of how this can be done. The latest partnership to be announced with Vietnam brings together $7.75 billion in pledges from rich countries with a plan to raise a matching $7.75 billion from Glasgow.

Financial Alliance for Net Zero (GFANZ) institutions, including Bank of America.²⁵ This has been modeled on the partnerships announced between donor governments and both South Africa and Indonesia at COP26 and the 2022 G20 summit, respectively, providing a possible public-private template for achieving an accelerated phaseout of coal.

There is also an urgent need for multilateral development banks and other public international financial institutions to play a bigger role as facilitators in the public-private partnerships required to drive and achieve a just transition. As an independent report commissioned by the G20 noted recently in July, these institutions could successfully recalibrate and refine their risk appetite around these partnerships by paying less attention to ratings agencies and more attention to prioritizing the risks their shareholders specify.²⁶ Such recalibration would allow them to deploy more money, or to put capital to work with a higher risk appetite, mobilizing significant and much-needed private debt and equity capital as a result. Current capital mobilization ratios are around 1:1. These ratios need to be increased by an order of magnitude to 10:1 to successfully deliver the quantum of climate finance currently needed in emerging markets. The fact that reform of the public finance architecture was included in the cover text of the COP27 decision in Sharm el Sheikh suggests that there is now sufficient momentum to achieve the necessary reforms.

There is scope for further creative thinking around the relationships between rich countries and developing ones. UK Export Finance recently became the first export credit agency in the world to introduce a climate debt clause, thereby allowing low-income countries to defer repayment in the event of a climate shock.²⁷ The Seychelles has agreed to a debt-for-nature conversion, in which debt held by European countries was bought with funds from the Nature Conservancy, a conservation organization, freeing up finance to protect swaths of the Indian Ocean. Several other such deals are in the pipeline and offer opportunities to reduce debt burdens, protect marine livelihoods, and ensure that nature continues to play its vital role in regulating the climate.

The scale of the challenge is vast: globally, fossil fuels still account for more than 80 percent of energy consumption.²⁸ But the present challenges have their analogs in the past. During the first industrial revolution, banks played a critical role in supporting those entrepreneurs with the best chances of success and putting capital to work.²⁹ There is undoubtedly deep value to be unlocked in the net-zero transition, but it will only be released where innovation and collaboration happen at scale and speed.

That is both the challenge and the opportunity in the months between now and COP28: to drive reform, establish new partnerships and advance yet more public-private collaboration. We need to decarbonize the existing system as well as green the new one. We need to find an inclusive and just approach—an approach that reduces emissions at speed and scale while not holding back progress, especially in the developing world. We need to find a faster route to success.

Bernard Mensah is president of International for Bank of America and the chief executive officer of Merrill Lynch International (MLI). Bank of America is a sponsor of the 2023 Atlantic Council Global Energy Forum.

Partner perspective

Tackling the global energy crisis in 2023 requires a greater emphasis on energy security

By Steven Kobos

Today, the world is facing an energy crisis that is unprecedented and arguably the most significant energy market disruption since the 1970s. Although initial headwinds were seen in late 2021, Russia’s invasion of Ukraine and subsequent curtailment of gas flows into Europe exacerbated the situation, resulting in “the first truly global energy crisis,” according to the International Energy Agency (IEA). Many countries are adopting energy policies that take into consideration security of supply, food security concerns, and the advancement of climate change goals. It has become increasingly clear that tackling the global energy crisis will require policymakers to place a greater emphasis on enhancing energy security to navigate the challenges ahead.

Energy market outlook

With much of the global energy market still in flux, predicting how events will unfold in the year to come is difficult. However, based on what we know today, we can make some broad assumptions for the 2023 energy market.

The global liquefied natural gas (LNG) market is expected to remain tight in 2023, due to the lack of new liquefaction projects coming online over the next twelve months. Global gas markets will continue to balance demand destruction and inventories rather than LNG supply growth. Any additional natural gas supply disruptions in 2023 will increase volatility in an already tight market.

2023 will be the first full year that Europe will not have significant Russian pipeline gas imports. An increase in the deployment of flexible LNG import infrastructure will allow substantial access to alternative natural gas markets and help ease the import bottlenecks experienced in 2022—mainly in northwestern and southern Europe. As an example, on December 28, Excelerate’s floating storage and regasification unit (FSRU), the Exemplar, arrived at the port of Inkoo, Finland, to provide critical regasification services to Finland and the Baltic countries for the next ten years. Another Excelerate FSRU, the Excelsior, has been chartered to Germany on a five-year contract beginning in the first quarter of 2023.

China’s changing coronavirus policies will be an important factor in global energy demand. The country’s zero-COVID policy decreased China’s gas demand in 2022, providing some relief for global gas markets. The easing of China’s COVID restrictions, however, will generate greater energy consumption in the world’s most populous country. The repercussions will be felt in the Asia-Pacific region and beyond.

If the war in Ukraine extends well into 2023, the competition for finite LNG supply will remain intense. This will force spot-dependent importers in regions like Latin America and South Asia to look for alternative sources, including domestic gas production and other fuel types.

Food security

Too often, energy security is mistakenly viewed only through the narrow lens of being able to reliably power homes, businesses, and transportation. The actual implications of energy insecurity are much broader in scope. Energy is the driving force of transformative socioeconomic opportunities. It touches on every aspect of sustainable development—none more important than food security. Throughout the agro-industrial supply chain, energy is needed, from making fertilizer for growing crops to harvesting, processing, preserving, transporting, and cooking. It is inevitable that populations that lack access to secure and flexible energy infrastructure will experience some form of food insecurity.

Energy transition

The current energy crisis is also influencing global perspectives on the transition to a clean energy future. While higher fossil fuel costs may drive developed countries to accelerate their net-zero plans, it is likely that capital-constrained developing countries may revert to more carbon-intensive fuels like oil, coal, and even wood as major energy sources. Coupled with lingering effects of the global pandemic, the IEA estimates that the energy crisis means “75 million people who recently gained access to electricity can no longer afford it, and 100 million people may no lon- ger be able to make food with clean fuels, returning instead to biomass.”³⁰

As we gather in Abu Dhabi for the Global Energy Forum, we also look ahead to COP28 to be hosted in Dubai from November 30 to December 12. Between these events, this question must be addressed: can a just transition be achieved, one that allows governments to balance energy security with climate action?

If we are to tackle the global energy crisis in 2023, it is imperative that the energy industry and government leaders enter the year with a renewed focus on energy security. Policymakers must continue to equip their countries with the flexible infrastructure needed to weather the figurative and literal storms ahead. Through a collective partnership, we will all rise to meet the myriad challenges that remain at the top of the global energy agenda.

Steven Kobos is the president and chief executive officer of Excelerate Energy. Excelerate Energy is a sponsor of the 2023 Atlantic Council Global Energy Forum.

Partner perspective

Road to COP28: Why the growth of nuclear must be part of the net-zero solution

By H.E. Mohamed Al Hammadi

At the opening of COP27 in Sharm el Sheikh, UN Secretary General António Guterres warned world leaders that we are engaged in “the fight of our lives” for a safe and livable planet.

His pivotal address served as a stark reminder that despite years of climate policy, sustainability pacts, and carbon targets, global temperatures keep rising, greenhouse gases keep building up, and we are fast approaching the point of no return in our battle against global warming.

The UN Framework Convention on Climate Change (UNFCCC) recently stated that the combined pledges of 193 countries put the world on track for a temperature increase of 2.5 degrees Celsius by the end of the century—well short of the 1.5 degrees target needed to avoid the worst effects of climate change. In fact, the data from the UN’s Intergovernmental Panel on Climate Change shows that carbon emissions would need to be cut 45 percent by 2030 against 2010 levels to limit temperature rise to 1.5 degrees.

At the conclusion of COP27, despite the creation of a fund to help developing nations face the devastation of climate change, negotiations failed to secure stronger commitments on cutting greenhouse gas emissions enough for them to peak by 2025, or on phasing down unabated fossil fuels.

The message to the world was clear: we are failing to fulfill our net-zero promises and must take faster and more decisive action. We must use the realistic and feasible solutions we have in our hands today and adopt a transformational approach to change if we are to avoid a climate catastrophe.

Nuclear energy holds the potential to revolutionize our clean energy transition. Indeed, global experts agree there is no credible pathway to net zero without it.

The International Energy Agency (IEA) projects that nuclear-generated electricity must grow by more than 109 percent in order to achieve net-zero by 2050. And while we have seen a resurgence of support for investment into nuclear technologies in the past two years—spurred by unprecedented social and economic disruption—it is simply not enough.

While we saw a number of nuclear energy organizations represented at COP27, if we truly want to shift the dial on climate action toward the road to COP28, now is the time to completely clear the way to demonstrate the true role of nuclear energy today, and ensure it is supported to make an even greater contribution to our sustainable future.
The good news is the UAE provides the best-practice blueprint the world needs to get this done.

In little over a decade, our country has illustrated that nuclear as part of a balanced clean energy portfolio can rapidly decarbonize the power sector and deliver an economically viable and time-critical solution to clean energy security. Today, our plant at Barakah is the largest clean electricity generator in the Arab world, producing electricity 24/7 with zero emissions. Once all four units are fully operational in the near future, it will account for 25 percent of the UAE’s Nationally Determined Contribution for emissions reductions.

As an essential component of the UAE’s net-zero strategy, nuclear energy supports our nation’s energy security by diversifying our energy mix and freeing up natural gas that would have otherwise been used for domestic electricity production—an amount equivalent to around 200,000 barrels of oil per day. This achievement will allow us to double liquefied natural gas (LNG) exports and support our aim of becoming a net gas exporter by 2030.

The electricity generated from Barakah is also providing the clean electricity needed for local companies to access environmental, social, and governance (ESG) funding and investment. Through the Abu Dhabi Clean Energy Certification (CEC) program, domestic enterprises can demonstrate their green credentials and decarbonize their operations through the purchase of clean energy certificates of renewables and nuclear energy.

But the value of our investment in nuclear does not end there. We are building a thriving net-zero economy: creating entirely new value chains, opening new markets, and improving the intellectual wealth of our nation.

By incubating strategic investments in nuclear energy, we are accelerating research and development in nuclear science, small modular reactors (SMRs), and advanced reactor designs. We are also driving innovation in related fields and building crucial links to other clean fuels such as hydrogen, where nuclear is set to play a vital role in delivering the growing amounts of hydrogen needed for net-zero with the lowest carbon foot- print possible.

Our commitment to nuclear as part of a clean energy system places us at the forefront of clean energy leadership worldwide and is powering our sustainable growth. The UAE’s recent strategic partnership agreement with the United States to invest $100 billion to produce 100 gigawatts of clean energy globally by 2035 is a demonstration of this. We are looking forward to working with our US partners to promote advanced reactor designs and SMRs, and to promote nuclear energy as a clean energy solution to drive emissions reductions.

There is no doubt that our world needs large-scale decarbonization and energy security, now more than ever. By adopting a long-term, holistic, and data-based approach to energy policy that prioritizes diversification, decarbonization, and electrification, the UAE model has shown how this can successfully be achieved.

As we look ahead to COP28, my hope is that our experience can encourage others to move past the outdated misperceptions and politics that stand in the way of greater nuclear energy uptake and allow others to access the huge potential this technology offers as the net-zero solution our world so desperately needs.

H.E. Mohamed Al Hammadi is managing director and chief executive officer of the Emirates Nuclear Energy Corporation (ENEC). ENEC is a sponsor of the 2023 Atlantic Council Global Energy Forum.

Partner perspective

Electrification and decarbonization: the UAE as a springboard for action for 2023’s top two priorities

By Roger Martella

In 2023, the United Arab Emirates is taking center stage in the global efforts to address climate change and sustainability. Leaders will soon gather for Abu Dhabi Sustainability Week, kicking off a year of events leading up to the UAE-hosted COP28 at the end of the year. This momentum, following on the heels of the successful implementation COP27 in Egypt, will help continue driving positive action in emerging markets and globally for the decade to come.

The efforts that will be in focus at these events align closely with two key priorities in 2023: electrification and decarbonization. Private industry and governments must partner to make progress on both goals in parallel: growing access to electricity, while decarbonizing the energy, transportation, and industrial sectors.

Electrification

Entering the new year, access to reliable, affordable, and sustainable electricity is top of mind for billions of people globally—in a way that it has not been in decades. Nearly 775 million people lack access to electricity. However, even for those with more reliable access, extreme weather events, global conflicts, cybersecurity, and growing demand are increasingly raising questions about the security of supply. At a recent White House Summit, US Secretary of Energy Jennifer Granholm said the United States needs a “tripling” in the rate of electrification and “new architecture.” Many nations are looking at similar goals.

Access to power is a core sustainable development right. As the global community takes important action for climate change—which includes placing increasing demands on the grid by electrifying other sectors—we must make the right investments to ensure everyone has access to the lifeblood services associated with electricity. Thus, setting the right path for electrification is a 2023 priority.

In many countries, work must begin now on grid digitization and modernization to make grids smarter and more robust. That means adding advanced distribution networks, hybrid systems, and energy storage to manage the complex grid requirements of tomorrow’s renewables-heavy grid, as well as the even longer-term multifaceted, multi-directional grids of a net-zero future. An essential part of building this grid is cybersecurity and digital defenses.

Modernizing transmission and distribution infrastructure means using the latest protection, control, monitoring, and diagnostic technologies and software to monitor the health of equipment across the system and better manage key infra- structure, such as substations.

In other parts of the world, it’s not just about grid resilience. It’s about building the grid in the first place. These new systems can feature world- class digitization and resilience systems, leap-frogging older transmission and distribution infrastructure.

Fortunately, while the risks are significant, so is the sense of urgency and action. The International Energy Agency says that global investment in power grids should grow from $260 billion today to $820 billion in 2030. In 2022, GE saw nations increasingly prioritize grid infrastructure in unprecedented ways through investment. In 2023, the focus must be on how to deploy these commitments swiftly and strategically to ensure the grid is well positioned to meet growing demands and threats and to succeed in decarbonization goals.

Decarbonization

Building a more resilient grid enables success for the second priority: progress toward decarbonization goals. As a global energy company, we think of decarbonization in two ways: (1) deploying diverse generating technology today to make progress in lowering both emissions and carbon intensity, while (2) investing in the breakthrough technologies of tomorrow to achieve net zero.

The near-term reductions are dependent on investing in a portfolio of renewable energy, efficient gas power, and advanced nuclear to reduce emissions while generating more electricity. Our overarching goal is to grow wind as quickly as possible and in increasing amounts over this decade. Growing support for nuclear and hydro energy such as pumped storage in policies around the world is also welcome. All these technologies contribute to decarbonization by enabling energy production while lowering greenhouse gas emissions.

Importantly, efficient gas power also has a strong role to play in decarbonization plans. Deploying gas is frequently the fastest way to reduce emissions while enabling a strong foundation for building renewables and other generation assets. Gas turbines have a pathway to decarbonization—both pre-combustion with hydrogen and post-combustion with carbon capture and sequestration. Egypt should be applauded for a strong emphasis on pathways to decarbonizing fossil fuel technology at COP27—a theme we anticipate will continue at COP28.

While this diverse mix of assets will help decarbonize the energy sector this decade, these technologies will not be enough to meet net-zero goals. Research must continue on break- through technologies as well as implementation of pilot projects and full-scale deployments in areas such as low-carbon hydrogen and carbon capture utilization and storage (CCUS). Small modular reactors, an important technology for reliable, zero-carbon baseload electricity, also require more study and policy action to demonstrate government commitment and build public support for this safe, affordable, and nimble nuclear technology.

Taking action in 2023 to succeed for electrification and decarbonization

The start of a new year is always a time for reflection, for goal setting, and for optimism. The world is now three years into the “decade of action” on climate change, reinforcing the imperative for progress. For us to advance our goals of electrification and decarbonization, transitioning from discussion to implementation is essential. The actions we take now will set us up for success when we meet again in the UAE in November. In turn, that success will create the global momentum to carry us into future years, on a sustainable and equitable trajectory to deliver on a net-zero future for our communities and our planet.

Roger Martella is the chief sustainability officer of GE and vice president of GE Vernova Government Affairs and Sustainability. GE is a sponsor of the 2023 Atlantic Council Global Energy Forum.

Chapter 3: An inclusive energy transition

Essays

The year of COP28: Climate action requires financial empowerment and collaboration

By H.H. Sheikha Shamma bint Sultan bin Khalifa Al Nahyan

To travel the net-zero path, we must rethink international cooperation

By Francesco La Camera

The nexus between climate, water, food, and energy

By H.E. Yasmine Fouad

Just energy transition for Africa

By Kevin Kariuki

For a just energy transition, a new approach to mining is critical

By Adam Matthews

We can address climate change by accelerating the just energy transition

By Rajiv J. Shah

The landmark Paris agreement of 2015 set a goal of limiting warming to 1.5 degrees Celsius (compared to preindustrial temperatures) to avoid catastrophic effects of climate change. Six years later, during Glasgow’s conference in 2021, many countries made pledges to phase down coal, cut methane emissions, and stop public funding of overseas oil, gas, and coal development.

This year, the United Arab Emirates will take over the COP presidency from Egypt following COP27 in Sharm el Sheikh, where an agreement emerged to set up a “loss and damage” fund to support developing countries most impacted by climate change. The COP28 agenda includes a global stocktaking exercise that will review progress on nationally determined contributions (NDCs) to reduce emissions by 2030, which are intended to help ensure that the Paris Agreement’s goals remain within reach. The process, however, is likely to be a somber assessment of the world’s inability to act quickly enough; this could reinforce numerous UN Intergovernmental Panel on Climate Change (IPCC) reports noting that global efforts remain insufficient to limit global temperature rise to 2 degrees Celsius by the end of the century, much less 1.5 degrees Celsius.

The 2023 Global Energy Agenda survey respondents have taken note and are unimpressed with progress to date. When describing progress on climate pledges in their own words, responses generally fall into four categories, which are (with representative examples in parentheses):

Highly negative, in some cases even dismissive (“Impotence, feeble, tokenism”)
Mixed—more negative than positive (“Desultory but positive”)
Mixed—more positive than negative (“Steady but slow”)
Highly positive (“Optimism, politics, profit”)

Although the majority of responses to this question were rather negative, these views represent a very modest improvement in perceptions toward COP26. In the 2021 survey, respondents were about 4.5 times more likely to give a negative evaluation than a positive one. In the 2022 survey, that figure is down to 2.5 times. Interestingly, the tenor of responses is broadly similar across those surveyed. Approximately 77 percent of oil and gas respondents and 83 percent of renewables and nuclear energy respondents feel the world is not following through on climate pledges. Even 63 percent of government employees view progress as slow.

Where the biggest difference in response to this question comes into focus is among geographic and economic groups. When split into North American, European, and emerging market respondents, views on climate progress become more nuanced. While still generally negative overall, about a third from Europe and more than a third from emerging market countries say that the world is making headway on climate pledges. Survey participants in North America, however, have uniformly more negative views. This pattern demonstrates that expectations and perceptions of climate progress are more closely related to locality than industry profession.

The global stocktake, however, offers more than a below-average report card and will also result in a call to action. And it is safe to assume that the UAE aims to ensure parties to the UNFCCC leave Dubai hopeful and with a clear plan to put the world on track to achieve global climate ambitions. That means a comprehensive approach for closing the gap to 2030, one that will likely include an emphasis on mobilizing capital, scaling deployment of clean energy resources, and empowering a diverse and inclusive coalition of stakeholders from youth to industry.

Recognizing the challenges and opportunities ahead, the 2023 Global Energy Agenda survey asked all respondents to describe, in their own words, the key barrier to reaching net-zero emissions. To aid analysis, our team coded each reply into six categories: political will/other political priorities; popular attitudes; cost/insufficient resources; technology cannot fully deliver on future needs; entrenched interests/friction within the system; and general/practical difficulties. Because many answers reflected more than one of these concerns, percentages total greater than 100 percent. The same categories were applied last year to the identical question.

The clear message is that insufficient political will/governmental focus on the net-zero goal continues to act as a dominant barrier. Indicative of this line of thinking, one participant stressed the need to “move from lip service to actual implementation of policies that decarbonize.” Outside of political headwinds, however, respondents from developing nations diverged from their counterparts in the United States and Europe. Invoking the chorus of voices from the climate-vulnerable countries in the Global South that enabled the notion of “loss and damage” to formally enter the UNFCCC negotiations, respondents from emerging markets highlighted cost and insufficient resources as other significant challenges to achieving net-zero commitments. As one person from this group articulated, the quest for net zero will come up against “developing countries’ needs for cheap energy sources to feed and heat their populations.”

Unfortunately, optimism for achieving long-term net-zero targets echoes respondents’ views of progress in achieving COP targets to date. Indeed, the overall response to the 2022 survey on this topic is almost equally divided: 55 percent say attainment of net zero is unlikely, and respondents are evenly split on whether achieving net zero would slow economic growth. As in other sections, parsing responses by geography yielded interesting differences. Respondents from the United States were most pessimistic about reaching net zero by 2050, while those from the Middle East and North Africa (MENA) are the most optimistic.

When looking at respondents by profession, those working in government and collectively in academia, consultancy, and media hew closely to the overall sur- vey results. The big difference, almost predictably, is between renewable and nuclear energy, on the one hand, and between those in oil and gas, on the other. A surprising area of agreement is that both groups remain convinced that achieving net-zero emissions is unlikely (62 percent of oil and gas respondents, and an eyebrow-raising 73 percent of respondents from clean energy). But their views on the economics of the transition differ substantially. Of those in the renewable and nuclear energy sectors, roughly seven in ten think that the shift will not create adverse economic effects, while roughly the same proportion of those in oil and gas say the opposite.

While only time will lend credence to how the economy will affect midcentury goals, anticipating that respondents would have strong perspectives on the global economic outlook in a year defined by unrelenting inflation, the 2022 survey sought insights on which economic risk would most likely slow the energy transition. Survey participants indicate a range of risks, with no single one standing out as an obvious top concern. Most frequently mentioned is a possible recession (28 percent of respondents), while 19 percent say that inflation is a bigger concern. Central bank responses to inflation, which could exacerbate that problem or drive further recession, come in at 10 percent. These three—which collectively worry a majority of those surveyed—are not mutually exclusive; in June 2022, the World Bank highlighted the rising risk of stagflation.³¹

A closer look at the data reveals that Europeans are more concerned than others about a recession and far less about inflation. Respondents from the United States are almost evenly split over the two risks and also more likely to cite concern about the Federal Reserve response. Respondents in emerging market countries are almost as worried as Europeans about recession and as worried as Americans about inflation, but they see central banks as either unlikely or unable to exacerbate problems. Nearly a quarter of those surveyed from emerging market countries, however, are also more likely than other respondents to call insufficient government spending the top risk, a perspective that is consistent with emerging-market views on barriers to achieving net-zero emissions where costs feature heavily.

In an unusual result, a fifth of respondents answered “none of the above” to the question about potential economic barriers to the energy transition. For insight into this result, participants’ responses to related questions suggest that other factors, such as the lack of political will and the inability of technology to deliver net-zero emissions, could account for respondents’ decisions not to select an economic risk. While skepticism persists on whether the world can fully deliver on net-zero goals, without technology there will be no energy transition. To have its greatest impact, technology requires investment to develop, improve, and deploy new and existing low-carbon energy solutions. Two years ago, our survey asked which new fuel technologies would see the biggest rise in investment in 2021. This year, we posed the same question.

Fewer respondents this year chose hydrogen and energy storage than last year, although they still are the most common options. The biggest anticipated investment increase over last year’s responses is in advanced nuclear. Last year, it ranked seventh; this year, it is tied for third with solar power. A renewed interest in nuclear energy is consistent with the International Atomic Energy Agency’s high case projections (which are ambitious but plausible) that that global nuclear capacity could more than double by 2050.³²

Fields of employment show greater variances on the question of clean energy investment. Of those in oil and gas, 17 percent say that carbon capture, utilization, and storage (CCUS) will see the greatest increase in investment. Indeed, more than half of those giving this response in the overall survey are from the industry. Similarly, 34 percent of the clean energy group—the largest segment of whom work in nuclear power—opted for advanced nuclear, choosing it ahead of hydrogen. Interestingly, only 8 percent of observers and commentators from think tanks, consultancies, and media name advanced nuclear as the area likely to see the most growth. Once again, energy producers and industry watchers hold divergent views.

The lack of a clear favorite for clean energy investment is perhaps an indication that governments and private industry are applying an all-of-the-above strategy to address both the energy crisis and transition. As our authors in this chapter propose, however, what’s still needed is greater international trust and collaboration on an equitable transition that takes into account not just energy access, but also its relationship to food, water, and larger societal impacts.

Leadership insight

The year of COP28: Climate action requires financial empowerment and collaboration

By H.H. Sheikha Shamma bint Sultan bin Khalifa Al Nahyan

Climate change is impacting everything from our economies, to our cities and societies, and even geopolitics.

National emergencies such as wars, droughts, and floods have prompted near-term action to mitigate the immediate problem, while long-term food shortages, rampant malnutrition, disease, and other human crises have resulted in the donation of funds and resources to end suffering. This is human nature, and we are inclined to react to such tragedies that affect our fellow humans. However, the images of entire forests being felled, bees disappearing, and the loss of underwater flora and fauna do not necessarily invoke the same emotional or financial response. It seems we have forgotten that we, as human beings, are an integral part of the natural world.

We must, therefore, understand—and perhaps remind ourselves of—the underlying connectivity that environmental degradation has on this array of issues, our social fabric, and, indeed, our very future. We must recognize that we depend highly on our local environments and habitats, often much more than we initially comprehended, or appreciated.

According to the World Health Organization, climate change is expected to cause approximately 250,000 additional deaths per year, between 2030 and 2050, from heat exposure in elderly populations, diarrhea, malaria, and chronic childhood undernutrition.³³

Research by the Massachusetts Institute of Technology found the Middle East will be uninhabitable by 2100 if climate change is not addressed.³⁴

While these predictions may seem imminent, we have an opportunity ahead of us to take action today. It is crucial that we use the year of COP28 to focus on global decarbonization, unlock financial tools for the energy transition, and work for an equitable energy transition.

Decarbonization challenges

Decarbonization is a mammoth task that countries need to grapple with. In 2022, we witnessed just how unprepared our world is, as we face a global energy crisis. Over the years, there have been many promises from nations to invest in the Global South, with not enough being done to support their energy transition. This is partly due to a lack of criteria on where to invest and deploy funds where they are needed.

As much as there are challenges, the present global scenario means we can approach and utilize finance innovation in a very different way. What we need are proper mechanisms in place to finance the journey of decarbonization globally.

We cannot look at decarbonization through a single lens; but rather, we need to take a multidimensional view that includes social, geopolitical, and environmental considerations.

One way for us to unlock these financial mechanisms is by providing early-stage funding for emerging climate solutions and their commercialization. Philanthropists are well-positioned to help find solutions to issues resulting from climate change at a greater scale, thus enabling these platforms to become affordable and readily accessible. Eventually, these solutions have the potential to become more economical than less climate-friendly options, as we have seen occur with solar, wind, and other clean energy sources, thereby becoming the mainstream.

Another area that has been overlooked is human resources; in particular, the ideas, abilities, and efforts of women. In the United States, only 2.4 percent of venture capital funding goes to female founded start-ups, highlighting the distinct imbalance in where capital is funnelled. As the founder of a number of sustainability ventures, I have seen, first-hand, the power of women in government, business, and my field of expertise, sustainable development. If we could attract venture capital and other financing mechanisms to support women, I believe we would witness a paradigm shift.

The road to COP 28

At the heart of tackling climate change is an important word: “collaboration.” We have a long road ahead of us, and one that cannot be travelled alone. This only way to create true impact is for us to interconnect and make a conscious effort to move away from working in silos.

Progress will only be achieved by enabling and energizing an ecosystem that actively participates in realizing one shared vision. I founded the UAE Independent Climate Change Accelerators (UICCA) to be the nucleus that will bring this ecosystem to life, providing advice and recommendations to stakeholders on positive climate action that will facilitate the transition to a green economy. By leveraging innovation with technology and actively engage with the private sector, our aim is to harness a cohesive and integrated way forward. By doing so, we can look beyond our national borders and look to the geographies that need our attention the most. As a matter of urgency, we must prioritize the Global South, as these countries are already experiencing the damaging effects of climate change now, despite the region’s negligible contribution to its cause.

COP28 presents an unparalleled opportunity to break down silos, invest in global climate solutions, and ensure a sustainable energy transition. It is now up to us to leverage the full potential of this opportunity, as we work toward building a greener and more secure future for all.

H.H. Sheikha Shamma bint Sultan bin Khalifa Al Nahyan is the president and chief executive officer of the UAE Independent Climate Change Accelerators. She is also chief executive officer of Alliances for Global Sustainability, co-founder of Aurora50, founder of RESET MENA, and founder of the Sheikha Shamma bint Sultan Sustainability Initiatives.

Leadership insight

To travel the net-zero path, we must rethink international cooperation

By Francesco La Camera

Ending global fossil fuel dependency is a daunting task. The moderate outcome of COP27 is a clear expression of competing priorities and the conflict of interest that countries face in responding to the immediate struggles of energy security, the abundantly evident impacts of climate change, and the shrinking timeline to 2030 by which the Sustainable Development agenda needs to be realized. But knowing and acting are two different things.

How does the world accelerate progress? And ensure net-zero pledges are implemented on the ground?

As the International Renewable Energy Agency’s (IRENA) World Energy Transitions Outlook states, anything short of a radical and immediate energy transition action will defeat our chances of reaching a climate-safe 1.5 degrees Celsius. IRENA sees efficiency and electrification as primary drivers, enabled by renewable power, green hydrogen, and sustainable modern bio-energy. The world must push for renewables as multiplier solutions, available today for a rapid scale-up.

Today, renewables are cost-effective. IRENA estimates that the new renewable capacity added in 2021 could have reduced electricity generation costs in 2022 by at least $55 billion. This is a compelling fact amid concerns around energy prices and the security of supply. Net zero means tripling the annual deployment of renewable power between now and 2030. The technology solutions to take us to 2030 already exist. The immediate next steps need a holistic policy framework and finance at scale to ensure these technologies are deployed strategically and worldwide.

I believe that only through solid partnerships and international cooperation can world governments effectively contribute to the global net-zero ambition and keep development high on the agenda. A new multilateral compact among nations, global finance, and the private sector is needed to deliver systemic change and advance the renewable-centered energy system with opportunities for developed and developing countries alike. Doing this means reimagining the way international cooperation works.

It is evident that energy supply—power in particular—is shifting toward renewables. But the demand side must also change. It requires an end to our ceaseless hunger for new fossil fuels that perpetuate the risks of climate change and threatens to leave behind those who do not have access to modern technologies and finance. IRENA’s Outlook sees investment needs of $5.7 trillion per year until 2030. Hence, investment decisions taken today, particularly the long-lived ones, must be climate-proofed.

Eighty percent of the global population lives in countries that are net importers of fossil fuels. By contrast, renewables are available everywhere, offering a way out of import dependency, decoupling economies from the costs of fossil fuels, and driving energy security, new industrial value chains, and jobs.

A successful transition, however, not only depends on strategies that grow renewables worldwide. We need a new system that is built on the corresponding infrastructure—physical, regulatory, and institutional. This will require all hands on deck to reimagine the system of the future, forge new partnerships, build the interconnectors that link supply and demand, and share know-how to accelerate the global learning curve.

Hydrogen is a good example. IRENA has been at the leading edge of knowledge about hydrogen for many years now. Collaboration is of paramount importance to accelerate the production, delivery, and use of green hydrogen. This will not work without greater connectivity. Countries and industry must collaborate to develop common frameworks to ramp up global hydrogen markets and build trade routes through shipping and port infrastructure to transport hydrogen and its derivatives such as green ammonia.

What the world achieves in the coming few years defines whether its leaders live up to the promise made to the peoples of the world: nobody will be left behind in a climate-safe world. For the energy transition to be fair and equitable, investments must be directed to countries that have not been able to attract investments. A shift to renewables holds a huge potential particularly for Africa, where the GDP could be 6.4 percent higher compared to current policies, enabling a truly green deal for the continent. Only 2 percent of global investments in renewables in the last two decades were made in Africa, with significant regional disparities. This must change. Developing countries need resources to build infrastructure. They need the know-how to develop enabling policies and the human capacity to play their part in the global energy sector’s transformation. Multilateral banks and international financial institutions must not only scale up their green investment portfolios, but also operationalize financing to adequately address capacity and infrastructure gaps with greater results including private capital mobilization.

This is particularly acute in view of rising financial costs associated with loss and damage for developing countries, resulting in a growing debt burden to adapt to climate change impacts.

We understand where the problems lie, we have the solutions, but a fresh look is needed to deliver new approaches and strategies. IRENA’s Assembly in January 2023, which gathers energy leaders from its global membership and partners in Abu Dhabi, will be the first milestone on the global agenda to identify energy transition priorities in preparation for the UAE-hosted COP28 later this year.

Transforming the energy system is an urgent and difficult task. It requires farsighted choices, discipline, and wise investments. Above all, it requires the world to deliver radical action and extraordinary levels of international cooperation. If we don’t put the pieces of the puzzle together, we risk catastrophic failure.

Francesco La Camera is the director-general of the International Renewable Energy Agency (IRENA).

Leadership insight

The nexus between climate, water, food, and energy

By H.E. Yasmine Fouad

The term “nexus” is commonly used to portray interactions between water, food, climate, and energy.³⁵ Each aspect within the nexus either contributes to the production of another or impacts its existence.³⁶ In the 2013 UN General Assembly, the inter-linkages between water and energy sectors in framing the post-2015 development agenda were highlighted.³⁷ Water needed for energy extraction and processing accounts for 2 percent of the sustainable supply in the Middle East and North Africa (MENA), while water abstraction, desalination, and waste-water treatment constitute energy-intensive processes.³⁸ Food is the third pillar for human survival where agriculture is the largest consumer of the world’s freshwater resources. Ultimately, energy, water, and food all impact and are impacted by climate change. I would argue that the famous nexus, commonly referred to WEF (water-energy-food), needs to be rebranded as C-WEF (climate-water-energy-food).

Unfortunately, choices related to management and use of energy, land, and water are taken in isolation and without adequate consideration of the inter-sectoral implications. C-WEF nexus is imperative in devising an integrated framework that would allow for effective monitoring, legislative and control systems.³⁹

Transforming the conventional processes of production and consumption of water, food, and energy is at the heart of climate action. Demand for all three is increasing rapidly. As conventional oil reservoirs in the MENA region get depleted, extraction methods shift to more water-intensive technologies.⁴⁰

Even with improved efficiency alongside a transition to renewable energy sources, water consumption for energy is expected to double by the end of the century.⁴¹

Furthermore, the demand for electricity is expected to more than triple between 2005 and 2050, and without the adoption of end-user efficiency for water applications, electricity demand will increase by a factor of 5.6.⁴²

Water extraction, treatment, and production, as well as end-user and commercial consumption, are energy-intensive processes, making energy and water conservation strategies top priorities. To address growing water demand, renewable energy technologies to extract water, such as solar water-pumping, are implemented in Egypt. In turn, improved water conservation practices can save electricity. A study showed that under a water-saving scenario, 22 percent of electricity could be saved in 2050.⁴³ Employing climate smart agriculture, for example, would result in considerable energy savings. Hence, to withstand current and future pressures, governments must ensure integrated and sustainable management through a C-WEF nexus to balance the needs of people, nature, and the economy.

While achieving net-zero emissions by the middle of this century is critical to limiting climate change, this alone is simply not enough. We must ensure that the clean energy systems are equally available to everyone in the world and that everyone has access to reliable energy that provides a decent quality of life.⁴⁴ Meeting this urgent and massive challenge requires an ambitious, pragmatic, and multi-pronged approach. Because of this nexus’ crucial role in many sustainable development goals (SDGs), decision-makers in all three domains must cooperate and coordinate climate action in an integrative approach.⁴⁵ Developing countries need to hold on to their rights in access to finance and to call for just energy transition pathways that are realistic. It means that both financial and technical support are needed to ensure that new energies are successfully deployed, integrated, and consumed in developing countries.

As one of the most vulnerable countries to climate change, Egypt is taking a leading role toward combatting the global crisis, as it adopts an integrated approach highlighting the C-WEF nexus. The WEF Nexus index value for Egypt is 53.1, placing the nation in the 125th position out of 181 countries for WEF security.⁴⁶ As we adopt the COP27 priority of “Together for Implementation,” we have set an ambitious national program called the Nexus of Water, Food and Energy (NWFE). NWFE package is our flagship bundle of nine projects that reflects a Green Transition for Sustainable Livelihoods built on the nexus that hits all Paris agreement targets, while ensuring human development through touching on SDGs. Hence, NWFE is an implementable and replicable example for the C-WEF nexus approach when human needs are at the heart of climate action.

H.E. Yasmine Fouad is minister of environment of the Arab Republic of Egypt

Leadership insight

Just energy transition for Africa

By Kevin Kariuki

I foresee an African just energy transition that is anchored on the continent’s vast renewable energy sources as well as grid interconnections of intra- and inter-regional power systems, complemented by natural gas as a transition fuel, pending the development of cost-effective green hydrogen and affordable energy storage systems and other clean sources of flexible generation. Moreover, the transition must be facilitated by adequate financial resources as well as technical capacity to efficiently develop, operate, and maintain the emerging technological solutions.

The transition must, however, also proceed in the context of synergizing climate action and socioeconomic development agenda, including increasing access to quality electricity supply and providing access to clean cooking.

This context is vital, given that in 2021, nearly half of all Africans did not have access to electricity while a billion people did not have access to clean cooking.⁴⁷ At the current rates of investment in energy systems on the continent, Africa will thus not achieve affordable, reliable, sustainable, and modern energy for all, as encapsulated by SDG7, a UN Sustainable Development Goal.⁴⁸

Also, at 500 kWh—and even lower in Sub-Saharan Africa—the per capita electricity consumption across the continent remains a tiny fraction of consumption levels in developed countries. Africa’s just energy transition must focus on addressing the continent’s energy poverty.

However, one size does not fit all. There are some countries that have carbon-intensive economies, while others produce minimal greenhouse gas emissions. South Africa and Egypt, for example, contribute 1.17 percent and 0.67 percent of global carbon dioxide emissions respectively from fossil fuels and industry, whereas most other African countries, especially in Sub-Saharan Africa, such as Ethiopia, Zambia, and Mali, hardly contribute anything toward the continent’s current 4 percent of global greenhouse gas emissions. Approaches to the transition must therefore be specific to a region and country.

Thus, while the few African countries with higher carbon intensities and near-universal access to modern energy must focus on decarbonization, most countries on the continent will concentrate on increasing access to quality electricity supply and providing access to clean cooking for the billion Africans who rely on wood- or charcoal-burning fires for cooking.

Thankfully, Africa is endowed with abundant renewable energy sources, that remain largely untapped. These must be harnessed to anchor low-carbon development pathway. At the same time, the security of the continent’s energy supply must remain sacrosanct, the socioeconomic impacts of the energy transition must be addressed, and the achievement of sustainable development goals related to energy as well as the African Union’s Agenda 2063 must be guaranteed.

These aspects must inform the transition, which is also predicated on (i) access to adequate financial resources, (ii) the availability of cost-effective technologies, and (iii) the technical capacity of the countries to efficiently develop, operate and maintain emerging technological solutions. It is not simply a matter of Africa “leap-frogging” fossil fuels as the often-quoted cliché suggests.

Availing African countries with adequate concessional financing in a timely manner will enhance their trust in developed economies, thereby strengthening confidence in, and sustainability of, Just Energy Transition Partnerships (JETPs) and other transition plans. In my mind, Special Drawing Rights are an ideal way to finance the Africa’s JETPs and climate action in general.

To further embed a low-carbon trajectory, it will be necessary to accelerate the development of (i) cost-effective green hydrogen as an alternative to fossil fuels in power production and as feedstock for harder-to-abate sectors such as steel, cement, and long-haul transport, and (ii) affordable energy storage systems and other clean flexible generation. Meanwhile, the capacity of African countries to efficiently develop, operate and maintain the emerging technological solutions must be strengthened.

The foregoing will also determine the speed of Africa’s energy transition and, therefore, the continent’s ability to complement global ambitions toward the attainment of the Paris Agreement goal of limiting the increase in global average temperature to 1.5 degrees Celsius.

Energy transition is not a step-function. Instead, the energy mixes characterizing Africa’s just energy transition will evolve with time, depending on access to the drivers mentioned above and the speed at which viable cleaner energy alternatives are developed. Hence, in line with the Paris Agreement, the African Development Bank intends to continue to strategically support Africa’s natural gas sector, to facilitate the transition to clean energy, and to promote climate adaptation and resilience. This approach recognizes that, in addition to grid interconnections, gas is an important enabler for increased integration of renewables in the energy mix, as its flexible generation readily compensates for loss of solar and wind generation in case of sudden weather changes. It also supports the use of natural gas to increase access to clean cooking and the health benefits thereof.

Moreover, there is a remaining carbon budget of 400 gigatons of CO2 equivalent emissions compliant with the 1.5-degrees Celsius goal. This budget should be allocated in inverse proportionality to the historical emissions of regions, thus enhancing the fairness of the energy transition from a global perspective, while enabling increased renewable energy penetration in developing countries, which have contributed the least to historical emissions. This principle is enshrined in the Paris Agreement.

In this regard, who would begrudge tiny Gabon if it exploited its gas to boost its baseload power generation, increase access to electricity, and provide a source of clean cooking while continuing to absorb almost a third of France’s annual total greenhouse gas emissions? On the same token, would it not be beneficial if Tanzania used its natural gas to increase its population’s access to clean cooking from the current 4 percent, while reducing emissions from use of biomass or charcoal and curbing deforestation? Also, why shouldn’t South Africa use its new gas finds or imports from Mozambique to safeguard its security of supply by converting its newer coal plants to run on gas—thereby reducing emissions by about 40 percent in the medium to long term, pending development of cost-competitive green hydrogen?

To answer these questions, what is required is a holistic, honest, and pragmatic consideration of the energy quadrilemma, i.e., the need to find balance between energy reliability, affordability, and sustainability, as well as its impact on the social dimensions of energy. This approach is tantamount to synergizing climate action and socio- economic development and is key to a just energy transition.

In the meantime, developed nations must simply reduce greenhouse gas emissions.

Kevin Kariuki is the vice president for Power, Energy, Climate and Green Growth at the African Development Bank.

Leadership insight

For a just energy transition, a new approach to mining is critical

By Adam Matthews

The global energy transition is unquestionably gathering pace, but one particular emerging constraint has the potential not only to disrupt the transition, but to also cause significant conflict: the role of the mining sector to meet the demand for minerals. This is not just a challenge of being able to extract more from the ground, but also of the industry’s ability to address the range of issues that continually call into question the sector’s social license. A new approach is needed, and one is beginning to take shape.

Put simply, without critical minerals and metals for batteries and a host of other transition infrastructure, we will not limit warming to 2 degrees Celsius, let alone 1.5. Even with much greater recycling, substitution of products, innovation, and efficiency, the increased demand will require both more greenfield mining and the expansion or extensions of existing operations.

Scale of the demand challenge

The World Bank has estimated that production of some key critical minerals could skyrocket by nearly 500 percent by 2050 under a 2-degree scenario to meet demand for low-carbon technologies.⁴⁹ To keep to 1.5 degrees would put even more formidable demand on the mining industry, with wind, solar, and electric vehicle (EV) technologies together representing a massive emissions reduction potential at low cost, but carrying huge mineral dependencies.⁵⁰ There are increasing warnings of a looming disconnect between mineral supply and climate ambition. Earlier this year, S&P Global signalled that the world could face a historic copper deficit by 2035, and the World Economic Forum warned of lithium shortages in just three years’ time. Supply is also easily affected by faulty waste management practices, as demonstrated by the recent production pause at a Tesla-backed nickel mine due to a leak at a waste (tailings) dam.⁵¹ Part of the challenge is a lack of investment in supply chains. An injection of $42 billion is needed in lithium alone if it is to meet 2030 demand, while $325 billion is needed to plug a potential 16 million metric ton copper shortfall by 2040.⁵² The investment gap is particularly acute upstream, leaving downstream players without raw material supply—already, in 2022, the global anode pipeline capacity has doubled, but cannot access the necessary raw graphite feedstock. With greenfield mines taking an average of six- teen years to become fully operational according to the International Energy Agency (IEA) (although some estimates are shorter), a lack of investment now could result in huge production gaps further down the line.

Some governments in the West have also been very late to respond to the concentration of mineral processing in China. Mineral security is rising up the political agenda and western governments are playing catch-up against a multi-decade strategy that has positioned China at the heart of many mineral-based value chains. This is leading to dramatic interventions, such as Canada’s instruction to Chinese owners to sell their shares in what the government has perceived as three critically important mining companies.

Mining’s social license to operate

It is not just financial investment that is lacking. Questions about avoiding societal and cultural harm need answers. Will society at large continue to accept electric vehicles made on the backs of child labor, from minerals from conflict zones, or in a manner that creates huge tailings (mining waste) dams that can collapse? Will we accept the development or expansion of mines that result in the destruction of 46,000-year-old heritage sites, as happened in Australia a couple of years ago, or that conflict with indigenous or First Nation communities, or that result in the loss of biodiversity? Add to this other challenges such as the benefits of automation that can increase efficiency and improve safety but potentially challenge the relationship of mines in their host communities if jobs are lost. The closure of mining courses and colleges also calls into question if the future pipeline of engineers has been invested in as an industry-wide priority, and we are only beginning to understand the realities of the change needed in some mining operation workplace cultures.

While there is unquestionably good practice in a number of mining companies and in a new emerging generation of mining leaders, when taken as a sector as a whole, the record of addressing systemic challenges is wanting. The challenge is, when something goes wrong in mining, society at large and increasingly those invested in it through their pension funds do not differentiate between companies, and the sector as a whole is tarred with the same brush.

It should also be noted that those that demand the products of mining have failed to align behind best practice standards to incentivize the scale of shift needed across the sector. This will be even more critical to give mining companies the confidence that their investment in driving best practice will not price them out of the market.

Investors have long remained silent observers and failed to see the interconnection between this sector and every other they are invested in. Too often the solution is to exclude and exit the sector when what is called for is a long-term investment in driving genuine real-world change. Running away from the sector as an investor is easy, but irresponsible.

A different approach

With energy transition plans hinging on global capacity to scale up low-carbon infrastructure, and with many resource-rich nations hoping their mineral resources will be a lever for development and a just transition, investors, governments, and companies need to rethink how mining will play the role it needs to.

Therefore, to meet future mineral demand, we will require a very different approach that demands zero harm to people and the environment. The nature of that approach could be grounded in the intervention that institutional investors are continuing to lead, working together with industry and the United Nations, and informed by the voices of impacted communities, following the horrific disaster that killed 270 people when a tailings dam collapsed in Brumadinho, Brazil.

Following this tragedy, investors intervened. They were no longer willing to only engage individual companies involved in the disaster, but they drove a sector-wide response. This has led to the creation of the first Global Tailings Standard—endorsed by seventy-eight mining companies representing over 70 percent of market capitalization—entailing the public disclosure of key information about the dams companies have and the standards they heed. An additional vital piece of the puzzle will shortly be added with the creation of a Global Tailings Institute that will ensure independent audits are conducted to bring the standard to life. This is a long-term engagement by investors, but one that puts in place the pieces needed to address the issue and eliminate waste as an unsubstantiated risk and externality.

Based upon this approach, the lessons are clear. The need to work collaboratively to recognize challenges, identify global best practice, and align the application of standards across investors, banks, and insurers, enabled by thorough mine-site audits, is apparent.

A new bottom-up landscape can emerge. Investors will also need to work with those sectors that demand mineral resources so that they too reinforce alignment to global best practice standards. This is the basis for the Mining 2030 Investor Agenda that will be set out by investors in January.

This is not an easy path, but it is a necessary one to ensure that through collaboration and standard-setting, the mining sector is not one that has its social license continually questioned, but is instead recognized for the vital role it plays in the future we want.

Adam Matthews is the chief responsible investment officer of the Church of England Pensions Board.

Leadership insight

We can address climate change by accelerating the just energy transition

By Rajiv J. Shah

The sun was setting when I stopped by a remote village in the Indian state of Bihar.

On a typical evening, the central power grid would shut off around dusk. Market stalls would close, and darkness would fall across town.

But not on that night. I was there to see a recently installed a solar mini-grid project sponsored by The Rockefeller Foundation (the Foundation) to bring reliable electricity to an area that had never had it before. It is one of thousands of projects the Foundation has supported for more than a century to leverage science and technology to advance the well-being of humanity.

That night in Bihar, the lights kept shining, market stalls stayed open, and customers shopped. I caught a glimpse of a more sustainable and equitable future when I met Ruby Kumari, a widow, a mother of two girls, and an expert seamstress. The new electricity empowered Ruby to walk the streets more safely. It allowed her daughters to continue their education after dark. And it enabled Ruby to use her skills to build a viable business: a sewing school.

Not long after my visit to Bihar in late 2019, COVID-19 hit that region of India, as it did Beijing, Brooklyn, and everywhere in between. Today, the virus is one of many crises increasing the suffering of vulnerable people around the world: the poor, hungry, unhoused, under-educated, and infirm.

One such crisis, climate change, poses a singular threat to humanity. We must confront it directly. Fortunately, as Ruby’s experience demonstrates, there is a way to make climate action about more than just taking molecules out of the air—it can also be a vehicle for uplifting the world’s most vulnerable people. By scaling technologies like solar mini-grids, the world can finally end energy poverty, empower millions to compete in the global economy, and reduce the likelihood of a climate catastrophe.

If humanity continues with business as usual, the planet will warm by about 3 degrees Celsius. At that temperature, life for billions of people will be harsher, poorer, and more fragile. But that future is not inevitable. Humanity could come together to achieve the Paris Agreement’s goal of limiting warming to 1.5 degrees Celsius, building a world where people have the opportunity to pursue their dreams.

This is the choice facing us at the Global Energy Forum and the rest of this year’s international convenings. If we want to keep the 1.5-degree dream alive, we must do more than talk. We must put people like Ruby at the center of our efforts to mitigate and adapt to climate change.

New partnerships and new innovations can help us mobilize the capital needed to meet this challenge. The Global Energy Alliance for People and Planet (GEAPP) is one such partnership. The Alliance is a collaboration between three philanthropies—The Rockefeller Foundation, the IKEA Foundation, and the Bezos Earth Fund—as well as multilateral development banks, development finance institutions, technology providers, delivery partners, and nations themselves. Together, Alliance partners are working to accelerate just energy transitions in a dozen emerging and developing economies.

Since its inception, GEAPP has committed more than $350 million, both directly and via partners, accelerating initiatives worth many times more in value. Currently, Alliance partners are building 10,000 solar mini-grids that will power homes and businesses in Nigeria. We are supporting an innovative project to stimulate energy demand through micro-entrepreneurship in Haiti. And we are deploying small scale solar faster than ever before, driving equitable economic growth for rural businesses across India.

To scale these green technologies and avert emissions, the world must develop new means of financing. At COP27, US Special Presidential Envoy for Climate John Kerry, The Rockefeller Foundation, and the Bezos Earth Fund announced an effort to expand voluntary carbon markets: the Energy Transition Accelerator (ETA). Our intent is to start a process to design an ETA that produces verified greenhouse gas emission reductions that developing countries will have the option of issuing as marketable carbon credits. The credits could then be purchased by companies, including through advanced purchase agreements, creating a predictable finance stream to de-risk and leverage other forms of finance.

New initiatives often come with hard questions and some risks, but it is important to remember that ambition is not a bad thing. It has helped humanity address development challenges for decades, from slowing the spread of HIV/AIDS to vaccinating the world’s most vulnerable children. And decades from now, I believe we will see that the Alliance, the ETA, and other ambitious initiatives proved essential to averting 3 degrees of warming.

For more than one hundred years, The Rockefeller Foundation has been committed to doing whatever it takes—finding new ideas, taking new risks, making big bets—to address global challenges. At the Global Energy Forum this month, and at COP28 later this year, we hope to establish and strengthen partnerships that will help the world meet the most important challenge of our time.

Rajiv J. Shah is the president of The Rockefeller Foundation. From 2010 to 2015, he served as administrator of the US Agency for International Development.

Conclusion

The political and economic landscape of 2023 is vastly different than a year prior. At its core, this sentiment is captured through feedback from a dynamic community of Global Energy Agenda survey respondents. Undeniably, Russia’s invasion of Ukraine is the prevailing story of 2022, and although it has colored how individuals, companies, and countries are adapting to facets of political and economic risk that were previously thought outdated by some, it is striking that the views of the energy transition by this year’s respondents are increasingly undeterred by such near-term belligerence.

A year ago, we noted growing “ambivalence,” if not pessimism, about the outlook for the transition to an emissions-free energy system. Predictions of peak oil demand and timelines to net zero were contracting. Almost instinctively, one might assume the havoc sown by Moscow this year—chaos that has compounded stress on an energy system working to rebound from the pandemic—would serve to amplify doubts about the energy transition. However, that is not the case. The response to our survey, as 2022 was coming to a close, shows expectations of peak oil demand steadied, while hope that the world can achieve net zero accelerated.

Participants’ views on pathways to a zero-emissions future are not uniform, however. This feature is apparent in the international reach of the Global Energy Agenda and the corresponding geographical distinctions that emerged from the survey data.

Across the world, there is a consistent call for financing the energy transition, and nowhere is this more acute than in the developing world. And while the voice of the Global South was well represented at COP27, the urgency of the climate challenge means financing access to affordable and reliable clean energy cannot be left to diplomacy alone. Honest dialogue around the tangible impacts of climate change on impoverished communities throughout Africa, Latin America, and the Asia-Pacific region should remain a fixture of the UNFCCC process, but this discourse should be matched by equally impassioned efforts to deploy energy technologies that keep costs down, boost political stability, and achieve international climate goals.

It is therefore fitting that COP28 will take place in the United Arab Emirates, a country that is a major oil producer but also the Arab world’s first provider of nuclear energy and a significant advocate for renewable energy.⁵³ To achieve the aims of the Paris Agreement, all segments of the global energy system must work concurrently to enhance energy security while stemming global greenhouse gas emissions. The COP28 presidency provides the UAE an opportunity to advance an inclusive energy transition that helps achieve such an approach, one that is emblematic of the country’s own diverse energy commitments. The defining aspect of the 2023 energy landscape will be whether the global community can come together to seize this opportunity.

Appendix

In what country do you live?

(Grouped by region outside North America)

Respondents to this year’s Global Energy Agenda survey form a group more global than ever, living in fifty-one countries, compared to forty-one in last year’s survey and thirty-nine in the one before that. Just over half (53 percent) are based in the United States, 20 percent in Europe, and 10 percent in the Middle East and North Africa, with the remainder spread across the rest of the Americas, Asia, Africa, and Australia.

In which sector do you work?

Respondents represent various sectors, and primarily fall into four groups: 44 percent are associated with academia, think tanks, consulting, and media; 16 percent work in government; 14 per- cent are associated with low-carbon energy production, including from renewables, nuclear, and advanced energy technologies; and 13 percent are involved in the oil and gas industry.

What is your age?

Respondents range from eighteen years to over seventy-five with the mean age (again) of fifty-six. Younger, middle-aged, and senior respondents do not vary significantly in their answers. As a result, respondent ages do not feature in our analysis.

PREVIOUS GLOBAL ENERGY AGENDA

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

EDITORS

Landon Derentz is senior director at the Atlantic Council Global Energy Center; Christine Suh is the managing editor for the Atlantic Council Global Energy Center; Ameya Hadap is an Assistant Director for the Atlantic Council Global Energy Center; and Paul Kielstra is a freelance editor, analyst, and writer based outside of London.

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Yes, you can mine Bitcoin and contribute to the climate effort

Julia Nesheiwat and Ari Kohn — Tue, 06 Dec 2022 19:39:47 +0000

Amid recent news of the leading crypto exchange FTX’s collapse, and as countries move to implement climate targets after COP27, the question of crypto-assets’ sustainable future has never been more pertinent.

On September 8, the White House Office of Science and Technology Policy (OSTP) released a report claiming the environmental impact of producing cryptocurrencies could “impede US efforts to combat climate change.” President Biden ordered the study in March as part of a sweeping executive order on digital assets. In the coming months, other federal agencies and offices, including the Environmental Protection Agency (EPA) and the US Department of Energy (DOE), are expected to release recommendations and reports for how the United States should regulate the asset class to align with net-zero carbon emissions goals. Immediate criticism from OSTP seems to cast a shadow on the mining process. But recent developments, such as Ethereum’s “merge” and renewable energy’s ability to power mining operations in order to support the grid transition, position crypto as a strategic utility for meeting US climate targets.

Soon after the report’s release, Ethereum executed the so-called merge, which reduces the asset’s energy consumption by an estimated 99.9 percent. By transitioning the digital machinery securing the second-largest cryptocurrency by market value from an energy-intensive proof of work (PoW) to a property-based proof of stake (PoS) verification, the equivalent of Finland’s energy consumption is conserved.

This overhaul not only decreases Ethereum’s profile as a major contributor to crypto’s carbon footprint, but is also advantageous for the platform’s long-term function and visions. Unlike Bitcoin, Ethereum aims to be a blockchain platform for smart contracts and decentralized applications, and has little prospect of becoming a monetary system. The growing popularity of the Ethereum blockchain, which hosts a majority of non-fungible tokens (NFTs), decentralized finance (DeFi), and other web3 applications, has started to overwhelm the system. Therefore, it makes sense for the community to take years of research and development to plan for the transition to PoS, which promises greater scalability and throughput than PoW, since transactions and blocks can be approved more quickly, without the need to solve complex equations.

Ethereum’s transition, despite its complexity and challenges evidenced by several delays of the overhaul since 2020, is well justified in order to fulfill the platform’s purpose as a web3 substructure. PoS’ versatility, cost-effectiveness, and operational efficiency also unlocks potential to explore the role of blockchain and distributed ledger technologies (DLT) in environmental markets.

In contrast, Bitcoin’s key function as a peer-to-peer electronic cash system is well served by PoW. Bitcoin’s robustness and simplicity are the fundamental layer that upholds its role as the most liquid and largest cap cryptocurrency. Under PoW, the chance of winning a Bitcoin block reward is proportional to the computational power one directs to solve the mathematical puzzle. It is deliberately designed to be expensive in terms of electricity and hardware as a defense against cyberattacks. In theory, subverting the Bitcoin network requires gaining an inordinate amount of power, which is extremely costly, if not impossible, given the scale of the network. PoW incentivizes participants to spend the expensive energy resources to honestly join the competition, earn Bitcoin rewards, and safeguard the security of the network.

While PoS effectively mitigates crypto asset emissions, many solutions have begun exploring how a PoW mechanism—used by Bitcoin—can accelerate the global energy transition by directing its large appetite for energy towards renewable, nuclear, and other clean sources of energy. Miners also serve as a complementary technology for clean energy production and storage because they offer highly flexible and easily interruptible loads, provide payouts in a globally liquid cryptocurrency, and are completely location-agnostic, requiring only an internet connection. These combined qualities constitute an “energy buyer of last resort” that can be turned on or off at a moment’s notice anywhere in the world.

By nature, renewables like solar and wind face intermittency issues, whereby energy supply is either abundant or nonexistent. This deficiency is further exacerbated by limited transmission capacity and feasibility of energy storage solutions, presenting hurdles to deployment. PoW mining can symbiotically employ renewable energy that would otherwise go wasted due to grid congestion, a strategy put into practice by CleanSpark mining in Georgia. This opportunity is particularly attractive given that 66 percent of the primary energy used to create electricity has dissipated by the time it reaches consumers. Incentivizing more solar and wind power construction will help hasten the retirement of fossil fuels.

Further, a sizable percentage of the hash power is derived from remote regions with abundant renewable energy (mainly hydroelectric). These areas have tremendous potential to generate and distribute renewable energy, which would otherwise not be marketable due to a lack of local demand. Bitcoin mining’s ability to be completely location-agnostic and provide highly flexible demand allows the delivery of electricity to populated areas, creating ancillary revenue possibilities for these bitcoin mining sites, enhancing their attractiveness for capital investment.

New and innovative clean energy companies focused on powering mining operations like TeraWulf and XBTO allow the monetization of previously dormant natural resources and simultaneously creates economic and environmental value. There are also projects such as the Sustainable Bitcoin Protocol that incentivize miners through a market-based solution to use and deploy clean energy sources, while enabling investors to hold Bitcoin in a verifiably climate-conscious way.

OSTP underscores the importance of collaboration with the private sector in developing performance standards for environmentally responsible digital asset development and suggests that DOE, in coordination with the Federal Energy Regulatory Commission, the North American Electric Reliability Corporation, and its regional entities, conduct reliability assessments of crypto-asset mining on electricity system reliability and adequacy. However, the report admittedly lacks enough data to have a conclusive understanding of the scale of energy used for mining and calls for the Energy Information Administration to collect data on mining energy usage and environmental justice implications. OSTP states that crypto-asset industry associations should publicly disclose crypto-asset mining locations, annual electricity usage, and greenhouse gas emissions. This would likely cause an uproar in the crypto community as it imposes additional regulations and reporting costs.

While there are good intentions and a need for further research, some of the recommendations in the report have the potential to create more bureaucracy and regulations. The report does not take into account existing sustainable mining companies that currently use renewable energy. The industry’s mining electricity mix increased to 60 percent sustainable sources in Q2 2022, and despite a considerable increase in hash rate, has decreased overall energy consumption by just 25 percent.

The White House report also lacks substantial input from the mining sector, cites non-peer reviewed sources, and lacks sufficient data and analysis. Additionally, there are virtually no case studies present in the report, even though there are many examples of miners operating sustainably, adding power to the grid, taking zero-carbon approaches, and engaging in grid stabilization.

The good news is that technology matters, the type of electricity matters, and there are ways now to drive innovation and accelerate the just transition in a way to get to net-zero that enables us to meet our climate goals.

Dr. Julia Nesheiwat is a distinguished Fellow at the Atlantic Council Global Energy Center, and since December 2020, has served as Commissioner on the US Arctic Research Commission reporting to the White House and Congress on domestic and international Arctic issues.

Ari Kohn is a Sustainability and Strategy Fellow with Sustainable Bitcoin Protocol and a student at Harvard University.

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

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

Learn more about the Global Energy Center

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

Joseph Webster — Mon, 05 Dec 2022 14:14:25 +0000

Just as a thousand-mile journey begins with a single step, the United States is looking to build out its offshore wind (OSW) capacity from a standing start. US offshore wind deployment currently lags other regions – badly. In October 2022, the US had deployed only 42 megawatts (MW) of offshore wind energy. US offshore deployment is currently outmatched by several economies, including China (which installed 17 gigawatts (GW) of OSW capacity last year alone), the European Union (EU), the European Free Trade Association—and even Vietnam and Taiwan.

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.

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Joseph Webster

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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

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

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The post A nascent US offshore wind strategy? Permitting reform and the Inflation Reduction Act appeared first on Atlantic Council.

Transcript: Nancy Pelosi and Kathy Castor speak after the midterm elections about the future of US leadership on climate change

Atlantic Council — Thu, 10 Nov 2022 13:28:06 +0000

Watch the full event

Speaker Nancy Pelosi on climate and resilience at COP27

AN #ACFRONTPAGE EVENT – How can the US and allies bolster climate action and change the trajectory of global warming?

Climate Change & Climate Action Energy & Environment United States and Canada

Event transcript

Uncorrected transcript: Check against delivery

KATHY BAUGHMAN MCLEOD: Good morning, good afternoon, good evening. I’m Kathy Baughman McLeod, director of the Adrienne Arsht-Rockefeller Foundation Resilience Center at the Atlantic Council. Welcome to the Atlantic Council’s Front Page event. We are here at the resilience hub at COP27 in Sharm el Sheikh, Egypt. I am delighted to be hosting this conversation with Speaker of the House Nancy Pelosi and Chairwoman Kathy Castor of the Select Committee on the Climate Crisis.

At Arsht-Rock, we are focused on building climate resilient for a billion people around the world. We focus on the most deadly of climate risks, extreme heat. You are feeling it right now. Let me encourage you to take your jackets off, if you can. This is the coolest we can make the room, we understand. But it is emblematic of the crisis we are facing.

Let us just get right into the conversation. We are at such an interesting time in our country and in the climate debate. We are here, seeing all sorts of challenge, suffering, loss and, at the same time, opportunities in every direction, in all of the pavilions here at the COP and beyond. The US plays a critical role in the debate, the action, the investment, as an emitter, as investment in the transition to a cleaner energy future, and to helping build resilience to climate impacts people are facing every day. When we think about the big packages of climate action, this is the very best place to have the conversation.

Speaker Pelosi, can I ask you at this critical moment, where is the US role in the energy transition, and all the turmoil we’re facing? And how do the midterm elections affect it?

NANCY PELOSI: Well, thank you, Kathy. It’s wonderful to be here with you at the Rockefeller and Adrienne Arsht Center for—and thank you for what you do in that regard, because the nonprofit sector is so important. No political agenda, just saving the planet for the children. Whatever we do is under the guidance of our distinguished chair of our Select Committee on Climate, Kathy Castor. She has been chairing the committee and listening to all of the stakeholders, whether it’s people of faith or concerned scientists, whether it’s business or labor, environment or labor or business, whether it’s farmers, whether it’s venture capitalists. You name it, every aspect to listen, so that people do not feel that they are left out or not taken into consideration.

So when you ask, what are we doing? We’re doing it in that way. And I salute Kathy for years of listening and putting together a report that was historic. And on that report, inspiring the legislation the Inflation Reduction Act, which has in it $370 billion to address the climate crisis. For the children, in a fair and just way. And Kathy will speak more about it, but I want to acknowledge three of our colleagues who are here. Mr. Meeks is the chairman of the Foreign Affairs Committee. He has been fighting and trying—and it’s a challenge; we haven’t succeeded yet—to get the global funding that we need to be good neighbors on this planet. And that is a fight that he has been making, again, part of the report from the committee.

Much of the committee—much of the committee worked on tax credits, and the chairman of the Ways and Means Committee, Richie Neal, is here, and his committee. Mike Thompson of California, under the leadership of our distinguished chairman, has the bulk of the bill. How we can come together, private sector, public sector, nonprofit sector. And Mr. Espaillat, the senior member of the Appropriations Committee from New York, he’s been—we’ve traveled to Puerto Rico after disasters, and the rest, about workforce development and how you—if you’re going to reconstruct, or transition, or have resilience, all of it, you have to have workforce to be able to do it. And so part of his contribution is that aspect of it. Other members of our delegation are Chellie Pingree as far as agriculture and the food issue. Barbara Lee roaming around here someplace, maybe will arrive, chair of the Subcommittee on Appropriations that would be funding so much of the global aspects of this.

So I really—it’s hard to speak in terms of the midterm elections and this subject, because we have had, shall we say, a disagreement on the subject. When Kathy had her bill on the floor, our colleagues said why are we having this discussion? There is no climate crisis. It’s all a hoax. We have to get over that.

I place my confidence in their children, who hopefully will teach their parents that this is urgent, long overdue. But again, how we will address it is to get working together.

Maybe Kathy would like to add to that.

KATHY CASTOR: Well, good afternoon. It’s—we come to this COP with not just talk anymore but with real concrete action out of the United States Congress, led by the most effective speaker in the history of the United States of America in Speaker Nancy Pelosi.

She has been at this—tackling the climate crisis has been her flagship issue. And many of you remember, over a decade ago she led the charge in a different Select Committee on Global Warming. And we passed in the House climate action. Unfortunately it didn’t get through the Senate. This year, finally, we delivered through the Inflation Reduction Act the most important climate bill in the history of America.

But that was the follow-on to the bipartisan infrastructure law that also doubles down on building resiliency across the country, especially vulnerable communities and frontline communities, doing more on environmental justice, doing more on the transition to the vehicles that we drive, but also significant progress in chips, in manufacturing in America, and science, because what we want folks here at this COP, want our friends across the globe, to understand is that America is ready to participate at a much higher level through science, technology, resilience, that you all—that the Atlantic Council and the Arsht-Rockefeller Center so focused on.

So this is a time of action. I know we’re talking about this COP being the implementation COP. And now, thankfully, the US is going to have the tools to implement and meet our goals of getting to net zero as quickly as possible, and no later than 2050.

KATHY BAUGHMAN MCLEOD: Thank you very much.

Speaker Pelosi, at the Aspen Ideas climate event, you said sometimes you have to take a punch for the children and sometimes you have to throw a punch for the children. What does that mean at the COP?

NANCY PELOSI: Well, I come here again—I do believe that this is God’s creation and we have a moral responsibility to be good stewards of it. So in that spirit, I would hope that we could come to our common ground for the children, for their future.

It’s a health issue in the here and now as clean air, clean water, for the children. It’s an economic issue for their families, green technology for all over the world, for everybody to participate in the new technologies economically. It’s a national-security issue. We’re told by national-security experts that the competition for habitat and resources can cause conflict. And we have to avoid that. And it is a moral issue, as we know, for the children to pass this planet on to future generations, as I believe God’s creation. If you don’t share that belief, you certainly share the belief that we have to do that for the children.

But let me just add this one thing, and that is in all of the measures that Kathy, Madam Chair, mentioned, whether it was the Inflation Reduction Act, the bipartisan infrastructure bill, where we got thirteen Republican votes, bipartisan, and all of the bills that we’ve passed—the CHIPS Act, all of that—the president and the Congress—we worked together to make sure there was justice, fairness, inclusiveness, diversity, so that—and this was sixty billion dollars in infrastructure strictly for diversity and building infrastructure that unites communities rather than divides them, but in every bill making sure there’s education and research and STEM that draws in everyone and enables everyone to participate, so that we have the best thinking wherever it springs from. So the justice piece of it is central to how we go forward for the children.

I know sometimes that I use that phrase about the punches—to quote a Republican, Teddy Roosevelt—about the arena. When you’re in the arena, you’re no longer a spectator; you’re in the arena, and I just take it to the next step. When you’re in the arena you have to take a punch, right? That’s what it is. You also have to be ready to throw a punch for the children. That’s why.

KATHY BAUGHMAN MCLEOD: I love it. I love it.

Chair Castor, I wanted to ask you about the work of the Select Committee. You have invested in immense advancements in all regard for climate and climate resilience and looking at the health effects if climate. What is the next chapter for that work, and how can that work help countries and partners all over the world?

KATHY CASTOR: Well, talk about the midterm elections, it’s quite likely—if for some reason the GOP ekes out control of the House of Representatives, they will nix the climate committee. They have not really been partners in tackling the climate crisis, and it’s inexplicable because the world’s top scientists tell us we are running out of time.

They said in the last IPCC report there is a rapidly closing window for action and that’s why we’re just so grateful that President Biden was where he was at that point in time, that the Senate—we still had control, and we’re able to finally deliver the most historic climate law in the history of American and really the world.

Now, we have a whole lot more left to do, and—but this will provide the important groundwork that we can build upon. We’re not in it alone. The private sector now has got to match the resources in our investments, and that’s why tax credits are front and center to develop the technologies on clean power—whether it’s wind or solar, the battery storage—and then, help us transfer that to the rest of the world, especially the developing world, the vulnerable nations that are going to need help because they—here in Africa, Africa wants to modernize and develop. And they can—there’s a pathway in the road where they can go the cheaper, but more dangerous and destructive—coal and gas. Or we can pivot and help provide sustainable clean energy and clean energy jobs.

So that’s why the structure of the Inflation Reduction Act and our dedication of resources to frontline communities, environmental justice communities, is an important roadmap that can be replicated as we expand technology and financing to the rest of the developing world.

KATHY BAUGHMAN MCLEOD: Thank you. Wonderful.

One of the aspects of the private sector’s involvement, we’ve heard that this is the implementation COP, and while we’re not reaching our mission’s reductions goals, that a lot of the action is taking place in the hubs, not in the government negotiations, and innovation, investment, and private sector.

Speaker, how do you think the private sector is doing? Are they playing their very best role that they can play to advance our climate goals?

NANCY PELOSI: Well, let’s hope so, but let’s make sure we shine a bright light on it. As you know, technology enables us to identify emissions. I mean, we have—knowledge is so, shall we say, enlightening, too.

But here’s the thing. It is, in my belief, in the fiduciary responsibility of the private sector to go down a green path. It is—you can’t say, well, I have a fiduciary responsibility to my shareholders so I can’t spend this money on that.

No, talk about the future. There are experts in the field who may—contend this—that you really are thinking backward, unless you’re thinking in terms of how to do this in a green way. I have so many examples of the people I encountered—both in friendship and professionally, officially, and in every way—who have said my company’s change came from my children, who just said “what are we doing”—especially when there was a family interest in the company—”what are we doing, we cannot be part of this.”

So some are because it’s the right thing to do. Some are because it’s a moneymaker and it honors their responsibility to their shareholders.

But they have to be thinking of their stakeholders, too. Not just the shareholders but the community, their employees, their customers, honoring every aspect of their purpose as they used to do.

I was raised in the mayor’s house. My father was mayor my whole life growing up in Baltimore. When I was in first grade, he became mayor. When I went away to college, he was still mayor. My brother was mayor. And the mayors are doing great work.

So I would say, as I do say sometimes to the nonprofit sector, be in touch with the mayors for what they are doing because it gets very personal as well as official—at a very personal—a very personal level.

But I don’t think that we should be contending with—I think we should be cooperating but understanding that there’s a different pace. But everybody has to know we have to pick up the pace.

I’m always telling this story, if I may, about when the private sector wasn’t so cooperative. A long time ago, I took a delegation to Alaska to see what was happening there, and, as you know, the glaciers are melting before your very eyes. You know, it’s been bad—the thermal management of the planet, so—the acidification of the ocean, the cannibalizing of the—every aspect of this right there in Alaska.

And the indigenous people there told me that thirty or forty years previous to that, so, say, forty or fifty years from now back, the elders told the scientist that something different was happening with flora and fauna and habitat, and the scientist told them that that was anecdotally interesting but scientifically insignificant.

And it bothered me so long until I realized the scientist probably worked for the oil companies. But now, of course, it’s very obvious. How many times have these communities had to move and then transition? So obvious.

But we should be paying attention to indigenous people. That was my first bill in Congress called the International Environmental Protection Act, better known as—later known as the Pelosi amendment when it was reduced to an amendment, and it was to listen to the indigenous people, not allow any American director of any multilateral development bank support an initiative unless there was an environmental assessment made and unless that assessment was made known to the indigenous people as well as globally, and that has saved many things.

So, and speaking in that regard, I want to yield to Kathy because we’ve been talking about how working with the multilateral development banks…

KATHY CASTOR: Yeah, that’s key. And you all know if you’re reading up on what’s going on behind the scenes at the COP, is empowering our multilateral banks, the development banks, the IMF, the rural bank, giving them a forward-looking mission focused on climate—on the climate crisis, just like they had a mission after the rebuilding after World War II.

And then the special envoy—the US Special Envoy John Kerry—he is now talking about an idea to bring those private dollars off the sideline from the large banks, the corporations, the hedge funds, through an emissions trading program to try to get them in the game faster because it’s all about urgency now.

We are running out of time. If we do not do this now it’s going to be a much steeper climb and then people around the world will continue to suffer these climate catastrophes and that’s why we know already warming is baked in. If we stop today, the atmosphere is full of greenhouse gases and it’s a bleak future unless we act now.

So everyone now this is the—I hope it will turn out to be the implementation COP and a COP where we are doing new and innovative things, and I hope, again, people are inspired by, finally, the United States of America passing the most historic investment in clean energy, climate change, resiliency, and climate justice in our history.

KATHY BAUGHMAN MCLEOD: Hear, hear.

NANCY PELOSI: Not one Republican vote, sadly.

KATHY BAUGHMAN MCLEOD: In terms of the urgency and the investment, we—and the Resilience Hub represents this, and the race to resilience—that we need to invest equally in adaptation and mitigation because we are now in this situation of what you described. So how will the investment packages and the legislative packages that you’ve passed—they’re the biggest ever, as you’ve said, and so historic, and have such big impact. How will we best leverage those packages for private and multilateral investment in both adaptation and mitigation? Would you like to—

NANCY PELOSI: She likes talking about it.

KATHY CASTOR: I do. You know, we’re so proud to be representing the United States of America, because we have the cutting-edge science at our disposal. But what we’ve done through the bipartisan infrastructure law, through just our plain appropriations, through the Inflation Reduction Act, is give more resources to NASA. NASA inspired the world in the 1960s to get to the moon and back. And now look at what the images coming back with the new telescope. NASA has an important role to play, not just for the US, but for the entire world. Same thing for NOAA. NOAA is the leading scientific organization gathering the data we need to build resilience, to make sure that countries around the world and people around the world know what the impacts are so that they can plan. And use—and we can devote the scarce resources we have to the most effective adaptation strategies.

NOAA, NASA, and our national laboratories are big winners, frankly, in the Inflation Reduction Act and the bipartisan infrastructure. And if the United States of America is not going to be in the lead on science and technology, who is? We’re not willing to cede that to another country. We’re not. We are the—I think after—you’d have to say, we’re the strongest—one of the strongest democracies—it was a little shaky there for a while. But we—our values tell us to use our God-given resources and the blessings of science and technology to help tackle this crisis. And that’s what we intend to do.

KATHY BAUGHMAN MCLEOD: Hear, hear. So turning to the inclusive nature and the justice aspects, 80 percent of the people displaced by climate change are women. Seventy percent of the 1.3 billion people living in conditions of poverty are women. In urban areas, 40 percent of the poorest households are headed by women. And we know that when women are empowered with resources, the entire community benefits. With all that we have on our plate, how do we continue to push for more women in leadership to solve the climate crisis, and protecting and empowering women at the short end of the stick of climate impacts?

NANCY PELOSI: When we were in—right before COVID-19, when we were in Spain, I spoke to a big women’s event there. And my biggest—I was talking about climate, but one of the lines I had, which got more attention than anything else, is: If you really want to succeed with this, you have to make a commitment globally to the education of women. It’s so central to all of this. I also think we have to have a fight against corruption in some of our, shall we say, economic systems around the world. And that will open the doors for women to be involved.

But to go back to where Kathy talked about the other bills, one of the pieces of it that is so important in our own country—and we would say as a model, again, to help others—is many things that are in there, like the child tax credit—thank you very much, Richard Neal—the child tax credit, childcare, family and medical leave, home health care that enable women to be in the game, in the workplace. Now, it’s men too who have—are caregivers, so they too. But to unleash women in that, as well as what we have in the CHIPS Act, with the increase of participation of women in science and technology and—well, we call it STEAM in San Francisco. So we have the arts in there as well.

But the role of women is—I mean, just think of the brainpower, just think of the value systems and the rest that would make—that are—that are making a big difference. But we have to have a systemic way for that to happen. And starting with the education of women, whether it’s women in the poorest situations in the world or women in the United States of America, there’s still a need to involve in a stronger way. And the president is very much committed to that.

It is—it’s very exciting. It’s very exciting. And you see so many women participating in these meetings, as well. So let’s hear it for the women. OK.

KATHY BAUGHMAN MCLEOD: And let me give a plug for the Women in Resilience reception right here tonight at 6:30. So you are all welcome. And the catering is coming.

Kathy, would you like to say a few words about that? That’s such an important topic.

KATHY CASTOR: About the reception? I’m pro-reception. No—the—well, if you do see Congresswoman Barbara Lee here this week, she has been leading the charge for international family planning and the education of girls and women across the globe. And in fact, as we developed our climate action plan in the Congress—and the charge was don’t just focus on the electricity and power sector, don’t just focus on clean cars; really do broad-based outreach. And one of the clear climate solutions is the education of young girls and family planning. Project Drawdown, if you all are familiar with that, highlighted it as I believe one of the top five climate solutions.

So, fortunately, again, here is a place where the United States of America under Democratic leadership especially has been leading the charge. And now we hope we can work with all of our allies and all countries around the globe to do better by girls and women no matter where they live.

NANCY PELOSI: In that regard, we also want them to have the opportunity to determine for themselves the size and timing of their families.

KATHY BAUGHMAN MCLEOD: Hear, hear.

So I think our time has begun to draw to a close. Any final thoughts that you would like to share with us before you go on and do good things here?

KATHY CASTOR: Well, it was about little over a month where I was boarding up my home in Tampa, Florida, as a monster storm, Hurricane Ian, was barreling towards the coast of Florida. And two weeks ago, I had an opportunity to take a Coast Guard overflight of Southwest Florida, and now here’s another late-season hurricane bearing down. So this is—this is personal for everyone now. Our hearts go out to the people of Pakistan, where over 1,700 people died in the floods. Same in Nigeria, where six hundred; the wildfires in California; everywhere.

No one is immune to the costs and the growing risks of the climate crisis. And that’s why I emphasize again: Join us in this urgent action. When you talk to people, tell them we cannot wait anymore. The time is now. We must implement. We must act. The US is in the game leading and we’re not leaving the playing field ever again.

NANCY PELOSI: Associating myself with the remarks of our distinguished chair, I would only add—and not really add, but further emphasize—that, as she has done in her magnificent way as chairman, we want to proceed with respect to not be menacing to those that we need to win over, but to show them a path and how it is in all of our interests, and that doing that we have to listen to them.

We, as the United States of America, hope, as Kathy has said earlier, that with what we’re doing technologically and all the rest, that that can be a resource to these countries as well. But our president has asked for more money for the countries for us to make—recognize that funds are needed globally. We have responsibilities. We’ve made commitments. And again, we invited your entire committee—Democrats and Republicans—but none of them came—well, unless they’re going to surprise us, but we have two planes that have come and so far we haven’t had any of them. But we really need to convince them that none of us is protected from this unless all of us is protected from it. That’s not a values-based, it’s a pragmatic-based reason, but, in fact, for the children. We have to save all of the children.

And these countries—when we were in Spain, when we were in Madrid, we were talking to the conference of the vulnerable countries, and it was urgent then. It was urgent in Copenhagen. It’s long overdue. So we cannot just have any political disagreement or the power of the fossil-fuel industry cramping our style as we go forward with this, but to show a path that gets us to where we need to be. And we’re good enough, the need is great enough, and the urgency is clear enough.

I just want to say one thing. When I was watching—when we were watching the NASA presentation, I was taking great satisfaction in the fact that on the Intelligence Committee in the 1990s we were advocating for the satellite capability—smaller satellites and other things—to take a measure of all of this. And now they’ve just taken it to, shall we say, new heights in terms of what they can see, what we can learn, and again, enabling us to make the scientific argument.

Four words—science, science, science, and science, again, with our values—will get us to where we need to go. So we have to have our respect for that.

KATHY BAUGHMAN MCLEOD: So I think it’s safe to say that you are among friends here. And can I please thank you both for your climate leadership and your commitment to this issue and the work that you have put in year over year over year over year that puts us where we are? It’s a moment of opportunity, and you’ve put us here. So thank you for spending time here.

Thank you, everybody, for joining us. Thank you for joining the Atlantic Council’s Front Page event here from COP27 and the Resilience Hub as a part of the Race to Resilience. We look forward to the next conversation.

NANCY PELOSI: Let us thank the Rockefeller-Adrienne Arsht Resilience Center and COP.

KATHY BAUGHMAN MCLEOD: Thank you. Thank you. Thank you. Thank you.

Watch the full event

The post Transcript: Nancy Pelosi and Kathy Castor speak after the midterm elections about the future of US leadership on climate change appeared first on Atlantic Council.

Recommendations for a US Northeast hydrogen hub

Joseph Webster — Wed, 09 Nov 2022 19:25:03 +0000

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Climate imperatives, geopolitics, and domestic incentives are spurring widespread interest in hydrogen as a means to decarbonize industrial applications at scale in the United States. Hydrogen is abundant, can be sourced in water, and emits only water vapor and heat. Also, hydrogen can be produced wherever generation exists, allowing for siting close to demand centers and potentially reducing the need for extensive new infrastructure. Tax policy and prevailing economic forces could cause the cost of clean hydrogen to drop precipitously, placing it on equal footing with grey hydrogen in the not-so-distant future.

The US Northeast, in particular, boasts several advantages in the Department of Energy’s search for suitable “hydrogen hubs,” including its offshore wind capacity; its emerging hydrogen-supportive supply chain; its diversity of use cases; and its world-class universities. And the region is also in dire need of affordable energy, with electricity prices ranking among the nation’s highest due to its reliance on global natural gas and refined fuel product markets, especially during the winter months. Hydrogen thus shows promise as a well-tailored solution for the US Northeast’s energy woes and aspirations.

But unanswered questions remain. A robust solution set will require dogged pursuit of renewable deployment, continuous monitoring of the best available data on hydrogen blending, and immediate efforts to rework and replace aging infrastructure networks. Policymakers in the Northeast will need to act now to give the region the best possible chance to serve as a successful hydrogen hub and provide a model for the rest of the nation. The future of US decarbonization could very well be at stake.

View the full report below

Meet the author

Staff

Joseph Webster

Central Asia China

In-Depth Research & Reports Mar 2, 2021

Brief 1: Has hydrogen’s time come in the United States?

By David Yellen, Randolph Bell

This first brief in the Atlantic Council’s hydrogen policy sprint examines the current state of hydrogen development in the United States and begins to explore pathways for clean hydrogen production across the country.

Energy Markets & Governance Energy Transitions

In-Depth Research & Reports May 3, 2021

Brief 2: Producing clean hydrogen at scale in the United States

By David Yellen, Randolph Bell

This second brief in the Atlantic Council’s hydrogen policy sprint explores pathways for and the challenges and opportunities facing scaled clean hydrogen production in the United States.

Energy Markets & Governance Energy Transitions

In-Depth Research & Reports Jul 21, 2021

Brief 3: Hydrogen transportation and storage

By Cynthia Quarterman

This third brief in the Atlantic Council’s hydrogen policy sprint discusses pathways for hydrogen transportation and storage infrastructure development in the United States.

Energy Markets & Governance Energy Transitions

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The post Recommendations for a US Northeast hydrogen hub appeared first on Atlantic Council.

Live updates from COP27 as leaders battle climate change amid global crises

Atlantic Council — Mon, 07 Nov 2022 18:35:14 +0000

Activists, experts, and leaders flocked to the beaches of Egyptian resort town Sharm el Sheikh for the United Nations Conference of the Parties (COP27). Over the two-week convening, global leaders discussed topics ranging from ways to finance their emissions-reduction goals to new ambitions to keep global warming below 1.5 degrees Celsius.

Dubbed the “African COP,” this year’s conference was expected to see Global South countries rally together to press rich countries on their role in driving climate change. For the first time, global leaders promised to set up a “loss and damage” reparations fund, paid for by wealthy countries, to help low-income countries pay for the consequences of the climate crisis.

COP27 took place after a season of extreme weather events and natural disasters that saw catastrophic flooding in Pakistan, droughts across Africa, and more. And as the conference unfolded, leaders kept their eyes on the global energy crisis spurred by Russia’s invasion of Ukraine, which has pushed energy security to the fore—sometimes at the expense of the climate.

Have countries heeded this year’s wake-up calls with bold commitments at COP27? Our experts—many of whom were in Sharm el Sheikh—dispatched their insights and recommendations for world leaders throughout the course of this critical conference. This post was continuously updated as their reactions streamed in.

The latest analysis from Sharm el Sheikh

COP27 readout: The good and the bad as COP27 concludes
The big success and bigger failure of COP27
Read our experts’ analysis from earlier in the conference

NOVEMBER 23, 2022 | 3:30 PM WASHINGTON | 10:30 PM SHARM EL SHEIKH

COP27 readout: The good and the bad as COP27 concludes

Requiring an additional thirty-six hours of negotiation, official delegates finally reached a settlement and final communique early Sunday morning. The deal is underpinned by the landmark agreement to create a fund for climate compensation, bringing a nearly three-decade journey for “loss and damage” closer to the finish line. Even if details are sparse regarding contributions to the fund and the criteria for disbursement to vulnerable or impacted nations, bringing forth a commitment from two hundred participating countries is representative of the amount of influence the Global South has wielded throughout the past two weeks.

The disappointing absence of increased emissions reduction targets in the communique is an indicator of how the needs of the developing world have underpinned this COP. Ambitions for economic development amidst a global energy crisis have given enough influence to global oil and gas producing states that room for a significant push to reduce the role of oil and gas in the energy mix has been significantly limited.

EnergySource

Nov 23, 2022

COP27 readout: The good and the bad as COP27 concludes

By Global Energy Center

Global Energy Center experts take stock of two weeks of COP developments in Sharm el Sheikh.

Climate Change & Climate Action Energy & Environment

NOVEMBER 21, 2022 | 8:57 AM WASHINGTON | 3:57 PM SHARM EL SHEIKH

The big success and bigger failure of COP27

The Global South won, but did the climate? Negotiators at the UN climate-change conference known as COP27 extended their stay in Sharm el Sheikh, Egypt to hammer out a final agreement that will create a loss and damage fund to compensate developing countries harmed by climate change. But the deal barely addresses other urgent topics such as reducing greenhouse-gas emissions, even as the consequences of climate change become clearer by the day. Have negotiators done enough to help save the planet and the people on it? What other surprises cropped up at COP? Our experts, who were on the ground in Sharm el Sheikh, are here to weigh in.

Read their takeaways

Fast Thinking

Nov 21, 2022

The big success and bigger failure of COP27

By Atlantic Council

What other surprises cropped up at the conference? Our experts, who were on the ground in Sharm el Sheikh, are here to weigh in.

Brazil China

Stepping up ahead of negotiations

Solutions for achieving net-zero emissions and improving energy access for all
How climate change affects peace and security across the world
Insurance for a climate-safe future
Dispatch from the Resilience Hub: Why countries can’t give up on the 1.5 degree Celsius cap on warming
Will countries step up on loss and damage?
Saudi Arabia’s take on aligning energy security needs and decarbonization goals
How Freetown is addressing extreme heat
Addressing Africa’s rapidly rising energy demand
Why now is the best time to address energy security and climate change in tandem
Read our experts’ analysis from earlier in the conference

NOVEMBER 18, 2022 | 6:18 AM WASHINGTON | 1:18 PM SHARM EL SHEIKH

Solutions for achieving net-zero emissions and improving energy access for all

Our Global Energy Center pulled to the side top thinkers, leaders, and innovators on climate solutions at COP27 to talk about their ideas for achieving net-zero ambitions while ensuring energy access for all.

Watch the full playlist

NOVEMBER 17, 2022 | 9:28 AM WASHINGTON | 4:28 AM SHARM EL SHEIKH

How climate change affects peace and security across the world

By Lama El Hatow

As climate change impacts intensify—fueling migration and competition over scarce resources—so does the risk that conflict that may emerge. That risk has only been exacerbated by recent economic shocks, energy-supply disruptions, and increasing food insecurity.

While climate-linked migration and displacement (or “human mobility”) are discussed extensively at COP27, they are not officially on the agenda. The US Center, as well as several other pavilions at COP27 like the Climate Mobility Pavilion, have hosted series of events discussing the connections between climate change, conflict, peace, and security. At these events, speakers explained how, with assessments by officials from the US Departments of State and Defense, the United States is looking at hotspot zones around the world that are at risk from severe climate impacts—including how fragile and conflict-affected countries are negatively affected by these impacts. The United States is conducting these assessments in an attempt to provide an early warning about which regions are most at risk from climate change.

One of the most concerning ways that climate change will impact these regions is by contributing to increasing food insecurity. According to a report by the UN Food and Agriculture Organization and the World Food Programme, up to 205 million people across forty-five countries are expected to face acute food insecurity, while up to 45 million people across thirty-seven countries are projected to face severe malnourishment that may result in starvation or death. The report also explains that more than 70 percent of people facing acute food security over the last year were living in conflict-affected countries; and in several countries and regions, climate change and extreme weather events are driving increases in food insecurity. Russia’s full-scale invasion of Ukraine has only added to the crisis by elevating prices for food and energy, the latter key to distributing food worldwide.

The report also identified nineteen hotspots—seventeen countries and two regional clusters—that are most at risk of worsening food insecurity over the next few months due to climate change effects, increasing conflict, economic shocks, and more. The 970,000 people who are projected to face the most severe conditions are located in five countries—Afghanistan, Ethiopia, Somalia, South Sudan, and Yemen.

With the number of climate refugees increasing, countries are beginning to assess how to manage this new movement of people, which will likely have spillover effects across regions. Although climate change is impacting the world all over, some countries have more capacity and resilience to manage the crisis than others; hence, migration flows in the Global South are steering toward countries with better resilience. Many at COP27 have argued that developed countries have a moral and ethical responsibility towards the migrants from the Global South, since they are coming from countries that didn’t contribute as much to the world’s emissions problem. Historically, however, there has been a pervasive anti-immigration sentiment that fuels restrictive policies and a general reluctance to provide legal protection to people fleeing their home countries due to conflict or climate change. Additionally, there has not yet been an established finance arrangement or action protocol on climate-linked mobility at the global level. Extensive work with significant cooperation still needs to be done to address this worsening crisis.

—Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

NOVEMBER 17, 2022 | 1:55 AM WASHINGTON | 8:55 AM SHARM EL SHEIKH

Insurance for a climate-safe future

With COP27’s focus on climate change adaptation, in addition to mitigation, the insurance sector now has an “absolutely integral role to play” in helping people manage disasters after—and even before— they happen, said Francis Bouchard, Marsh McLennan’s managing director of climate.

In conversation with Jorge Gastelumendi, director of global policy at the Adrienne Arsht-Rockefeller Foundation Resilience Center, Bouchard explained that insurance still has a very “traditional” role in terms of signaling to people the risks they may be acquiring in a new venture and paying claims after events unfold.

But there’s a new way that the insurance sector is helping send those risk signals earlier: Anticipatory finance, in which some companies offer a way to pay before a disaster strikes. “So if you statistically know that at some point [an] event is going to turn into something that would’ve been insured, you can actually put money in peoples’ hands before the event,” Bouchard explained. “They can spend that money to protect their families, their businesses, their cattle, their farms, whatever it is; but they can take steps before.”

Bouchard warned, however, that the idea hasn’t been scaled yet, as companies undergo a “mindset shift” from paying a claim after an event to making a claim never happen. Yet, he added, with momentum sparked by the global focus on risk reduction, which has resulted in new initiatives like the Group of Seven’s Global Shield, “the time is now for the insurance industry to lead.”

Watch more

NOVEMBER 16, 2022 | 7:18 PM WASHINGTON | NOVEMBER 17, 2022 | 2:18 AM SHARM EL SHEIKH

Dispatch from the Resilience Hub: Why countries can’t give up on the 1.5 degree Celsius cap on warming

If countries that signed the Paris Agreement agree that we’ll exceed 1.5°C & change the temp, it means accepting more floods, fires & extreme heat+more people vulnerable to climate impacts. We must accelerate solutions that protect people &communities from climate disasters pic.twitter.com/4jIWd2JZgH
— Arsht-Rock Resilience Center (@ArshtRock) November 17, 2022

NOVEMBER 16, 2022 | 12:04 PM WASHINGTON | 7:04 PM SHARM EL SHEIKH

Will countries step up on loss and damage?

By Lama El Hatow

While loss and damage is near the top of the agenda at COP27, it has been a sticky point for many countries as they debate how to finance the loss and damage payments.

Climate mitigation looks to avert climate change through the reduction of greenhouse gas emissions and the development of zero-emission solutions; climate adaptation aims to minimize the chance that climate change impacts a given community. But loss and damage addresses the harms and costs induced by climate change, which is already happening.

In Pakistan, for example, the recent disastrous floods, which put one-third of the country under water, damaged over a million homes, and killed over a thousand people. The damage has been estimated to cost more than thirty billion dollars and it displaced more thirty million people from their homes, raising an immediate need for loss and damage compensation. Overall, while some countries like Belgium and Scotland have been willing to pledge funding for loss and damage, other leading economies, including the United States, showed resistance.

At the same time, climate finance has traditionally been in the form of loans to developing countries. So essentially, developing countries are borrowing money from developed countries for a problem they mostly haven’t caused—and are being asked to pay it back with interest. Additionally, when climate disasters cause significant damage, they bring significant costs for the impacted country and, for developing countries, wipe out their financial resources, so the net outcome of the loan is almost nil. This essentially is why Pakistan has called for debt restructuring and debt relief after the flooding, to change this unfair setup.

At the institutional level, the Vulnerable Twenty Group (V20), a “cooperation initiative” of finance ministers from the countries most vulnerable to climate change, was formed in 2015 to present a unified voice on climate action. V20 members are also members of the Climate Vulnerable Forum, a non-treaty organization of fifty-five member countries which are estimated to have collectively lost $525 billion from 2000 to 2019 due to climate change. These two forums are actively pushing to promote a loss and damage payments mechanism.

While reaching a consensus on loss and damage has been challenging, some developed countries proposed alternative funding mechanisms for vulnerable countries. For example, the Group of Seven-led Global Shield announced at COP27 provides immediate financial support to V20 countries when climate-change-related disasters strike. With Germany’s contribution of $175 million, and with additional contributions from France, Austria, Denmark and Ireland, the total financial coverage of the Global Shield is about $207 million. But the V20 countries also warned earlier this year that they could stop paying their debt service (estimated at about $685 billion) if lenders are not willing to restructure these debts and deduct the climate induced costs. In the words of Ghanaian Finance Minister Ken Ofori-Atta, by leaving nations at the mercy of climate catastrophe, “you could be triggering a global economic meltdown.”

—Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

NOVEMBER 16, 2022 | 11:00 AM WASHINGTON | 6:00 PM SHARM EL SHEIKH

Saudi Arabia’s take on aligning energy security needs and decarbonization goals

Global Energy Center Senior Director sat down with Khalid M. Abuleif, chief negotiator for the climate agreements for the Kingdom of Saudi Arabia, to talk about Saudi Arabia’s latest plans to meet its commitments in the Paris Climate Accords and the world’s needs for energy security.

The Paris Agreement has the potential to “be very costly for Saudi Arabia,” Abuleif explained. “The countries that will be most impacted… [are] going to be oil producers, developing countries; the reasoning is because their economies are not fully diversified and they rely heavily on limited sectors.”

But now is still the time for global climate action, Abuleif said. So as Saudi Arabia moves forward, it is working on making the country more resilient “to any kind of measures that could be taken,” Abuleif explained.

Watch the full interview to hear about Saudi Arabia’s latest initiatives geared toward improving energy security, boosting the country’s economy, and meeting its climate obligations.

Watch more

NOVEMBER 16, 2022 | 9:05 AM WASHINGTON | 4:05 PM SHARM EL SHEIKH

How Freetown is addressing extreme heat

Yvonne Aki-Sawyerr, mayor of Freetown, Sierra Leone, caught up with Kathy Baughman McLeod at the Resilience Hub and explained how her city is using an affordable and “simple solution” to protect women from extreme heat at markets across the city.

Watch the full conversation

We’re coming #TogetherForImplementation with our partner @yakisawyerr! https://t.co/pPQr4to3pO

She stopped by the @COPResHub to chat with @KBMcLeodFLA about how Freetown is building a cooler future with adaptation solutions. Watch our latest #COPChat now! pic.twitter.com/vOdCaHuo7u
— Arsht-Rock Resilience Center (@ArshtRock) November 16, 2022

NOVEMBER 16, 2022 | 2:03 AM WASHINGTON | 9:03 AM SHARM EL SHEIKH

Addressing Africa’s rapidly rising energy demand

The African Development Bank Group’s Kevin Kariuki joined Global Energy Center Deputy Director Reed Blakemore at COP27 to talk about sustainable development and energy access across Africa.

“Africa has endemic energy poverty which must be addressed,” Kariuki said, “and at the same time, we must address the issues of the climate crisis.”

To do that, Kariuki explained that he hopes leaders at COP27 realize that “what is actually required today is synergizing growth in energy demand with climate action.” He said that would help “[meet] the needs of Africa.”

“But we must also be realistic,” Kariuki added, “that renewable energy on its own will probably not be able to provide the security of supply and affordable power that is required to be able to underpin Africa’s social economic development.”

Watch more

NOVEMBER 16, 2022 | 1:10 AM WASHINGTON | 8:10 AM SHARM EL SHEIKH

Why now is the best time to address energy security and climate change in tandem

Global Energy Center Senior Director Landon Derentz joined the National Grid’s Rhian Kelly at COP27 to talk about addressing energy security in tandem with the energy transition.

“I think in many ways they’re more aligned than they’ve ever been because if we want to get ourselves off Russian gas, the cheapest form of self-reliant energies are renewables,” Kelly explained. She added that because global politics have changed, she thinks it’s “the best time to be thinking about energy security and climate change together.”

Watch more

A strategy for the Global South

How cities in the Global South are adapting to climate change
The first global ambassador for heat action lays out his top priorities
Dispatch from the Resilience Hub: How women are impacted by climate change
How to inhabit an uninhabitable region
Read our experts’ analysis from earlier in the conference

NOVEMBER 15, 2022 | 5:07 PM WASHINGTON | NOVEMBER 16, 2022 | 12:07 AM SHARM EL SHEIKH

How cities in the Global South are adapting to climate change

At the Thailand Pavilion, Mauricio Rodas talked about urban resilience and climate adaptation in cities across the Global South. “Extreme heat is the climate hazard that [effects] more people than any other, and it is particularly severe in cities,” he explained. He pointed out the innovations that are addressing extreme heat, such as the Cool Capital Stack investment portfolio recently launched by the Adrienne Arsht-Rockefeller Foundation Resilience Center and its partners.

See the highlights

Today at @COP27P discussing in different sessions the need to implement Nature based Solutions in cities, and highlighting the importance of the recently launched Cool Capital Stack as an innovative financial mechanism to address extreme heat related risks. @ArshtRock pic.twitter.com/sTtcx5lgtA
— Mauricio Rodas (@MauricioRodasEC) November 15, 2022

NOVEMBER 15, 2022 | 10:05 AM WASHINGTON | 5:05 PM SHARM EL SHEIKH

The first global ambassador for heat action lays out his top priorities

Newly appointed Global Ambassador for Heat Action Felipe Calderón outlined his agenda for tackling extreme heat in conversation with Mauricio Rodas, the senior advisor for heat and city diplomacy at the Adrienne Arsht-Rockefeller Foundation Resilience Center.

“The first thing we need to do is gather information… [and] second, to transmit that information to the right people,” Calderón said.

He said that he believes “the main problem is the lack of awareness about the importance of the problem, about the magnitude of the problem.” But, he added, getting information out to leaders, the media, and other stakeholders can help boost the urgency among leaders to address heat.

Afterall, Calderón explained, “the most cost effective way to avoid human deaths… [is] preventing or taking action on heat waves.”

He also stressed the importance of nature-based solutions like planting trees in cities. That, he said, is an effective one because it “combines an adaptation solution with a mitigation solution.”

Watch more

NOVEMBER 15, 2022 | 7:49 AM WASHINGTON | 2:49 PM SHARM EL SHEIKH

Dispatch from the Resilience Hub: How women are impacted by climate change

Arsht-Rock’s Director @KBMcLeodFLA shares that “80 percent of the people displaced by climate change are women, and women are 14 times more likely to die from climate disasters.” Action here at #COP27 is to understand how to better protect them from climate change. pic.twitter.com/RPUx2fN6vW
— Arsht-Rock Resilience Center (@ArshtRock) November 15, 2022

NOVEMBER 15, 2022 | 7:17 AM WASHINGTON | 2:17 PM SHARM EL SHEIKH

How to inhabit an uninhabitable region

By Lama El Hatow

The latest analysis from the United Nations (UN) indicates that we are still nowhere near limiting global warming to 1.5 degrees Celsius—the target set by the Paris Accords—and are actually headed towards 2.8 degrees. That means we may see regions around the globe become completely uninhabitable. According to the UN Office for the Coordination of Humanitarian Affairs, about six hundred million people across the Middle East and North Africa will face heat waves that go beyond the human survivability threshold by 2100. The Middle East North Africa (MENA) region is already a hot arid climate, and it will get hotter and drier with the impacts of climate change—with summertime temperatures that make it dangerous to be outdoors.

In this respect, we are heading toward an uninhabitable world and need to consider how best to adapt to it, particularly during the summer months. The immediate impact will be for people to spend more time indoors with the safety of air conditioning, which increases the demand for energy even further—bringing greater urgency to the search for clean renewable energy to power a smooth green transition. Additionally, within this year’s COP there have been many discussions about the possibilities of heat resilience within cities, including urban reforestation that can create cooler micro climates, shaded areas above bicycle lanes, and holistic urban planning with an eye toward resilience.

Consider the way many cities in Canada and the far north have adjusted to their harsh winters by creating underground infrastructure to minimize outdoor exposure, including public transportation, tunnel systems, and connections to buildings. Similarly, countries in MENA such as the United Arab Emirates and Qatar are already working to enhance their infrastructure to limit outdoor exposure by connecting their metro lines through tunnels to buildings, along with tailoring cultural attractions to the climate from the world’s largest indoor ski slope in Dubai to indoor stadiums and indoor golf courses. The MENA region is already building its cities to adapt to an uninhabitable world. The biggest risk, however, does not lie in wealthier countries that have the capacity to do this, but in the most vulnerable communities that will suffer tremendously in an environment made uninhabitable by climate change.

—Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

The future of climate adaptation

Water Day comes to COP27
Delivering on UPS’s emissions-reductions commitments
Here’s what to know heading into week two of negotiations
Dispatch from virtual reality: How games are informing decision makers on climate adaptation
What to make of USAID’s new adaptation and resilience plan
The United States is finally stepping up—but it there are also other climate leaders to watch
Read our experts’ analysis from earlier in the conference

NOVEMBER 14, 2022 | 2:37 PM WASHINGTON | 9:37 PM SHARM EL SHEIKH

Water Day comes to COP27

By Lama El Hatow

Monday was Water Day at COP27; it was a reminder that putting water in the center of the climate debate is imperative, necessary for crucial action, and long overdue.

Water access is still a challenge for many local communities. While the world leaders are striving to achieve Sustainable Development Goal 6 (clean water and sanitation for all), they are in many ways moving backwards.

For example, in many parts of the world, the privatization of water has shifted communities away from bodies of fresh water hat sustain their livelihoods. Water is a public good, and commodifying water takes away very basic human rights. Private companies have bought the rights to use bodies of water for profits, while poor and marginalized communities struggle to pay the higher prices on water. In many cases, private companies are not only limiting access to this public good but also polluting it further with industrial processes.

Several groups at COP27 have discussed how vital it is to preserve water as a public good. With the impacts of climate change, the world is seeing water scarcity in some regions (such as the Middle East and North Africa), and floods and extreme rainfall in others. The COP27 president and the World Meteorological Organization launched the Action for Water Adaptation and Resilience initiative to focus on the climate and water nexus and on water adaptation.

Climate adaptation and covering loss and damage will require more climate financing, and much of that money needs to go toward water—specifically, toward efforts supporting water security for vulnerable communities. During Hurricane Katrina in 2005, the New Orleans area lacked sufficient access to clean water for days. Similarly, the floods in Pakistan left millions without access to clean water as some of the infrastructure needed to provide it was severely destroyed. Drought-stricken countries are banding together to share their technologies and expertise to manage water scarcity. For example, a group of countries led by Spain and Senegal launched the International Drought Resilience Alliance at COP27 to “shift drought management from emergency response to resilience against climate change impacts.” Spain is committing five million euros to start it off.

As countries continue to partner with one another on water action, it will be crucial to ensure that there is appropriate focus on action for adaptation and resilience.

—Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

NOVEMBER 14, 2022 | 10:38 AM WASHINGTON | 5:38 PM SHARM EL SHEIKH

Delivering on UPS’s emissions-reductions commitments

Laura Lane, executive vice president and chief corporate affairs and sustainability officer of the United Parcel Service (UPS), sat down with Global Energy Center Senior Director Landon Derentz at COP27 to talk about UPS’s emissions-reductions goals.

Lane hopes that COP27 ultimately helps foster a “greater sense of collaboration between government, the private sector, and the NGO community. If they all come together, they “can solve a lot of the challenges that lie ahead for companies like [UPS],” that, Lane explained, are part of “one of the… hardest to abate industry sectors.”

She pointed out that while UPS has a goal to be carbon neutral by 2050, global tensions and supply chain shortages are making it difficult to hit key checkpoints. For example, the global shortage of microchips is making it more difficult to electrify their ground fleet.

“And so we are trying to find other ways to be able to get the emissions out of our… operations,” Lane explained. She said that UPS is searching for alternative fuels for its ground fleet and is working with other companies to incentivize the production of sustainable aviation fuel to power its operations in the air.

Watch more

NOVEMBER 13, 2022 | 1:16 PM WASHINGTON | 8:16 PM SHARM EL SHEIKH

Here’s what to know heading into week two of negotiations

By the Global Energy Center

As COP27 reaches its midway point, technical discussions are set to gain speed in week two. The twin realities of an energy security crisis and the sweeping impacts of climate change on the developing world remain at the forefront of discussions throughout Sharm el Sheikh. The multi-stakeholder drive to surmount both challenges is drawing stronger linkages between climate action and energy security, opening new avenues for collaboration between governments, civil society, and industry.

After week one, a few things are clear:

US climate leadership is achieving legitimacy through action. Midterm elections at the start of COP27 served only to further energize a US delegation already operating with confidence following passage of the Inflation Reduction Act. President Biden, Speaker of the House Nancy Pelosi, Special Presidential Envoy for Climate John Kerry, the Director of the National Economic Council Brian Deese, and many others arrived in Egypt emphasizing an optimistic outlook for the energy transition in the United States, while underscoring the need to unlock “trillions” in private financing to replicate US momentum in the developing world. The steadfast presence of US congressional delegations from both sides of the aisle further reinforced the United States’ commitment to addressing the climate crisis.

Next, the narrative at COP27 is no longer Western-led. The introduction of “loss and damage” to the COP agenda illustrates how the global south has successfully used the conversation in Europe and the West around energy security following Russia’s invasion of Ukraine to underscore the need for access to sustainable energy resources that enable economic growth.

And finally, the hard conversations which have often been missed or dodged at prior COPs are now front-and-center.

Overall, the twin realities of a global energy security crisis and a developing world at the forefront of a majority of the worst impacts of climate change have created an opportunity to better integrate the policy spheres of climate action and energy security.

EnergySource

Nov 13, 2022

COP27 readout: Week 1 comes to a close

By Global Energy Center

Global Energy Center react to the first week of COP27 proceedings.

Climate Change & Climate Action Energy & Environment

NOVEMBER 12, 2022 | 3:34 AM WASHINGTON | 10:34 AM SHARM EL SHEIKH

Dispatch from virtual reality: How games are informing decision makers on climate adaptation

Our Director of Extreme Heat Initiatives @KurtShickman & @ACMideast’s Lama El Hatow caught up at Arsht-Rock’s virtual reality booth https://t.co/4YjD37Q4iq

Great to see @AtlanticCouncil representation on the ground at #COP27! #ArshtRockAtCOP pic.twitter.com/iPcxCaSFs8
— Arsht-Rock Resilience Center (@ArshtRock) November 12, 2022

NOVEMBER 12, 2022 | 2:57 AM WASHINGTON | 9:57 AM SHARM EL SHEIKH

What to make of USAID’s new adaptation and resilience plan

At #COP27 @SamanthaJPower, citing the devastating $30+ billion flooding of Pakistan of @USAID announces new push to urgently drive private investment in adaptation & resilience. Big opportunity and vision here – @ArshtRock is ready – let’s go! pic.twitter.com/ITz3hKu5Qb
— Kathy Baughman McLeod (@KBMcLeodFLA) November 12, 2022

NOVEMBER 12, 2022 | 2:33 AM WASHINGTON | 9:33 AM SHARM EL SHEIKH

Experts praise the United States for finally stepping up—but there are also other climate leaders to watch

Global Energy Center Deputy Director Reed Blakemore sat down with the World Resources Institute’s Dan Lashof to talk about the countries taking the lead on climate action.

Lashof explained that while this is the twenty-seventh COP, “it’s COP1 for the United States being able to show up with a transformative climate law in place domestically.” He thinks “that gives President Biden much more credibility,” but he added that the world will be watching whether Congress will be able to sustain the momentum on climate action.

Lashof explained that, while people still pay a lot of attention to how politics in the United States impact the country’s climate leadership, the world is “no longer unipolar.”

“People are also looking to the EU and to China,” he said. So I think those three major players are pushing the wall forward, sometimes together, sometimes not so much. But as long as they’re moving and accelerating action, then we’re seeing progress.”

Watch more

Public-private partnerships

COP’s focuses on implementation, emerging economies, and public-private partnerships raise hopes
At the “corporate COP,” a new focus on private-sector solutions
Partnerships to benefit the planet—and the private sector
Gaming and social tech can reorient the world toward a climate-resilient future
Quick take: The attendance at COPs has transformed. Here’s what that means for the energy transition.
Improving clean-energy access for everyone
The energy crisis shows the need to accelerate the energy transition
Read our experts’ analysis from earlier in the conference

NOVEMBER 11, 2022 | 7:12 PM WASHINGTON | NOVEMBER 12, 2022 | 2:12 AM SHARM EL SHEIKH

COP’s focuses on implementation, emerging economies, and public-private partnerships raise hopes

By Roger Martella

In this pivotal moment for global action on climate change, I’m in the full optimist camp regarding COP27 in Sharm el Sheikh—not only for Egypt, but for the precedent Egypt is setting for the future.

Two main reasons drive this enthusiasm. First, COP27 is focused on implementation—putting climate promises into action. Second, the event is committed to highlighting the needs and challenges of emerging economies. This will place a global spotlight on the unique opportunities for countries where most of the 750 million people without reliable access to electricity live.

Another reason to be optimistic about COP27 is the rapidly growing role of public-private partnerships between policymakers and corporate stakeholders. The growing role of companies to be part of the solution and partner with governments, nongovernmental organizations, and other companies in industrialized and emerging markets is leading to unprecedented collaborations, some already having an impact.

The pursuit of public-private partnerships is perhaps the top undercurrent at COP27, as many collaborators and odd bedfellows alike come together for bold pronouncements of projects and initiatives together. These examples demonstrate how emerging economies, through public-private partnerships and tangible proof points, are addressing the energy transition by blending different approaches, technologies, and perspectives. Additionally, they illustrate how emerging economies are positioning strategically to build climate resilient infrastructure that grows access to energy at the same time. The lessons learned from each will help inform the many ongoing discussions and negotiations in Sharm el Sheikh.

Roger Martella is the chief sustainability officer of GE. GE is a presenting partner of GEC at COP27: Ambitions for All.

EnergySource

Nov 11, 2022

Partner perspectives: In emerging markets, partnerships and proof points are key to driving the energy transition

By Roger Martella

COP27 is an opportunity for emerging economies to lead the energy transition. Public-private partnerships can help drive progress towards their goals.

Energy & Environment Energy Transitions

NOVEMBER 11, 2022 | 12:37 PM WASHINGTON | 7:37 PM SHARM EL SHEIKH

At the “corporate COP,” a new focus on private-sector solutions

By Lama El Hatow

The private sector has an immense presence at COP27 in all the various zones within Sharm El Sheikh, earning this conference the label of the “corporate COP.” The business role comes in several forms.

First, there is a growing recognition that the private sector will have to close the gap in the unfulfilled one hundred billion dollar per year climate finance promise made by developed countries. We already know that one hundred billion is insufficient, with reports now claiming that two trillion dollars per year is what’s needed for the Global South. UN Climate Change High-Level Champion for Egypt Mahmoud Mohieldin and US climate envoy John Kerry have argued that various modes of blended finance (using development funds to leverage private capital), as well as regulations on the private sector, are the only way to meet the one hundred billion dollar pledge and move toward the two trillion dollar goal. Kerry even announced that the US Energy Transition Accelerator would be carried out in partnership with Bezos’ Earth Fund and the Rockefeller Fund, solidifying the role of the private sector in implementation.

Second, fossil-fuel and high-polluting companies are frightened and lobbying quite strongly. During decarbonization day today, their viewpoints were expressed in various sessions discussing how they are shifting their practices to renewable energy and phasing out fossil fuels. However, they are concerned, as Prime Minister of Barbados Mia Mottley and other island state leaders opened COP27 by stating that fossil fuel companies should pay a global carbon tax on profits to fund loss and damage for the Global South. The massive third quarter profits recently reported by Saudi Aramco ($42.4 billion), Exxon ($20 billion), and Chevron ($11.2 billion) alone show why this could be an attractive option for policymakers seeking loss and damage funds.

Third, businesses along with banks are under new pressure from investors to meet environmental, social, and governance (ESG) goals, and they are trying to catch up and understand what needs to be done. The Net Zero Banking Alliance, which is one of the four pillars of the Glasgow Financial Alliance for Net Zero that emerged at the last COP, has been convening to see how to enable as well as enforce banks to transition to net zero. CEOs of top commercial and investment banks including Blackrock, Citibank, and Standard Chartered are skipping the summit as they focus more on issues such as the fallout from Russia’s war in Ukraine, energy crises, rising inflation, and the threat of recession. It is no secret that many large-scale corporations produce more greenhouse gas emissions than many countries. The argument is that these companies should be liable for compensation, not only to their consumers and board of directors, but also to the Global South and the world’s most vulnerable people.

—Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

NOVEMBER 11, 2022 | 11:23 AM WASHINGTON | 6:23 PM SHARM EL SHEIKH

Partnerships to benefit the planet—and the private sector

Global Energy Center Senior Director Landon Derentz hosted Dorothy McAuliffe, the US State Department’s special representative for global partnerships, to talk about how governments can work with the private sector to develop climate solutions.

“Governments can’t tackle this challenge alone,” McAuliffe explained. “We have to be in this all together.”

While there are major benefits for the planet to be reaped from this partnership, McAuliffe explained that there are benefits for the private sector too: “There are jobs and opportunities that come along with this clean energy transformation… and finding these solutions.”

Watch more

NOVEMBER 11, 2022 | 10:43 AM WASHINGTON | 5:43 PM SHARM EL SHEIKH

By increasing awareness of climate adaptation measures, gaming and social technologies are creating impact on the ground in many countries.

On Friday, the Adrienne Arsht-Rockefeller Foundation Resilience Center hosted an event at the COP27 Resilience Hub that brought together gaming and technology experts to talk about innovative solutions to build resilient communities.

For example, games like Garden Story help users acquire the knowledge and skills they need to take climate action in their communities. Similarly, Meta aims to help users understand the types of climate-adaptation tools that are available to prevent future damage and loss.

See top moments from the event

“Gamers are ahead on the curve on climate & we’re seeing this permeate the industry a little faster than others,” says @ChanceGlasco. Arsht-Rock’s VR pilot & games like @gardenstorygame integrate climate solutions, equipping players w/knowledge & skills for climate action. pic.twitter.com/aF6XSVyNv3
— Arsht-Rock Resilience Center (@ArshtRock) November 11, 2022

NOVEMBER 11, 2022 | 11:12 AM WASHINGTON | 6:12 PM SHARM EL SHEIKH

Quick take: The attendance at COPs has transformed. Here’s what that means for the energy transition.

#COP27 quick take: As uniform acceptance of the #EnergyTransition takes hold, an increasing number of energy and finance executives – many for the first time – are gravitating to the conference. A post-denial posture is empowering a groundswell of new solution-oriented actors.
— Landon Derentz (@Landon_Derentz) November 11, 2022

NOVEMBER 11, 2022 | 7:30 AM WASHINGTON | 2:30 PM SHARM EL SHEIKH

Improving clean-energy access for everyone

As the energy transition gets underway, experts are searching for ways to bring clean energies to everyone—and particularly low-income and developing countries.

Doing so will require focuses like improving financing, making the energy supply chain more efficient, and turning toward cooling solutions, said panelists at an Adrienne Arsht-Rockefeller Foundation Resilience Center event at the Resilience Hub.

“We need to make sure that access to energy is resilient,” said Lavinia Bauerochse, global head of ESG at Deutsche Bank. “Climate change-induced weather extremes like floods and heat must be factored in. Without a resilient infrastructure, our efforts will be short lived.”

See top moments from the event

“One billion people have no access to cooling… & are considered highly vulnerable to heat events,” says @jmcurtin of @RockefellerFdn.

But traditional cooling contributes to emissions. We must bring cooling to vulnerable communities w/o further exacerbating climate-driven heat. pic.twitter.com/rAw06gdiAo
— Arsht-Rock Resilience Center (@ArshtRock) November 11, 2022

NOVEMBER 11, 2022 | 6:46 AM WASHINGTON | 1:46 PM SHARM EL SHEIKH

The energy crisis shows the need to accelerate the energy transition

Global Energy Center Senior Director Landon Derentz sat down with HIF Global’s Meg Gentle to talk about decarbonization ambitions at COP27.

“There are so many incredible ideas here in Egypt this year, and we can show that eFuels, this synthetic fuel, this is happening now,” Gentle explained. HIF Global produces eFuels in countries like Chile and Australia.

EFuels, which are fuels created by renewable energies and carbon capturing from the air, have potential now, added Gentle. “These are fuels that can be used immediately; this is a solution for today.”

Watch more

The innovative solutions at play

Gaming and virtual reality set out to change how decision makers tackle climate change
Investments in climate technologies must begin with software
Nancy Pelosi and Kathy Castor at COP27: The US won’t abandon its climate leadership, regardless of who controls Congress
Energy security and the energy transition are “mutually reinforcing,” says US official
Read our experts’ analysis from earlier in the conference

NOVEMBER 10, 2022 | 2:08 PM WASHINGTON | 9:08 PM SHARM EL SHEIKH

Gaming and virtual reality set out to change how decisionmakers tackle climate change

By Lama El Hatow

As climate change becomes the world’s reality, groups are using technology to bring it to virtual reality as well.

With the evolution of technologies over the years and the emergence of the gaming industry, there has been an increase in the number of innovative ways through which people can see how climate change impacts the world and, by association, how to deal with it. The COP27 Resilience Hub, run in part by the Atlantic Council’s Adrienne Arsht-Rockefeller Foundation Resilience Center, has created a VR experience that allows each user to click on various places around the globe to see what would happen in a +2 degree Celsius or +4 degree Celsius world. Based on the Paris Agreement and the science, we need to remain underneath 1.5 degree Celsius of warming to avoid catastrophic climate impacts. In this VR experience, one can see that the city of Miami, for instance, would be completely submerged underwater from flooding. Experiencing this submersion is quite difficult to process.

Additionally in this experience, the user has the option to select from various adaptation measures that can help the city of Miami avoid these catastrophic changes. For instance, after selecting “reforestation,” a nature-based solution, the user can see how Miami is able to withstand floodwaters. Alternatively, users can choose measures that may not be as effective, such as breakwaters in the case of Miami; from that, users can understand that decisions on adaptation must be designed for the particular contexts of each city. This technology allows policymakers to decide what kind of Miami they’d like to plan for in the future based on climate impacts.

Similarly, the video game “Eco” allows users to explore the “tragedy of the commons”—a situation in which users competing over environmental resources act in their own interest and ultimately deplete the resources entirely. Other games show how people’s physical conditions change in response to increased temperatures and heatwaves in certain settings—for example in poorly serviced areas versus in areas with resilient infrastructure. This game can be useful to help users understand how workers who are exposed to the outdoors for long periods of time are impacted by a world that is continuously heating.

The gaming industry and VR have opened up ways to envision the world in the future and how best to live in it. Ultimately, this technology and innovation is important in that it can help decisionmakers decide which adaptation measures to employ.

—Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

NOVEMBER 10, 2022 | 12:15 PM WASHINGTON | 7:15 PM SHARM EL SHEIKH

Investments in climate technologies must begin with software

By Scott Reese

The annual United Nations Conference of Parties is underway in Sharm el Sheikh, Egypt, with delegates from around the world gathering to address one of the most urgent of global imperatives: climate change and the energy transition. Central to the conversation is tackling carbon emissions, the leading contributor to planet-wide warming.

During last year’s conference, leaders reinforced the sense of urgency to take action. Since then, important moves have been made to drive progress. Notably, the United States, currently the world’s second-largest carbon emitter, took its biggest step yet in combating climate change with a $369 billion investment via the Inflation Reduction Act that will reduce US carbon emissions to an estimated 40 percent below 2005 levels by 2030. This is in addition to steps to fund a modernized grid and breakthrough technologies in the Infrastructure Investment and Jobs Act. These two landmark climate change laws not only aim to reduce climate emissions, but they also advance US investments in both energy security and grid resiliency as well as critical breakthrough technologies.

Yet a problem so daunting can leave us all wondering, how does the world move faster?

While it’s critical to invest in long-term, high-impact levers like renewable energy, hydrogen, and carbon capture and sequestration technologies, software is an investment that can pay dividends today and accelerate our ability to embrace electrification and decarbonization tactics.

EnergySource

Nov 10, 2022

Partner perspectives: The next unlock: Why software is key to the energy transition

By Scott Reese

The energy transition requires scale, but it also requires speed. Through the marriage of human ingenuity with data and computing power, software integration can enable the acceleration of electrification and decarbonization, moving the world closer to loftier climate ambitions.

Energy & Environment Energy Transitions

NOVEMBER 10, 2022 | 9:00 AM WASHINGTON | 4:00 PM SHARM EL SHEIKH

Nancy Pelosi and Kathy Castor at COP27: The US won’t abandon its climate leadership, regardless of who controls Congress

By Katherine Walla

The United States is officially back “in the game,” leading the fight against climate change, said US Representative Kathy Castor, chair of the House Select Committee on the Climate Crisis. “And we’re not leaving the playing field ever again.”

Castor and House Speaker Nancy Pelosi spoke on Thursday about how the United States is addressing the climate crisis at an Atlantic Council Front Page event hosted by the Adrienne Arsht-Rockefeller Foundation Resilience Center at the United Nations Climate Change Conference of the Parties (COP27) in Sharm el Sheikh, Egypt.

While the United States—which withdrew from the Paris Climate Accords in 2019 but rejoined the agreement in 2021—has seen its climate leadership questioned, Castor said the country now has the tools to meet its emissions reduction goals. Those tools, she explained, include the bipartisan infrastructure law and the Inflation Reduction Act (IRA), the latter of which she deemed the “most important climate bill” in US history.

At COP27, Pelosi hopes that US and global leaders will “find common ground” to address climate change, especially because of how pervasive the effects will be on health, economies, and even security globally. “The competition for habitat and resources can cause conflict,” Pelosi noted. “We have to avoid that.”

COP

Nov 10, 2022

Nancy Pelosi and Kathy Castor at COP27: The US won’t abandon its climate leadership, regardless of who controls Congress

By Katherine Walla

The US House speaker and the chair of the climate committee appeared at an Atlantic Council Front Page event in Sharm el Sheikh, Egypt.

Climate Change & Climate Action Energy & Environment

NOVEMBER 10, 2022 | 6:52 AM WASHINGTON | 1:52 PM SHARM EL SHEIKH

Energy security and the energy transition are “mutually reinforcing,” says US official

On Thursday, Global Energy Center Senior Director Landon Derentz sat down with US Assistant Secretary of State for Energy Resources Geoffrey Pyatt to talk about global energy security.

“Energy is at the white hot center of international affairs in a way that it has not been in a long time,” Pyatt said. But despite countries scrambling for cheaper and more destructive energy sources like coal amid global gas shortages, Pyatt argued that energy security and the energy transition “are not in conflict with each other; in fact, they’re mutually reinforcing.”

“We need to continue to work… to build an energy system internationally which helps our allies and partners to advance their economies [and] to deliver results for their citizens,” he said. “But we also need to keep working on the energy transition.”

Watch more

Protecting the planet—and people

For COP outcomes that benefit the groups most vulnerable to climate change, representation must improve
Reasons to be optimistic about the “implementation COP”
The health sector’s role in climate change and ambitions
The newest advocate of heat resilience: The world’s first global ambassador for heat action
Cash for cooling
How cities are taking the lead on heat action
Read our experts’ analysis from earlier in the conference

NOVEMBER 9, 2022 | 12:30 PM WASHINGTON | 7:30 PM SHARM EL SHEIKH

For COP outcomes that benefit the groups most vulnerable to climate change, representation must improve

By Lama El Hatow

Looking around to see who is present at COP27, there’s a lot of diversity and an array of ethnicities, cultures, and backgrounds across groups that aim to represent their communities and share their stories about how climate change impacts them. But not everyone has the privilege to be able to attend this COP and convene in an effort to inform policymakers of the realities on the ground. In fact, the most vulnerable and impacted communities around the world are often the ones that face the most hurdles in attending these conferences. Hence, these communities’ stories oftentimes never make it to the ears of the decision makers in the negotiating rooms deciding the world’s fate.

It thus becomes the international community’s responsibility to inform those decision makers for the sake of those not present at COP27. Within Egypt, minority groups such as the Nubian communities in Aswan and the Bedouins of Sinai will not be present at this COP. In November 2021, a severe storm hit the city of Aswan, destroying homes, flooding small islands, and decimating the already limited agriculture—and the community there is still healing from this disaster today. They report that such a storm has not hit Aswan in the last forty years. As these communities rely on the Nile River for their daily livelihood, the impacts of climate change, including lower water levels in rivers, are acute and detrimental for them. There are other examples of detrimental impact worldwide, most recently with floods in Pakistan destroying over a million homes and killing over a thousand people.

As leaders discuss the financial mechanisms for loss and damage payments in the negotiating rooms, it is important to know how and where these losses and damages are taking place across the globe. The Global Stocktake launched at COP26 requires countries to report on local- and community-level participation in nationally determined contributions, thus making the participation more feasible but still far from what is needed. That is why representation matters; and having local communities, tribes, indigenous peoples, and minority groups present at such a convening as COP is not only necessary but vital so that any outcomes of negotiations are holistic and take into consideration the needs of those most vulnerable to climate change. To ensure the inclusion of these groups, they must be allowed access to funding as well as partnerships with local and international civil-society organizations.

—Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

NOVEMBER 9, 2022 | 10:41 AM WASHINGTON | 5:41 PM SHARM EL SHEIKH

Reasons to be optimistic about the “implementation COP”

COP27 has, to date, been scarce on tangible results, with the majority of action occurring outside of the negotiating room as a diverse coalition of industry and nongovernmental organizations descends on Sharm el Sheikh.

But there are clear signs emerging that should offer optimism as technical groups dominate the balance of the next two weeks:

Finance remains center stage. Financing both energy transitions and climate adaptation has, at least thus far, remained front-of-mind for policy leaders over the past two days. Commitments from a handful of European countries seeking to accelerate international climate adaptation finance are one such bright spot, despite the relative lack of optimism for progress leading up to the COP this year. Yet this box is still largely unchecked.
Private sector participation. COP’s transition from a largely technocratic convening to an increasingly multifaceted climate convention filled with corporations and civil society continues. Observers should be encouraged that the dialogue is moving past simple greenwashing, in favor of efforts to establish a widespread coalition of parties engaged in the climate conversation.
Implementation is in limbo. Though COP is meant to focus on acting on the pledges laid out in COP26 and the Bonn intersessional, homing in on details that expose the current tension between energy security and climate ambitions is proving to be more difficult than gaining commitments from governments for these pledges in the first place.

Significant work remains to be done in the coming days.

EnergySource

Nov 9, 2022

COP27 readout: Days 1 and 2

By Global Energy Center

Global Energy Center experts are on the ground at COP27. Here’s what they observed over the first two days.

Climate Change & Climate Action Energy & Environment

NOVEMBER 9, 2022 | 10:30 AM WASHINGTON | 6:30 PM SHARM EL SHEIKH

The health sector’s role in climate change and ambitions

Global Energy Center Deputy Director Reed Blakemore sat down with John Balbus, acting director of the Office of Climate Change and Heath Equity at the US Department of Health and Human Services to talk about health equity and decarbonizing the health sector.

“Health is often mentioned as a reason to be acting on climate change, but the health community isn’t present,” Balbus explained. But over the last year, he added, “the health sector has mobilized in a way that it has not over the last twenty-six COPs.”

“So what we’re hoping is that by mobilizing the health sector,” Balbus said, the sector can provide health information to national leaders that convinces them to increase the urgency to tackle climate change.

According to Balbus, the health sector is responsible for about 5 percent of global carbon emissions, but no countries focus on the decarbonization of the health sector. He said they should include the health sector in both reducing emissions and adapting to climate change.

Watch more

NOVEMBER 9, 2022 | 7:16 AM WASHINGTON | 3:16 PM SHARM EL SHEIKH

The newest advocate of heat resilience: The world’s first global ambassador for heat action

On Wednesday, the Adrienne Arsht-Rockefeller Foundation Resilience Center unveiled a new leader in climate adaptation. At COP27, Felipe Calderón, former president of Mexico, took the reins as the first-ever global ambassador for heat action with a mandate to raise the issue of extreme heat among the world’s leaders to protect people, jobs, and the economy.

Watch the unveiling

Agradezco enormemente a @ArshtRock Resilience Center la invitación para ser Embajador Global para la Acción frente a las “Olas de Calor”. En el marco de la #COP27 en Egipto. Las “olas de Calor” mata muchos más personas en el mundo que el resto de los eventos climáticos extremos. https://t.co/Vxxps9fJy1
— Felipe Calderón (@FelipeCalderon) November 9, 2022

NOVEMBER 9, 2022 | 10:05 AM WASHINGTON | 5:05 AM SHARM EL SHEIKH

Cash for cooling

As the temperature goes up, it’ll be vital to protect people, communities, and local economies from extreme heat and its effects.

The Adrienne Arsht-Rockefeller Foundation Resilience Center and partners including the Rockefeller Foundation, JP Morgan Chase & Co, ClimateWorks, Marsh McLennan, and IFC, gathered together at COP27 to launch the Cool Capital Stack, the first investment portfolio dedicated to supporting cooling solutions for the world’s most vulnerable.

Watch top moments from the launch

Cities are taking the lead in implementation, like Freetown’s market shading project. https://t.co/eplPzcyxkT

But it’s hard to scale. “There just is not enough [money] flowing to the Global South,” says @yakisawyerr. “The difference between the rhetoric & the reality is huge.” pic.twitter.com/I2CnmMZMzi
— Arsht-Rock Resilience Center (@ArshtRock) November 9, 2022

NOVEMBER 9, 2022 | 1:15 AM WASHINGTON | 8:15 AM SHARM EL SHEIKH

How cities are taking the lead on heat action

On Wednesday, Luis Donaldo Colosio Riojas, mayor of Monterrey, Mexico, recounted watching his city’s temperature rise ten degrees over the last thirty years. “We are ill-prepared for this silent killer and people are facing the consequences,” he said.

The mayor gave his thoughts at an Adrienne Arsht-Rockefeller Foundation Resilience Center event focused on what cities are doing to take the lead on heat action. Earlier this year, the city of Monterrey appointed a chief heat officer committed to reducing the threat of extreme urban heat for vulnerable people.

Global Chief Heat Officer Eleni Myrivili explained that the way cities are built makes them “death traps” of heat for people. It is important to listen to cities, she added, as they know “where the problem is and what they really need to do to respond to it.”

Watch top moments from the event

“The way cities are built are death traps for people, that’s why it’s important to listen to cities.” We know that people don’t have to die from #ExtremeHeat.

Global Chief Heat Officer @leniomyrivili explains why cities need a seat at the policy table to protect people. #CoP27 pic.twitter.com/QB1NtbeA87
— Arsht-Rock Resilience Center (@ArshtRock) November 9, 2022

Takeaways as negotiations get underway

NOVEMBER 8, 2022 | 6:47 PM WASHINGTON | NOVEMBER 9, 2022 | 1:47 AM SHARM EL SHEIKH

Dispatch from the World Leaders Summit: The most fundamental plan for adaptation in a decade

LIVE FROM #COP27 Director of Global Policy @Gasteluj gives you an inside look at the newly launched Sharm El Sheikh Adaptation Agenda, with 30 adaptation outcomes to accelerate climate resilience. Watch now #cop27egypt pic.twitter.com/ddo4DP4OkZ
— Arsht-Rock Resilience Center (@ArshtRock) November 8, 2022

NOVEMBER 8, 2022 | 2:45 PM WASHINGTON | 9:45 PM SHARM EL SHEIKH

Some MENA countries are under-represented at COP27. Here’s what that means for the negotiations.

By Lama El Hatow

The delegates at COP27 face the challenging and daunting dilemma of tackling the world’s climate crisis in the midst of a series of global political and economic crises.

The world is still feeling the brunt of the COVID-19 pandemic with supply chain stalls from China and insufficient resources elsewhere. Add to that Russia’s war in Ukraine has pulled a plug on global gas flows—raising Europe’s worries about staying warm this winter—and has also generated concern about wheat-supply shortages and food insecurity globally.

The compounded effect of all of these issues has led to broadening global inflation. So not only are the least developed countries becoming more vulnerable to the worsening global economic outlook, but even some of the wealthier countries have difficulties staying afloat. In the Middle East and North Africa (MENA), several countries face their own economic and political turmoil with Syria still at war, Sudan reeling from political instability after a coup last year, and Lebanon facing the worst economic crisis in its history with power outages and bank closures that put the Lebanese people in unforeseen circumstances.

Without ignoring political and economic turbulences like these, how will the delegations at COP27 deal with global crises while also asking the world to commit to more ambitious pledges and enforce the execution of them? The limited representation of many delegations from MENA countries at COP, including some of the most water-scarce countries in the region, raises concerns about the outcomes of the negotiations. Since the conflict-affected MENA countries are very consumed with their local economic and political challenges, the capabilities of these countries to address the climate crisis at COP27 are certainly going to be limited.

While some countries are being represented by delegations made up of several dozens of negotiators and experts, conflict-afflicted countries from the MENA region only have a few delegates to cover an agenda with so many key topics. They’ll likely, therefore, have less negotiating power to tackle and influence the outcomes of the more controversial topics on the agenda, including climate financing and loss and damage.

—Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

NOVEMBER 8, 2022 | 11:17 AM WASHINGTON | 6:17 PM SHARM EL SHEIKH

Public capital is key to funding solutions to the “energy trilemma”

By Susan Flanagan

It is abundantly clear that achieving net-zero carbon emissions by mid-century is necessary to avoid the worst climate outcomes. However, the path to decarbonizing the energy sector is not “one-size-fits-all” between developed and developing markets. Given the historical tensions between developed economies, which modernized with fossil fuels, and developing economies, now being asked to forgo this route, it is evident that sustainable, long-term global cooperation will require addressing the ”energy trilemma”—the need for the people to have access to sustainable, reliable, and affordable energy.

Sustainability is more urgent for countries hardest hit by climate change and often exposed to greater environmental risks. Reliability remains an elusive goal in many countries still working to bring basic electricity to their citizens in a secure and dependable way. Many of these developing economies also face roadblocks to electricity affordability due to weak government finances and credit, and the corresponding higher cost of capital for infrastructure development.

To drive global decarbonization and increase electrification in developing countries, policymakers and financial institutions must partner with project sponsors to tailor capital solutions that best fit each region and country.

Susan Flanagan is the president and chief executive officer of GE Energy Financial Services. GE is a supporter of the Atlantic Council Global Energy Center.

EnergySource

Nov 8, 2022

Partner perspectives: With COP27 underway, there’s no time to waste—public capital is a key conduit to a just energy transition

By Susan Flanagan

The sheer scale of needed investments to enact the energy transition will require an unprecedented mobilization of capital. Given its unique capabilities, public capital must play a significant part in this effort.

Energy & Environment Energy Transitions

NOVEMBER 8, 2022 | 3:35 AM WASHINGTON | 10:35 AM SHARM EL SHEIKH

Ensuring both a just energy transition and access to affordable energy

Global Energy Center Senior Director Landon Derentz sat down with General Electric’s Roger Martella to talk about ensuring a just energy transition and decarbonization while ensuring access to reliable, affordable, and sustainable power for everyone.

“We want to help countries, particularly in emerging economies achieve these goals by focusing on bespoke solutions for each country. There’s no one-size-fits-all approach here,” Martella said. He explained that while solutions may be different in each country, they’ll all need to have the “same tools in the toolbox”: a combination of renewable energy, gas, and grid.

General Electric is a presenting partner for the Global Energy Center’s Ambitions for All project, which you can read about here.

Analysis as leaders assembled

NOVEMBER 7, 2022 | 1:43 PM WASHINGTON | 8:43 PM SHARM EL SHEIKH

What’s happening beyond official negotiations?

Alongside other @AtlanticCouncil colleagues, Arsht-Rock’s Director of Global Policy @Gasteluj set the scene for COP27 and the work that goes on beyond the official negotiations https://t.co/BKdk4GBGs3 @PoliticoRyan pic.twitter.com/y1CMuml9N2
— Arsht-Rock Resilience Center (@ArshtRock) November 7, 2022

NOVEMBER 7, 2022 | 12:36 PM WASHINGTON | 7:36 PM SHARM EL SHEIKH

The private sector holds a lot of the cards at COP27

By Lama El Hatow

As COP27 gets underway, various platforms of engagement are taking place.

In the blue zone, countries’ official delegations are coming together to meet and negotiate on the agenda items put forth and agreed upon with the support of the United Nations Framework Convention on Climate Change and Glasgow, the COP26 host. These agenda items include increasing ambition on pledges for greenhouse gas emission reductions by all countries to limit global warming to 1.5 degrees Celsius, making progress on climate adaptation and ways to propel it forward, boosting climate finance and pushing developed countries to meet their financing commitments of $100 billion per year, and discussing a mechanism for loss and damage payments. The delegations agreed on Saturday to include the loss and damage fund as part of the agenda; it’s considered a huge win for the Global South that is most vulnerable to and at risk from climate change impacts.

Meanwhile, the green zone is designated for civil-society pavilions, where various ministries from Egypt elsewhere can showcase their work; it is also a culture and arts hub for participants to network and have side events outside the negotiation rooms.

Additionally, there is a third zone this year: The Climate Action Innovation Zone, which has been set up as a private-sector hub for companies and corporations from around the world to showcase their work through exhibitions, side events, and networking sessions. Many of the region’s largest players including Saudi Arabia’s ACWA Power and Neom, the United Arab Emirates’ IRENA, and Egypt’s TAQA Arabia are all present on the sidelines of COP27 to discuss technology and innovation that sets the stage for a smoother green transition. Adjacent to the climate innovation zone is the Saudi Green Initiative, which also has its own designated area to showcase its work.

While the world focuses on the blue zone with government pledges and commitments, it appears the private sector holds a lot of the cards in this convening. As UN Climate Change High-Level Champion for COP27, Mahmoud Mohieldin reiterated that nonstate actors need to lead the way with regard to climate finance. It appears the role of the private sector and the deals happening on the outskirts of the COP may help set the stage for advancement in climate technology, innovation, and even financing.

—Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

NOVEMBER 7, 2022 | 11:23 AM WASHINGTON | 6:23 PM SHARM EL SHEIKH

Dispatch from the Singapore Pavilion: How to build cities resilient to heat

Kurt Shickman, director of Extreme Heat Initiatives at our Adrienne Arsht-Rockefeller Foundation Resilience Center, shared his readout from an event with the Mayor of Monterrey, Mexico, Luis Donaldo Colosio and Athens Chief Heat Officer Eleni Myrivili about the best solutions for managing extreme heat in cities.

Watch more

Live from #COP27 ! @ArshtRock‘s Global #ChiefHeatOfficer @LenioMyrivili & City Champion for Heat Action Mayor @colosioriojas joined @RCitiesNetwork to share climate resilience lessons from cities. Our Director for Extreme Heat @KurtShickman shares his key takeaways. Watch now pic.twitter.com/XPw0lsEtvT
— Arsht-Rock Resilience Center (@ArshtRock) November 7, 2022

Gearing up for COP27

NOVEMBER 5, 2022 | 3:13 PM WASHINGTON | 10:13 PM SHARM EL SHEIKH

How a lack of energy security will impact the speed and impact of the energy transition

As today’s energy crisis intensifies, Global Energy Center Senior Director Landon Derentz points out that a lack of energy security will slow the energy transition and spell trouble for ensuring affordable energy is accessible for all. “The world is short energy,” he writes, “now and over the next decade.” That calls for investment across the board—in zero-carbon energy sources and also oil and gas, he argues.

Read the thread

Policymakers must accept the path to climate progress starts with inclusivity. Unlike in prior decades, the bulwark of industry now accepts that the energy transition is real. They are engineers, put them to work. 8/x
— Landon Derentz (@Landon_Derentz) November 5, 2022

NOVEMBER 4, 2022 | 3:30 PM WASHINGTON | 10:30 PM SHARM EL SHEIKH

The new partnership financing a just energy transition in emerging economies

By Christopher Cassidy, Rainer Quitzow, and Maia Sparkman

As the global community convenes for COP27, Just Energy Transition Partnerships (JETPs) are poised to play an expanded role in financing the energy transitions of emerging economies. Conceived as multi-donor agreements to accelerate the phase-out of coal-fired power plants, JETPs first gained attention at COP26 with the announcement of the Just Energy Transition Partnership with South Africa, an $8.5-billion venture between the governments of South Africa, the United States, the United Kingdom, France, Germany, and the European Union. Since then, several other countries have expressed interest in their own JETPs, presenting an opportunity to drastically reduce global coal emissions. Nonetheless, while JETPs may represent an avenue for increased climate engagement with high-emitting emerging economies, they also face several key challenges moving forward.

Despite those challenges, JETPs bear the potential to represent a turning point in the climate finance agenda. By combining funding from several major Group of Seven (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 degree Celsius target. Nevertheless, the hope is that they can lend additional momentum to ongoing reform efforts.

EnergySource

Nov 4, 2022

Just Energy Transition Partnerships: Will COP27 deliver for emerging economies?

By Christopher Cassidy, Rainer Quitzow, and Maia Sparkman

The JETP model is poised to deliver results in South Africa. Now, at COP27 and beyond, the true test will be translating the model to other country contexts.

Energy & Environment Energy Markets & Governance

NOVEMBER 4, 2022 | 9:30 AM WASHINGTON | 4:30 PM SHARM EL SHEIKH

The West must rethink its development strategy to help electrify the African continent

By William Tobin and Maia Sparkman

Electricity access in Africa is in a dire state, and progress is being reversed. Outside of North Africa, around half of the population is electrified, and the electrification rate has decreased by 4 percent since 2019.

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.

EnergySource

Nov 4, 2022

To meet energy security and climate goals, Africa needs investment in infrastructure

By William Tobin, Maia Sparkman

Africa Energy & Environment

NOVEMBER 3, 2022 | 9:00 AM WASHINGTON | 4:00 PM SHARM EL SHEIKH

What leaders at COP27 should take away from the World Energy Outlook

By Emily Burlinghaus

The International Energy Agency World Energy Outlook (WEO), released last week, is historic in its first-ever presentation of a scenario where fossil fuels peak or plateau based on prevailing policy settings. But despite the cause to celebrate, the global transition to net-zero carbon emissions remains precarious. Developing countries are most vulnerable to the effects of both climate change and capital and resource restrictions. Meanwhile, global conflict and supply chain disruptions threaten national efforts to ensure food security, meet energy demand, and deploy resilience and adaptation measures. The WEO serves as a roadmap for where and how countries can allocate money at COP27 to maximize impact and ensure that no country is left behind.

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

NOVEMBER 1, 2022 | 10:04 AM WASHINGTON | 5:04 PM SHARM EL SHEIKH

How Europe can reclaim international climate leadership at COP27

By Michał Kurtyka and Paddy Ryan

COP27 will be uncomfortable for Europe. The continent’s energy crisis following the Russian invasion of Ukraine has upended the lofty objectives set at COP26. In Glasgow, the European Investment Bank and over a dozen European states pledged to cease financing fossil fuel projects abroad. Now, Europe is scouring the globe for new gas supply, pricing out poorer nations while maintaining opposition towards their development of reserves for domestic use. Europeans stand accused of climate hypocrisy, charges likely to be echoed at a COP notable for taking place in Africa.

Europe needs gas, and will for some time. The continent must reconcile short-term efforts to source new imports with long-term climate ambitions. Through more constructive gas diplomacy with the developing world and by accelerating domestic decarbonization, Europe can begin to repair its damaged climate credibility in Sharm el Sheikh. Doing so, Europe can reclaim international climate leadership by advancing low-carbon, energy-secure growth with partners in Africa and the developing world.

EnergySource

Nov 1, 2022

How Europe can salvage its climate credibility at COP27

By Michał Kurtyka and Paddy Ryan

Europe’s recent energy policies have begotten accusations of climate hypocrisy, as the continent blocks access to financing for gas projects in developing countries yet scours those countries for gas supplies for its own use. At COP27, Europe can—and should—responsibly reconcile those contradictions.

Climate Change & Climate Action Energy & Environment

NOVEMBER 1, 2022 | 4:00 PM WASHINGTON | 11:00 PM SHARM EL SHEIKH

Will the West’s competition with China get in the way of a clean-energy future?

By Joseph Webster and William Tobin

China uneasily straddles both sides of the energy transition. On the one hand, China is indisputably a world leader in numerous clean energy technologies, including electric vehicles, renewable generation, and supply chains. On the other hand, it is also the world’s largest carbon emitter and coal producer, and is constructing over half of the world’s new coal-powered electricity plants. With Western-China tensions rising and Beijing increasingly focused on energy security, there is a shrinking scope for climate cooperation. Perversely, however, US-China political competition could deliver climate benefits, as both sides will face pressure to provide clean energy leadership at COP27 and beyond.

At COP27, Western leaders will need to grapple with the emerging reality that two competing climate camps may be forming, one led by the West and another by China.

Not only will this dynamic unfold as a competition between economies in China and the West, but as a paradigm of global engagement and investment on climate mitigation and adaptation, particularly with respect to engagement with the developing world. For instance, in Africa, China’s trade volumes exceeded the United States’ by a factor of four. Moreover, China has not shied away from financing fossil fuel projects that rank high on the priority list of less developed countries with limited energy access. This has been welcomed by many African nations, as 43 percent of all people on the continent do not have access to modern energy services.

As the developing and developed world seek to resolve key issues on the agenda at COP27 such as loss and damages, closing the climate finance gap, and financing for natural gas projects in Africa, Western leaders will need to keep in mind that competition with China is likely to become a more prominent feature of climate negotiations.

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

OCTOBER 13, 2022 | 8:28 AM WASHINGTON | 3:28 PM SHARM EL SHEIKH

Cairo’s next steps forward on climate adaptation and human rights at COP27

By Shahira Amin

Skeptics are questioning Egypt’s leadership of COP27, citing human rights concerns and unideal environmental policies. Others are doubtful about the choice of Sharm el Sheikh as the host city. They argue that the holiday resort may not be the most suitable venue for a global conference of this magnitude and scale, given the logistical, organizational, and managerial challenges of hosting such a gathering.

Nevertheless, the opportunity to host COP27 has incentivized Cairo to take steps forward in regard to climate adaptation and human rights, even if a lot more needs to be done to show that authorities are serious about political and environmental reforms. Meanwhile, continued financial and moral support from the United States and other development partners—and further scrutiny of human rights violations committed—would ensure there’s no backtracking on the country’s progress in the past year.

Cairo needs to keep the momentum going and show that it is actually committed to continuing the progress made so far. To do this, it needs to speed up its green transition, taking steady and concrete steps to lower its emissions and shift towards renewables. Moreover, Cairo needs to free all political detainees, many of whom are imprisoned for nothing more than exercising their right to free speech and free expression. By doing so, it can expect to reap the rewards of its serious efforts: greater support from the international community and prosperity and stability for Egypt and all Egyptians.

MENASource

Oct 13, 2022

Egypt has made some progress on human rights and the environment in preparation for COP27. But there’s still more to be done.

By Shahira Amin

Skeptics are questioning Egypt’s leadership of the climate talks, citing human rights concerns and unideal environmental policies.

Economy & Business Energy & Environment

SEPTEMBER 22, 2022 | 8:28 AM WASHINGTON | 3:28 PM SHARM EL SHEIKH

What Egypt’s COP presidency means for how this conference may play out

By Lama El Hatow

Egypt has a huge role to play during its presidency of COP27, as all eyes will be geared towards how the country can lead by example. To put things in perspective, with 1.3 percent of the world’s population, Egypt accounts for only 0.6 percent of global greenhouse gas emissions (GHG) and ranks twenty-eighth on the global list of polluters. This number appears to be relatively small from a global perspective. Regionally, however, Egypt contributes 31 percent of the overall GHG emissions from North Africa and 13 percent of the overall GHG emissions from the entire African continent. Thus, Egypt has a great responsibility to establish a pathway towards a green energy transition.

This year, Egypt’s presidency for COP27 is very important as a middle-income, African, and Middle Eastern country hosting this event. Egypt may, therefore, be able to influence the agenda items and bring more focus to Africa’s increasing needs for adaptation and mitigation financing.

There are four main items at the top of the agenda: climate finance, adaptation, loss and damage, and increased ambition. Egypt has a significant role to play in all of them.

MENASource

Sep 22, 2022

Egypt is hosting COP27. What are the expectations?

By Lama El Hatow

As the host country for the 2022 United Nations Climate Change Conference, Egypt has a huge role to play during its presidency of the event, as all eyes will be geared towards how the country can lead by example.

Energy & Environment Middle East

The post Live updates from COP27 as leaders battle climate change amid global crises appeared first on Atlantic Council.

Turmoil and transition: Iraq twenty years after the invasion

Madeline Hart and Nour Alhajjeh — Thu, 03 Nov 2022 18:23:24 +0000

WATCH the sessions

The Atlantic Council’s Iraq Initiative held a two-day conference on “Turmoil and transition: Iraq twenty years after the invasion.” The event took place from Tuesday, October 25, through Wednesday, October 26, 2022. The conference brought together leading experts and senior-level American and Iraqi policymakers to explore Iraq’s past two decades and analyze the key challenges and opportunities confronting future generations in Iraq.

The conference presented a series of panel discussions, fireside chats, and keynote speeches. These explored questions on Iraq’s security landscape, its regional role in mediation and foreign policy in general, Iraq’s hydrocarbons sector and efforts to manage climate change and the challenges it has faced in its democratic transition.

DAY ONE

Highlights from Keynote Speech – Jennifer Gavito, Deputy Assistant Secretary of State for Iraq, Iran, and Public Diplomacy, US Department of State

Gavito discussed President Biden’s efforts to seek a more integrated Middle East by accelerating support to regional partners, including Iraq.
She also discussed the fruitful US-Iraqi partnership and emphasized that Iraq has faced and overcome many challenges, but now faces new challenges, including unemployment and lack of electricity. She stressed that the onus is on the new government to enact policies that improve lives of citizens and decrease corruption.
Gavito emphasized that Iraq’s youth are its most valuable resource, as an estimated 60 percent of the population is under the age of twenty-five.

Iraq’s Armed Forces, Security, and Counterterrorism

Gen. Abdel-Wahab Al-Saadi, Head of Iraqi Counter Terrorism Service, Republic of Iraq stressed that Iraq’s security challenges are at the heart of all of Iraq’s problems, particularly since 2003, although he noted that the US has helped build the capabilities of the Iraqi Army. Gen. Al-Saadi said that the Army still needs significant improvements and is attempting to do so with the help of the Ministry of Interior and other governmental institutions.
Gen. Michael D. Barbero, US Army Lieutenant General (Ret.), United States of America, emphasized the importance of continuing US aid and assistance to Iraq that is conditioned on solving corruption and the malign influence of Iran, as well as continuing US intelligence on the ground to fight counterterrorism in the country. Gen. Barbero stressed Iraq must restrict and remove corruption in security institutions in Kurdistan Regional Government.

Fireside Chat – Mohamed Ali Al-Hakim, Former Foreign Minister, Republic of Iraq

Al-Hakim emphasized the importance of the Strategic Framework Agreement (FSA) between the US and Iraq, calling it the groundwork of Iraq and America’s bilateral relationship.
He mentioned Iraq’s need to balance its relationships with both Iran and the United States.
He recommended that Iraq bring in more private sector companies into the country, which will increase not only political dialogue with the US, but also develop the economy and security situation in Iraq.
Al-Hakim also stressed the importance of increasing renewable energy similar to Egypt, citing Iraq’s abundance of sun for solar energy.

Iraq in the Region

Abbas Kadhim, Director, Iraq Initiative, Atlantic Council discussed the legacy of former Iraqi Prime Minister Al-Kadhimi. Kadhim also stressed that internal weakness opens the door for foreign influence and meddling, and recommended that Iraq heal internally, focusing on healing civic divides, particularly on ethno-sectarian lines.
Manal Radwan, Counsellor, Office of the Minister of Foreign Affairs, Kingdom of Saudi Arabia mentioned that Iraq has regained trust in the region, particularly in Saudi Arabia, although Iranian proxies in Iraq are still a major issue that threatens regional and international peace and security. Radwan also discussed the need to strengthen Iraq’s institutions and said that Saudi Arabia should work with Iraqis and other international partners to strengthen Iraq.
Aydın Selcen, Former Consul General of Turkey in Erbil, Republic of Turkey mentioned the close relationship between Turkey and Iraq, particularly in terms of trade, and commented that Turkey is the way for all Iraqis to bridge toward the West.
Sanam Vakil, Deputy Director and Senior Research Fellow, Middle East and North Africa Programme, Chatham House stated that Iran had a thirteen year head start on creating relationships with Iraq, and for that reason, Iran is the most important foreign player in Iraq today. Vakil emphasized that this relationship has heavily damaged Iraq’s internal stability, as Iran has used Iraq to assert its broader regional ambitions.

DAY TWO

Highlights from Welcoming Remarks – Olin Wethington, Board Director, Nonresident Senior Fellow, Asia Security Initiative, Atlantic Council; Chairman, Wethington International LLC

Wethington discussed Iraq’s unstable status and evolution, including past failures with possible solutions for various challenges such as employing constitutional reform.
He also emphasized that despite Iraq being an oil-dependent country, structural challenges remain present, adding entrepreneurship is still elusive, and opportunities in the private sector continue to be limited.
He suggested because of the widespread protests there will be public grievance and impatience, particularly among the youth and highlighted the country’s political fragility due to the inability to form a new government over a year since the last election.
He highlighted that the young generation in Iraq will shape the future of the country, stating “shaping the future is our primary collective task, hence the priority of this conference.”
Wethington stated, “the United States remains committed to a strategic partnership with the Iraqi people and their government and seeks to support a stable, prosperous, democratic, and unified Iraq.”

Energy, Economy, and the Environment

Majid Jafar, Chief Executive Officer, Crescent Petroleum, argued that the oil issue didn’t occur after the Ukraine war, or the pandemic, however, there has been a “structural chronic deficit in oil.” He added that because of the shortage of gas supply, Iraq must play a key role in supplying global markets after addressing its own needs.
Luay Al-Khateeb, Former Minister of Electricity, Republic of Iraq, examined the electrical interconnectivity, explaining that even though it provides a stable national grid and creates a competitive utility market within the MENA region, it will not resolve the electricity crisis in Iraq.
Sara Vakhshouri, Founder, SVB Energy International and SVB Green Access, said Iraq could have energy independence and decarbonization, stressing the importance of extracting its own natural gas and expanding oil production. She discussed that lack of investments in fossil fuels is a major reason for high energy prices and shortage in energy supplies. Further, she emphasized that energy production and security issues remain present due to problems with investment regulation which prevents Iraq from advancing domestically and globally.

Highlights from Keynote Speech – H.E. Hassan Nadhem, Minister of Culture, Republic of Iraq

His excellency highlighted Iraq’s cultural, educational, and technology, focusing on discussing the non-security centered issues.
His excellency mentioned that Iraq is determined to rebuild and renovate despite the existing challenges.
The minister stressed that Iraq has become a hub for agreement whereas in the past, it was for conflicts. Adding there has been change in the international and diplomatic relations but to see more effective transformation, this progress needs to be constant.
His excellency also emphasized Iraq’s clear improved relationship with United States regardless of the past and current challenges.

Iraq’s Democratic Experience

Feisal Al-Istrabadi, Founding Director, Center for the Study of the Middle East; McRobbie Professor in Global Strategic Studies, Indiana University, stressed the most difficult but important task for the new government in Iraq is to engender a sense of confidence in the Iraqi people and government. He also emphasized that corruption in Iraq would continue, and there will not be a significant reform.
Laith Kubba, Independent Advisor on Iraq, mentioned the previous protest movements and the impact they had on the Iraqi government. He emphasized the dysfunctional system failing to reform itself internally in Iraq. However, young individuals there are forcing an alliteration to this system.
Sarkawt Shamsuddin, Former Member of Iraqi Parliament, Republic of Iraq, emphasized that the political system in Iraq has a number of independent but inexperienced individual’s, which create inaccuracy in the process of decision-making in parliament. He added that the parliament is still truly controlled by the big political parties or “main players.” Highlighting the previous prime minister’s failure in conducting serious reforms including investments in securing the border, and his success in continuing mediation efforts with Gulf countries and Iran.
Shamiran Mako, Assistant Professor of International Relations, Pardee School of Global Studies, Boston University, emphasized finding ways for the government to revive confidence by providing necessary institutional reforms and engaging in more conciliatory politics, even when there are many strategic alliances. Professor Mako also stressed that Iraq was not a functioning democracy, it was always an elite game in terms of how government operates.

Nour Alhajjeh and Madeline Hart are Young Global Professionals with the Middle East Programs at the Atlantic Council.

Recap the 2022 event

Public Event Tue, October 25, 2022 • 9:00 am ET

Turmoil and transition: Iraq twenty years after the invasion

A conference exploring Iraq’s past two decades of change and upheaval and the key challenges and opportunities confronting future generations in Iraq.

Economy & Business Energy & Environment Iraq Middle East

The post Turmoil and transition: Iraq twenty years after the invasion appeared first on Atlantic Council.

Power projection: Accelerating the electrification of US military ground vehicles

Reed Blakemore, Tate Nurkin — Thu, 03 Nov 2022 13:45:28 +0000

FORWARD DEFENSE & GLOBAL ENERGY CENTER

ISSUE BRIEF

Public Event Thu, November 3, 2022 • 3:30 pm ET

To date, the US military has been driven by climate imperatives to begin to transition its ground vehicle fleet to electric power (in place of fossil fuels). But just as compelling rationales, if not more so, are the tactical, operational, and strategic advantages offered by electric power for military ground vehicles. This issue brief recommends an aggressive yet phased approach to vehicle electrification that will allow the US ground services to better compete in a future electrified battlefield that will support key elements of the future fight, from artificial intelligence to directed energy.

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Power projection: Accelerating the electrification of US military ground vehicles

Policy and industry experts discuss the way forward for the electrification of US military ground vehicles as part of the Defense Industrial Policy Series, hosted by the Global Energy Center and Forward Defense.

Climate Change & Climate Action Defense Policy Defense Technologies Energy Transitions

Battlefield electrification and the future fight

Today, Ukrainian troops are using quiet electric bicycles to slip past Russian front lines and wreak havoc against Russian units. In the future fight, many of the concepts that planners imagine–from human-machine teaming to edge-computing-powered platforms–will rely on electric power. To support that, future ground vehicles will require significant charging ability.

Military electrical vehicles and climate change

Climate change is neither a necessary nor a sufficient motivator for the US military to adopt electrified ground vehicles, although it has been a primary driver to date. Military electric vehicles can today offer tactical and operational advantages over their internal-combustion-powered peers quite apart from their climate bona fides. Indeed, adoption of electrified military vehicles would not be sustainable if the only benefit was to climate goals.

More than climate: The military value of electrical vehicles

Key advantages of electrified military vehicles lie in performance, power distribution, new and enhanced missions, sustainment, and logistics. Electric and hybrid vehicles have better torque and performance at low speeds, making for improved off-road handling. Moreover, they can move and idle with low sonic and thermal signatures, allowing for stealthier movement and silent reconnaissance watch. Electric tactical vehicles can serve as a power source for a range of onboard capabilities, from sensors, to small uncrewed systems, to directed-energy systems. Electric vehicles generally have fewer moving parts and can collect better data, allowing for less maintenance overall and a greater ability to maintain proactively.

Understanding the challenges of EV adoption

The US military will not adopt military EVs fleet-wide overnight. Years of progress must be made in energy density before heavier vehicles (tanks, for example) can be propelled by electric motors. Still, lighter vehicles can be fully electrified and heavier vehicles equipped with auxiliary power systems in the near term. Generating, storing, and distributing electric power to future formations of many electric vehicles will require advances in technology and in ground force operational concepts to be successful. Achieving electrification will also require the ground services to set forth clearer requirements and work better with the commercial sector–a persistent challenge for the Pentagon–to capture the innovation in electrified mobility that is primarily occurring in civilian contexts. The ground services will also have to manage supply chain risks introduced by existing bottlenecks for battery components.

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About the authors

Staff

Reed Blakemore

Director, Research and Programs

Geopolitics & Energy Security Energy Transitions

Fellow

Tate Nurkin

Forward Defense Indo-Pacific Security Initiative

China Defense Industry

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.

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Tobin, Webster quoted in Radio Free Asia on China’s role in the global response to climate change

ecarpen — Wed, 02 Nov 2022 18:18:21 +0000

The post Tobin, Webster quoted in Radio Free Asia on China’s role in the global response to climate change appeared first on Atlantic Council.

A new Europe-MENA energy interdependence: The role of hydrogen

Giampaolo Cantini — Wed, 02 Nov 2022 13:30:00 +0000

The war in Ukraine has created significant momentum for the European Union (EU) to diversify its energy sources and become independent from Russian oil and gas. In the short term, some of its major member states are striving to secure alternative supplies—mostly from the MENA region, the United States, a few African countries, and Azerbaijan—by increasing gas supplies both via existing pipelines and through LNG shipments.

However, the EU faces the challenge of establishing a new model of energy security, stable over the longer term and in line with its ambitious climate goals, as detailed in the EU Green Deal and in Fit for 55.

Even before the COVID and Ukraine crises, the idea of forging a new model of energy interdependence between the EU and North Africa was in the works, whereby the latter would be well suited to produce and export renewable energy, including green hydrogen. Vice President of the European Commission Frans Timmermans has consistently been a staunch advocate of such a vision.

For their part, several MENA countries have supported substantial growth over the last few years in the development of renewables, blue and green ammonia, and blue and green hydrogen in particular.

COP27 will likely provide additional impetus for renewed debates and initiatives in this field, with a view to promoting further investments in renewable energy in the MENA region as well as in interconnections with European markets.

Some exports of low-carbon products are already taking place by ship, as in the case of ammonia, a hydrogen-rich molecule that is often used in fertilizer but can also serve as a carbon-free fuel. Another way to transport hydrogen would be through existing gas pipelines, either blended with gas or on its own after conversion and refitting. North Africa and Europe are currently connected through a few gas pipelines, from Algeria and Libya to Italy and Spain.

There are also proposals, among some regional and international investors, on future development of dedicated hydrogen pipelines. According to some visions, even Saudi Arabia could be connected to Europe through this channel.

Another tactic for further strengthening EU-MENA energy cooperation would rely on interconnectors that convey renewable electricity. Egypt, Cyprus, and Greece have been working on such a project for some time, as have Italy and Tunisia.

Such models are not mutually exclusive, as diversification among them would bolster energy security.

There are, however, hurdles on the path toward such a new pattern of interdependence, especially in terms of the structure of expected demand for green hydrogen, the costs of production, and the scale of the investments required.

A recent report from the International Energy Agency (IEA) and other agencies highlights that to achieve a Paris-aligned pathway on a global scale, the supply of renewable and low-carbon hydrogen would need to increase from less than 1 million tons per year in 2020 to 140-155 million tons per year in 2030. This implies that production capacity would need to double every year from 2023 to 2030. In parallel, the production cost of renewable hydrogen would need to fall by 40-55 percent over the course of this decade, to almost $1 per kilogram in the most favorable locations.

According to the same source, the scale of investments required globally is equally enormous: “Hydrogen deployment consistent with a 1.5ºC-aligned pathway will require an annual investment of around USD 60-130 billion through to 2030, relative to the less than USD 1 billion invested annually, on average, over the last decade.”

However, the vicious circle of demand creation might be broken, on a regional scale, by the EU itself, as implied most recently by the REPowerEU plan. The proposal includes a production target of 10 million tons of green hydrogen by 2030 within the EU and the import of an additional 10 million tons through three corridors, one of which would run through the Mediterranean.

The scale of investments required globally is huge indeed: some sources estimate $7-8 trillion across the hydrogen value chain will be needed through 2050. This figure, however, would be comparable to investments of $5.7 trillion made in upstream oil and gas in the past decade.

Research and innovation in technology would most likely lead to a reduction in the costs of production, especially for electrolyzers. Several scenarios have been propounded on the possible evolution, throughout the current decade, of electrolyzer cost and of hydrogen transport. Under certain conditions that would lead to a decrease in costs, importing renewable hydrogen from North Africa by 2030 could become an economically attractive option for Europe.

Transport of renewable hydrogen (as complementary to onsite production) is a key factor in its future potential. Much will depend on renewable electricity generation cost differences and on the volume of investments required for developing adequate infrastructure (repurposing of pipelines, compressors, storage capacity, etc.). According to some analyses, for distances up to 3,000 kilometers, compressed hydrogen gas appears to be the cheapest option, particularly in the case of pipelines.

The plans underway throughout the MENA region are encouraging, even in light of continued insistence by some countries in the region to sustain new investments in oil and gas.

In the end, North African countries would have much to gain from a new energy interrelationship with Europe, with the possibility of retaining part of the production for their own markets and of benefiting from job creation, skills development, know-how, and a transition to a low-carbon economy.

The time has come for the governments of the wider Mediterranean, besides the EU institutions, to play a more active role, by developing an appropriate regulatory framework, optimizing public and private resources, and designing a long-term strategy of energy partnership with the aim of achieving broader goals of stability, growth, and transition to carbon neutrality by mid-century.

COP27 should provide the appropriate context for further advancing the development of renewable energy in all its aspects, including research, infrastructure, and transport modalities, as well as production. Climate goals can only be achieved on the basis of concrete plans and investment decisions, which should be be made as early as possible.

Giampaolo Cantini is a nonresident senior fellow 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.

Meet the author

Fellow

Giampaolo Cantini

Energy Transitions English

EnergySource Nov 1, 2022

China’s energy security realities and COP27 ambitions

By Joseph Webster, William Tobin

China Energy & Environment

EnergySource Nov 1, 2022

How Europe can salvage its climate credibility at COP27

By Michał Kurtyka and Paddy Ryan

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

Learn more about the Global Energy Center

The post A new Europe-MENA energy interdependence: The role of hydrogen appeared first on Atlantic Council.

Does the IRA make US offshore wind the “next big thing?”

Joseph Webster and Elina Carpen — Tue, 25 Oct 2022 18:09:56 +0000

The Inflation Reduction Act (IRA) could transform US energy markets and accelerate clean energy adoption. In it, offshore wind (OSW) received a major boost, and it could emerge as the “next big thing” in US clean energy. In addition to production and investment tax credits, the legislation will open up new US territories to clean energy development. Still, there are considerable uncertainties surrounding the cost and availability of OSW-relevant maritime vessels, including wind turbine installation vehicles, and permitting remains a major challenge. Follow-on legislation to address deficiencies in the US shipbuilding sector and the permitting process may be needed for US OSW to reach its full potential.

What’s in the bill: Tax credits

One of the bill’s most important provisions is the energy investment tax credit (ITC), which provides a credit of up to 30 percent for projects that begin construction before 2026. Projects must meet prevailing wage and apprenticeship labor requirements to receive the full credit.

The production tax credit (PTC) portion of the bill extends credits to OSW projects through at least 2033 and ensures that projects placed in service after 2021 are eligible for full credits. In order to obtain full credits, projects must meet wage and employment requirements.

Domestic content requirements for PTCs are lower for OSW than for comparable onshore projects as policymakers recognize that US OSW supply chains remain in their infancy. For projects that begin construction before 2025, the “adjusted percentage” of all manufactured products that are “mined, produced, or manufactured” in the United States is 20 percent for OSW facilities, versus 40 percent for onshore facilities. Domestic content adjusted percentages, for both onshore and offshore wind, rise to 55 percent by 2028.

As is true for other clean energy projects, offshore wind producers must claim either the PTC, which can be claimed for ten years, or the ITC, which is a one-time benefit. The economics of claiming the PTC or ITC are distinct, as the production and investment credits treat domestic manufacturing very differently.

The bill also grants a 45X credit equal to 10 percent of the sales price of a related offshore wind vessel for domestically produced ships. Given that US wind turbine installation vessels are roughly 50 percent more expensive (and less capable) than ships produced in other countries, however, this measure will likely have only a limited impact on the domestic wind turbine installation vessel industry. Since US national security, economic, and environmental interests require a healthy civilian and military maritime shipbuilding complex, this area may be the focus of follow-on efforts in Congress.

New areas for development

The IRA opens up additional areas for lease in the eastern Gulf of Mexico and the Atlantic—off the coast of North Carolina, South Carolina, Georgia, and Florida—that had previously been placed off limits by the Trump administration. The legislation also requires the federal government to issue calls for information and nominations for offshore wind leases by September 30, 2025 within the exclusive economic zones of Puerto Rico, Guam, American Samoa, the US Virgin Islands, and the Northern Mariana Islands. Offshore wind in Guam could present national security benefits, as the island is at the crux of the United States’ Indo-Pacific strategy but is overwhelmingly dependent on imported petroleum products.

International perspectives

The IRA’s offshore wind provisions have largely been greeted with enthusiasm outside of the US. The EU Commissioner of the Economy, Paolo Gentiloni, said that the IRA was aligned with European environmental and economic agendas. Similarly, Frans Timmermans, vice president of the European Commission, remarked at the UN General Assembly that the “IRA is a wonderful thing,” and noted the OSW provisions that have raised investment in projects off the coasts of New York and Maine. Yet Timmermans also warned the US against retreating towards protectionism and expressed unease about the IRA tax provisions that favor domestic content.

European energy corporations expressed enthusiasm about OSW opportunities introduced by the IRA. Norway-based Equinor praised “historic investments for US energy, creating certainty for offshore energy leasing and lowering emissions by encouraging offshore wind.” According to Denmark-based Ørsted’s US CEO, David Hardy, OSW tax credits will likely accelerate development of their US OSW projects.

Outside of Europe, many analysts in developing nations have praised the impact that the IRA, and by extension the OSW provisions, will have on their own clean energy development. The PTCs’ encouragement of the production of new OSW projects in the United States will reduce the cost of clean energy on a global scale, allowing developing countries to decarbonize more affordably. According to Fabby Tumiwa, executive director of the Institute for Essential Services Reform, an Indonesian energy think tank, the PTCs are good for developing countries like Indonesia “due to spillover effects because of lower costs.”

Implications for US offshore wind development

While extending production and investment incentives will provide an important fillip for the US offshore wind industry, significant challenges remain. Onerous permitting, siting, and leasing requirements continue to delay projects, while the US currently lacks a significant civilian offshore wind maritime capacity, especially for wind turbine installation vessels. To address these concerns, Congress might seek to streamline the permitting process and review maritime shipbuilding policies. The Inflation Reduction Act is a major step forward for the US offshore wind industry, but more congressional efforts are needed.

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

Elina Carpen is a Fall 2022 Young Global Professional 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.

EnergySource Sep 20, 2022

The Inflation Reduction Act will accelerate clean hydrogen adoption

By Joseph Webster

The IRA makes the production of clean hydrogen far more attractive to investors and generators. Carbon-free hydrogen could fall dramatically in cost by the end of the decade, greatly increasing its competitiveness against dirtier hydrogen sources.

Energy & Environment Energy Markets & Governance

EnergySource Aug 8, 2022

How to build on the Inflation Reduction Act and incentivize truly clean electricity

By Ameya Hadap

The production tax credits in the Inflation Reduction Act will lift up every carbon-free source of electricity in the United States. But there is no guarantee these clean energy sources will actually displace carbon from the grid. More legislation is needed to build on the bill and close the gap between clean energy deployment and carbon mitigation.

Energy & Environment Energy Transitions

EnergySource Jun 27, 2022

30 GW by 2030: Policies for expanding US offshore wind capacity

By Joseph Webster

Energy & Environment Energy Markets & Governance

Learn more about the Global Energy Center

The post Does the IRA make US offshore wind the “next big thing?” appeared first on Atlantic Council.

Pathways for DOE-enabled grid innovation

Ameya Hadap — Fri, 14 Oct 2022 13:40:00 +0000

On August 30, the US Department of Energy (DOE) issued a request for information for the Grid Resilience and Innovation Partnership Program, a $10.5-billion initiative from the Infrastructure Investment and Jobs Act to modernize and reinforce US transmission and distribution networks. Here are two areas the DOE should address when administering this program.

1.) Accelerate the integration of grid-enhancing technologies.

New transmission development in the United States faces considerable roadblocks. The buildout of long-range transmission that would connect generators with faraway load centers is plagued by not-in-my-backyard sentiment, cost-sharing disagreements, and anti-competitive pressure from utilities. Transmission builders would likely clamor for the inclusion of the cost of new lines in their rate bases and hike electricity ratepayers’ bills accordingly, and a transmission investment tax credit that could lower capital expenditure and potentially ease pressure on ratepayers did not make it into the final draft of the Inflation Reduction Act. Policymakers have tried to tackle the issue through permitting reform bills and Federal Energy Regulatory Commission (FERC) rules, but both are being buffeted by political headwinds.

Until the United States marshals the political capital to build new transmission in a cost-effective and fair way, the country will have to make do with what it has. The best way to do so is through the deployment of grid-enhancing technologies (GETs) that optimize power flow across existing grids, giving new life to underutilized electrical infrastructure.

There are two main GET classes. The first is dynamic line-rating (DLR) systems, which give real-time data on power lines’ true capacity. Most power lines are currently tagged with an unchanging, nameplate capacity, and they carry a set amount of current no matter the external conditions. But in actuality, these conditions—which include wind speed, air temperature, humidity, and other weather-related factors—have a profound impact on the amount of current a power line can carry, often creating more capacity. Static capacity ratings do not allow grid operators to take advantage of weather-induced excess capacity and increase power delivery, but DLR systems would. In extreme cases, DLR systems can also raise the alarm if a power line’s true capacity is lower than its nameplate capacity at a particular time, helping grid operators avoid pumping too much current through it.

The second class of GETs consists of devices that balance the flow of power around the grid, encompassing both topology optimization software and advanced power flow control devices. These systems ease congestion by automatically reconfiguring grid flows and redirecting current from overburdened to underused lines, ensuring safe delivery. Grid congestion is extremely costly, and it often leads to curtailment of renewable resources before any fossil-fuel generation sources. This class of GETs would thus maximize renewable uptime by circumventing bottlenecks, displacing more carbon and making investment in renewables even more attractive.

These two GET classes are best suited for different parts of the electrical network, but together, they can unleash the flow of much more power from source to endpoint and correspondingly reduce the need for new lines. They can also improve grid resilience and responsiveness during extreme weather conditions that jeopardize current delivery.

FERC recognized the value of GETs in an April notice of proposed rulemaking, and for the US grid to be able to affordably keep pace with economy-wide electrification while steering clear of debilitating political wrangling, DOE should too. The three funding streams in the Grid Resilience and Innovation Partnership Program, all of which GETs would fit into, are a great start.

2.) Support the development of high-voltage dry-air transformer equipment.

On September 21, the Senate ratified the Kigali Amendment to the Montreal Protocol, signing on to the global phase-out of hydrofluorocarbons. These gases are a subset of the broader fluorinated gases category, whose member gases are widespread in refrigeration and insulation applications. Fluorinated gases have thousands of times more global warming potential (GWP) than CO₂, meaning that for a given amount of mass, they trap thousands of times more heat.

Now that the United States has officially kicked off the process of ending hydrofluorocarbon use, it is time to shift focus to the worst fluorinated gas of them all: sulfur hexafluoride, or SF₆.

SF₆’s GWP is 23,500 times that of CO₂ over a hundred years. It is the most potent greenhouse gas (GHG) in the atmosphere. This makes it an excellent insulator for electrical transformer equipment (also known as “switchgear”) operating at high voltages, but it also makes it extremely deleterious to the climate, especially as high-voltage and ultra-high-voltage transmission networks expand over the coming decades—the global electrical switchgear market is forecast to reach $152.5 billion by 2029, and gas-insulated switchgear, which is particularly space-effective and mostly employs SF₆, is projected to increase greatly in market share. Already, global annual SF₆ emissions—the vast majority of which emanate from switchgear—total 8,100 metric tons, or the equivalent GHG footprint of 100 million cars.

Several jurisdictions are taking action. California has an SF₆ phase-out order in place for switchgear, as does the European Union. Massachusetts has instituted SF₆ emissions limits for transformer substations. US and global demand for cleaner switchgear equipment is growing inexorably.

To replace SF₆, some developers have proposed turning to other fluorinated gases with lower GWPs. But this swapping of greenhouse gases would still introduce undesirable climate risk to the electrification-driven transition.

A more climate-conscious solution is dry-air transformer equipment, which is insulated by a gas admixture that mimics the makeup of the atmosphere and thus has a GWP of zero. A number of major original equipment manufacturers (OEMs), including Siemens Energy, Schneider Electric, and Mitsubishi Electric Power Products, have made breakthroughs on certain key dry-air switchgear components, but only Siemens Energy currently has a dry-air suite that can operate at high voltages.

DOE-led initiatives like the Grid Resilience and Innovation Partnership Program will be necessary to realize a complete high-voltage dry-air equipment ecosystem in the United States. Federal support would give OEMs the resources to develop high-voltage dry-air technologies that are compact and safe (dry-air equipment has to compensate for its poorer insulation ability per unit mass with much higher pressure), train their technicians, and achieve the economies of scale needed for cost competitiveness. Using program funding to back dry-air switchgear development would position the United States as a leader in the rollout of high-value, high-demand technologies that enable emissions-free electrification.

While often talked about as an indeterminate means to an electrified end, the grid is made up of highly intricate physical assets that need to be optimized to propel the energy transition, not hinder it. GETs and dry-air switchgear are just two of the ways DOE can orient the $10.5 billion to make sure the electrical networks of the future are nimble, secure, and climate-friendly.

Ameya Hadap is a program assistant at the Atlantic Council Global Energy Center.

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Former staff

Ameya Hadap

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

EnergySource Oct 11, 2022

Riyadh crosses the Rubicon toward Russia

By David L. Goldwyn, Andrea Clabough

OPEC+ ministers’ decision to slash oil production will boost Russia’s revenues and aid Putin’s war effort tremendously. It could signify a marked realignment of Saudi Arabia’s strategic priorities away from Washington.

Energy & Environment Geopolitics & Energy Security

EnergySource Oct 4, 2022

What to know about fusion

By Ameya Hadap

Energy & Environment Nuclear Energy

Learn more about the Global Energy Center

The post Pathways for DOE-enabled grid innovation appeared first on Atlantic Council.

Atlantic Council’s Regional Clean Energy Outlook Conference covered by Anadolu Agency

Grady Wilson — Thu, 13 Oct 2022 20:12:00 +0000

The post Atlantic Council’s Regional Clean Energy Outlook Conference covered by Anadolu Agency appeared first on Atlantic Council.

Arslan joins TRT World to discuss the themes of the Atlantic Council’s Regional Clean Energy Outlook Conference

Grady Wilson — Tue, 11 Oct 2022 20:06:00 +0000

The post Arslan joins TRT World to discuss the themes of the Atlantic Council’s Regional Clean Energy Outlook Conference appeared first on Atlantic Council.

What to know about fusion

Ameya Hadap — Tue, 04 Oct 2022 15:18:52 +0000

For several decades, fusion has been touted as the paragon of energy. It would provide an essentially unbounded supply of secure, carbon-free power and heat for non-electricity applications, while the lack of long-lived waste and the impossibility of a runaway fusion reaction only add to its value proposition. But though fusion technology has advanced radically since the first lab-based demonstration in 1932, a reaction that produces more energy than it consumes—known as a net energy gain reaction—has remained out of reach.

That could change soon. Over the past several years, fusion has leapt out of the academic domain and into the commercial, with fusion companies pushing towards net energy production, attracting nearly $5 billion in private capital, and prompting the US government to map out a “bold decadal vision” for fusion energy. With more than thirty private fusion businesses making strides towards commercial deployment on a timeline consistent with the demands of the energy transition, the time to get familiar with the industry’s internal variations, multi-sector potential, and policy needs is now.

The fusion technology landscape

Fusion involves the nuclei of two light elements overcoming the forces between them under extreme temperatures and pressures and joining, creating the nucleus of a new, heavier atom and releasing massive amounts of energy in the process. It is the phenomenon that powers the stars. In pursuit of the same self-sustaining energy production, fusion organizations are pursuing exceptionally diverse methods to get there.

The most common approach is magnetic confinement fusion, implemented by several private sector organizations along with major international fusion projects like ITER and the Joint European Torus. In fusion, the fuel takes the form of a superheated plasma, too hot to be in direct contact with any materials. Magnetic confinement fusion solves this problem by suspending the electrically conductive plasma in magnetic fields and steering it around a vacuum chamber. In 2021, Commonwealth Fusion Systems successfully demonstrated its high-temperature superconductor (HTS) magnets, setting the stage for magnetic confinement fusion to be conducted in facilities close in size to an average coal- or gas-fired power plant, rather than the gargantuan compounds in which experiments had previously been run.

The other major approach is inertial confinement fusion. This method involves heating a very small fuel “pellet” using a laser or particle beam to compress the pellet so intensely that a fusion reaction occurs, creating a small explosion and generating energy. Inertial confinement fusion follows the same principles as the fusion reactions that take place when thermonuclear weapons are detonated, but on a much smaller, nondestructive scale. In an inertial confinement fusion power plant, a steady series of these explosions would produce consistent energy output.

The biggest names in the inertial confinement space are state-run research facilities including the US-based National Ignition Facility (NIF) and the French Laser Mégajoule, but those facilities have historically been focused on nuclear weapons research. NIF, however, achieved a major milestone last year by reaching a “burning plasma regime,” in which the fusion reactions generate most of the heat in the system rather than the lasers themselves. Companies like Marvel Fusion, Focused Energy, and Xcimer Energy are vying to build off this progress and bring inertial confinement fusion to market as a reliable energy source.

Most other approaches draw from one or both of these core methods but incorporate key innovations. First Light Fusion, for example, also uses a fuel pellet, but instead of reaching critical temperatures using lasers, it fires a projectile at the pellet at an incredible velocity—with a goal of 20 kilometers per second—causing the pellet to implode and undergo fusion. Helion Energy injects and accelerates two plasmas in field-reversed configurations towards each other until they collide and fusion conditions are reached, with the aim of directly capturing the subsequent energy rather than using the heat to drive turbines. General Fusion has opted for magnetized target fusion, which uses a magnetic field to confine and compress a plasma to extreme densities but surrounds it with a liquid metal liner. HB11 Energy’s non-thermal laser-driven fusion process, supported by experimental results, would avoid the need for high temperatures entirely, while Avalanche Energy’s unique “orbitron” configuration would theoretically allow its system to fit in a backpack.

Raw materials and supply chains

In the sun, fusion involves two protons (the nuclei of hydrogen atoms) that go through a complex series of reactions called the proton-proton chain, producing energy, a helium nucleus, and various other subatomic particles along the way. For a number of reasons, though, recreating solar fusion would be infeasible on Earth, so scientists have widened their scope, pursuing fusion with other raw materials.

Most projects rely on the fusion of a deuterium and a tritium atom—isotopes of hydrogen with one and two neutrons, respectively—due to its relative ease of execution and its high experimental energy yields. Others make use of proton-boron fusion, while still others would fuse deuterium and helium-3, an isotope of helium with only one neutron instead of the usual two.

And as with all other energy sources, differences in input materials lead to differences in supply chain considerations. Deuterium makes up just under one in 5,000 hydrogen atoms in the ocean, offering a virtually inexhaustible supply. Tritium is in more limited reserve, with only 25 kilograms stockpiled globally and decaying quickly. There are paltry helium-3 resources on Earth, and attempts to mine the Moon’s natural helium-3 deposits carry doubts. Meanwhile, boron production, though set to surge considerably due to boron’s use in several clean energy applications, is currently highly concentrated, with almost two-thirds of global boron output coming from just four mines in Turkey.

But innovative solutions in varying stages of development could fill in these supply chain gaps. Deuterium-tritium (D-T) power plants are exploring the use of “breeding blankets” that contain lithium and are designed to react with the free neutrons generated by the fusion reaction, producing tritium to sustain the reaction without refueling. Some breeding blankets under development may use enriched lithium to increase reactivity, employing novel methods such as crown-ether enrichment and the ICOMAX process. Various research institutions, including the Massachusetts Institute of Technology and Oak Ridge National Laboratory, are running experiments to assess the ability of low- or no-enrichment lithium blankets to breed an adequate supply of tritium, with results expected in 2023.

To meet helium-3 supply needs, one fusion company, Helion Energy, has ventured to keep its helium-3 production planet-side, fusing deuterium atoms in a proprietary process. Those sourcing boron for fusion purposes are looking to piggyback on broader energy sector demand, with emphasis on variety, redundancy, and technological self-sufficiency.

Regulatory frameworks and approaches

Fusion is not explicitly mentioned in the Atomic Energy Act of 1954, which governs all civilian use of nuclear power and radioactive materials. The act defines atomic energy as “all forms of energy released in the course of nuclear fission or nuclear transformation.” But in 2009, upon the recommendation of its staff, the Nuclear Regulatory Commission (NRC) extended its jurisdiction to commercial fusion energy devices.

In the same decision, though, the NRC kicked the regulatory can down the road, choosing instead to wait for fusion technologies to become more mature before settling on a specific approach, or until it was compelled to by Congress. That time came in 2019, when the Nuclear Energy Innovation and Modernization Act became law and mandated the development of a technology-inclusive regulatory framework for “advanced nuclear reactors”—a category in which the statute included fusion—by the end of 2027.

To that end, the NRC has a few options, which it laid out in a recent white paper. One of them is to regulate fusion energy devices under Parts 30 through 37 of Title 10 of the Code of Federal Regulations. These provisions govern the use of “byproduct material,” which is defined in the code as all radioactive material that is not itself fissile nor fertile (meaning material that can absorb neutrons and decay into fissile material) but is instead created from fission reactions. Given the predominance of tritium in fusion reactions, the NRC has thus far regulated fusion research and development (R&D) projects under the Part 30 regulatory framework. The byproduct material framework has allowed early-stage fusion endeavors to move from milestone to milestone without overly onerous regulation. However, the approach focuses on the material used or produced within a fusion device and whether that fusion device would be considered an accelerator, so there may be some disconnects under this framework between existing regulations and the commercial-scale facilities that emerge. Limited updates or extensions to this framework, which NRC staff have explicitly indicated as their preferred route and would mirror policies currently being rolled into legislation in the United Kingdom, could make it more fit for purpose.

Another approach would be to classify fusion energy devices as “utilization facilities,” which, under the Atomic Energy Act, are facilities that use atomic energy in a way that has a bearing on national security or public wellbeing. Under NRC regulations, a utilization facility is primarily defined to be a fission reactor. Still, as the NRC noted in its 2009 paper, the NRC could expand the definition set forth in its regulations to include fusion within its utilization regulations if the NRC determined that “such devices are of significance to the common defense and security, or could affect the health and safety of the public.” But doing so would subject fusion projects to the same highly stringent set of regulations as fission reactors, which present a completely different risk profile. And it would impose additional requirements for capitalization, licensing and permitting, and workforce development.

The third regulatory option would be to create a hybrid framework, melding aspects of both byproduct material and utilization facility statutes. This would require the identification of decision criteria that could sufficiently separate different fusion designs in order to regulate each of them properly. After assessing designs based on these criteria, the NRC would then move them individually into the byproduct material or utilization facility categories. While this would ostensibly offer a level of tailored control over the regulation of commercial fusion facilities, it could also foment uncertainty among developers and investors, who would be in the dark about the requirements their project must meet until well after significant capital expenditure.

The NRC now has a little over five years to chart a regulatory course, existing or bespoke, that addresses fusion’s safety concerns yet allows the industry to grow at the necessary pace to play a sizable role in decarbonization efforts by 2050. Hearings in the next few months and an expected decision date in 2023 could move that timeline even closer.

Opportunities for policy intervention

In both allies like the United Kingdom and rivals like China, policymakers and planners are putting the pieces in place to enable commercial fusion development. For the United States to keep up, US policymakers will need to play their role in the continued growth of the industry.

One way they can do so is through public-private fusion partnership models, like a newly announced Department of Energy initiative; milestone-based, technology-neutral approaches would drive the entire industry towards maturity without bailing out companies that fail to hit targets. As fusion’s market size and companies’ investment needs grow, these programs will need to scale accordingly.

Consistent support for US national labs, universities, and government-led fusion R&D, with an express directive to assist commercialization efforts, is another key lever for policymakers. This includes ITER, NIF, the Princeton Plasma Physics Laboratory, and Advanced Research Projects Agency-Energy (ARPA-E) projects. Strong levels of annual funding for commercially-oriented projects would enable these institutions to develop a skilled workforce and find solutions to the science and materials problems that commercial fusion companies still face on their way to a net energy gain reaction.

This support should be meted out with the understanding that a net energy gain fusion reaction is not the same as a net energy gain fusion power plant. A fusion power plant will likely need colossal amounts of energy for its magnets, lasers, and other equipment, and heat-to-electricity transfer always entails some energy loss. To that end, smart public support for fusion energy would impel progress towards a deployable net energy gain fusion reaction, but it would also fund R&D for less energy-intensive facilities and more efficient capture of electricity in parallel.

Federal procurement support and coordination with international partners would help secure availability and production capacity for both primary inputs and highly complex end products like HTS magnets and lasers. And legislation strengthening and formally extending the NRC’s statutory authority could eliminate regulatory ambiguity if unforeseen issues arise during the rulemaking process.

Fusion energy could eventually underpin the entire US energy system, but it cannot do so without solid policy backing and regulatory clarity. The private capital-fueled fusion boom and international policy headway proves that the time to engender that support is now. If not, fusion ventures that prove technological maturity and reach net energy gain will run out of runway before they can turn deployable fusion energy from a quixotic idea into a staple on the grid.

Ameya Hadap is a program assistant at the Atlantic Council Global Energy Center.

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Energy & Environment Energy Transitions

EnergySource Aug 31, 2022

Closing nuclear generation amounts to running in place on climate

By Stephen S. Greene

Retiring nuclear plants is the wrong climate move. It jeopardizes energy security, makes grids less reliable, and forces clean energy that could be better used displacing fossil fuel generation to make up for the shortfall.

Energy & Environment Energy Transitions

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The Inflation Reduction Act reinforces nuclear energy’s role as a climate solution

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The IRA provides much-needed support to the US nuclear energy sector. Its provisions will allow the continued operation of existing reactors along with the development of next-generation projects.

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The post What to know about fusion appeared first on Atlantic Council.

Ryan quoted in Ars Technica on the diversification of EV battery supply chains

ecarpen — Mon, 26 Sep 2022 15:27:22 +0000

Director, Research and Programs

The post Ryan quoted in Ars Technica on the diversification of EV battery supply chains appeared first on Atlantic Council.

Alternative battery chemistries and diversifying clean energy supply chains

Reed Blakemore, Paddy Ryan, William Tobin — Tue, 13 Sep 2022 04:00:00 +0000

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The energy transition from fossil fuels to low-carbon energy sources will stimulate great demand for energy storage, and batteries will play an essential role in enabling the electrification of the transportation sector and reducing the intermittency of renewable electricity generation in the power sector. Presently, lithium-ion batteries predominate in both electric vehicle and grid storage applications. However, the continued expansion of these sectors will drive demand for minerals in the lithium-ion battery supply chain by a staggering degree.

Demand for lithium alone is projected to grow by 42 times from 2020 to 2040 and could reach a structural undersupply with a deficit of 1.75 million metric tons by 2030. Geopolitical risks also abound in the battery value chain. Russia controls 21 percent of global class 1 nickel production, and China controls 80 percent of global cobalt processing capacity.

Utilizing battery chemistries with more-readily available supply inputs, as an alternative to lithium-ion batteries, could alleviate supply-chain concerns while meeting a wide array of energy storage needs—including utility-scale and distributed energy storage, which are likely to become increasingly important as a result of continued renewable energy deployment. This paper outlines several alternative battery technologies including new lithium-ion battery designs and sodium-ion, liquid metal, sodium-sulfur, and zinc-ion batteries. It also explores the supply-chain implications of greater shares of minerals like iron, phosphate, silicon, calcium, and antimony; how these alternatives may reduce the pressure on lithium-ion supply chains, while improving the performance of an ever-widening array of energy storage contexts; and what policies can ensure that the energy transition does not become overly reliant on a single stationary storage technology.

Three overarching categories are used for this analysis: battery cost and marketability, performance, and supply-chain risk. Weighing the interaction between these three categories, use cases are proposed for each novel technology, in conjunction with an assessment of their overall viability and prospects for entering development at scale as part of an “big tent” approach for expanding a sustainable energy storage economy.

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summary

The Atlantic Council Global Energy Center devised a set of scored values meant to represent the characteristics of each battery chemistry in terms of its supply security, cost-effectiveness, and performance. The values assigned to each battery are positive and are meant to be interpreted relative to each other. See the full report for a detailed description of the methodology.

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Geopolitics & Energy Security Energy Transitions

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The post Alternative battery chemistries and diversifying clean energy supply chains appeared first on Atlantic Council.

In an ecosystem of growth for batteries, a diversity of options is key

William Tobin — Tue, 13 Sep 2022 04:00:00 +0000

In a net-zero world, the market for batteries grows massively from current levels and could become one of the defining growth industries of the 21^st century. As intermittent renewable energy resources such as wind and solar compose an increasingly higher percentage of the electricity mix, energy storage solutions to provide sufficient supply of electricity during periods of lower solar and wind production will be essential.

As the technology with roughly 90 percent of current market share for grid-level battery storage, and the entire market for electric vehicles, demand for lithium-ion batteries is poised for particularly remarkable expansion. Logically, global demand for lithium itself—a critical mineral which is highly concentrated across the extraction and processing segments of the value chain—will surge as a result. In fact, according to the International Energy Agency (IEA), demand for the mineral is projected to grow by a staggering forty-two times from 2020 to 2040 under a Paris Agreement-compliant climate scenario, and a potentially higher rate under the IEA’s Net Zero by 2050 scenario. Global underinvestment in lithium supply may contribute to a widening shortage of lithium carbonate-equivalent by the year 2030, a gap which will require $42 billion of new investment to close, according to BloombergNEF.

However, lithium-ion batteries are not the only option, particularly for grid-scale energy storage solutions. In fact, there are a suite of alternative battery technologies (otherwise known as “chemistries”) which can alleviate the monumental risks to security of supply which confront the lithium-ion battery industry by utilizing minerals and metals not utilized in lithium-ion batteries and unfettered by the same supply constraints.

There are numerous battery chemistries available or in the demonstration stage—in the realm of flow batteries alone, there is nearly one flow battery for every element in the periodic table. The Global Energy Center’s report, “Alternative Battery Chemistries and Clean Energy Supply Chains,” unpacks several alternatives of particular interest and growing technological and commercial maturity: liquid-metal, sodium-ion, sodium-sulfur, and zinc-ion batteries.

Alternative battery chemistries are not a panacea to the supply issues which currently hamper the lithium-ion battery value chain. Each alternative carries its own suite of tradeoffs. In the report, each chemistry is assessed over three overarching characteristics: performance, price and competitiveness (across all stages of the value chain), and supply security. Through this lens, a diversity of market niches emerges for individual battery chemistries.

While alternatives to lithium-ion batteries cannot generally compete with the energy density of the lithium-ion chemistry, this ultimately may not matter for energy storage applications. Although in an electric vehicle, weight and volume come with a premium, the same is not universally true for grid storage. With a slightly larger grid storage battery, the same amount of energy as a lithium-ion battery can be stored in a larger liquid metal or sodium-ion counterpart, potentially for less money in capital expenditure, and with much less supply risk. In this sense, the economy of scale for lithium-ion battery technologies may even benefit alternative battery technologies. As the electric-vehicle value chain absorbs market capacity for lithium-ion, paying a premium for the technology’s energy density, versatile alternative battery chemistries may be able to provide value on the grid.

For energy storage applications, there is no question that lithium-ion is the sports car. Its status as the lightest metal, along with its electrochemical desire to shed electrons, make it the king of battery metals, unlikely to be usurped. However, in a mature battery market, there is also going to be room for a four-door coupe.

As is the case for all emerging technologies, investment in these alternative battery chemistries will be the key to their ability to fill niches as they emerge. As the energy storage ecosystem evolves, the magnitude of its growth will begin to make the case for this investment. The California grid operator CAISO now says that batteries comprise 6 percent of the state’s maximum on-peak capacity, compared to 0.1 percent in 2017. This constitutes a sixty-fold increase in market size in five years. In Texas, on-grid battery capacity is set to more than triple from current levels by June 2023 from 2,300 megawatts (MW) to 7,000 MW. The Inflation Reduction Act’s provision creating an investment tax credit for standalone energy storage systems will only accelerate the energy storage sector’s growth.

Therefore, policymakers should consider several areas for action to ensure that markets are best positioned to allow alternative battery technologies to reach full commercial deployment, in a manner which is technology-agnostic.

Firstly, the national RD&D enterprise needs to step up existing support for alternative battery innovation efforts. While many technologies are market-ready, other technologies still face technological risk. This will involve amplifying efforts such as the National Science Foundation’s funding for sodium battery research and research already being conducted on next-generation batteries in US national labs.

Secondly, the United States and governments worldwide must undertake a strategic shift on minerals security policy. Policymakers should consider developing incentive structures which incentivize utilization of battery material inputs which are more abundant or “de-risked” in comparison to lithium or other critical minerals such as cobalt and nickel. The Inflation Reduction Act attempts to make its mark on the resiliency of energy storage supply chains primarily by incentivizing mineral sourcing from friendly nations. As an alternative, policymakers should consider incentives that reward the use of materials which are not supply-constrained, as opposed to sourcing materials from specific geographies. This will accelerate the process by which alternative battery chemistry value chains will achieve scale and could provide a demand pull for materials which are abundant in existing supply chains.

Thirdly, policymakers should seize upon existing international partnerships such as the Minerals Security Partnership and expand their scope to include battery technology diversification as a means of alleviating supply risk. In both previous US presidential administrations, the national security imperative to act on critical minerals has heightened. However, the scope must be widened to include how methods to substitute for critical minerals can contribute to global partnerships for supply-chain assurance.

Lithium-ion batteries will be crucial to the success of the energy transition and are likely to remain irreplaceable for many electric vehicle applications. Nonetheless, an all-of-the-above approach is likely to be increasingly salient to energy storage solutions going forward, particularly for grid storage solutions. The above considerations may enable policymakers to get ahead of markets and provide the conditions necessary for alternative battery chemistries to carve their niche on the grid.

William Tobin is a program assistant at the Atlantic Council Global Energy Center.

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In-Depth Research & Reports Sep 13, 2022

Alternative battery chemistries and diversifying clean energy supply chains

By Reed Blakemore, Paddy Ryan, William Tobin

In an ecosystem of growth for batteries for grid storage and electric vehicle applications, alternatives to the lithium-ion battery chemistry may play an increasing role in alleviating supply chain woes and enabling deep decarbonization.

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The post In an ecosystem of growth for batteries, a diversity of options is key appeared first on Atlantic Council.

Younus in Profit: Millions of homes have been destroyed. Could we rebuild them with solar rooftops?

Atlantic Council — Sun, 11 Sep 2022 20:55:00 +0000

Original Source

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#BritainDebrief – What are the origins of Europe’s energy crisis? | A Debrief from Dr. Helen Thompson

Ben Judah — Fri, 09 Sep 2022 22:22:57 +0000

What are the origins of Europe’s energy crisis?

As concerns continue to grow over Europe’s capacity to endure a winter with less Russian natural gas, Senior Fellow Ben Judah spoke with Dr. Helen Thompson, Professor of Political Economy at Cambridge University, on Europe’s energy, climate and geopolitical reckoning. What are the historical origins of Europe’s predicament? Is the current crisis only caused by war in Ukraine? Why have Western Europe politicians become more “energy illiterate” when describing policy objectives? Is this a geopolitical and climate-related reckoning for Europe, in addition to it being an energy security-related reckoning?

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

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The post #BritainDebrief – What are the origins of Europe’s energy crisis? | A Debrief from Dr. Helen Thompson appeared first on Atlantic Council.

AC Selects: Best of #VetsEnergySummit: Inflation Reduction Act, climate change, and COP27

rcasberg — Wed, 17 Aug 2022 19:54:43 +0000

Event from the week of August 12, 2022

Catch the Global Energy Center host its 6th annual Veterans Advanced Energy Summit. The Summit is a learning and networking event dedicated to veterans, reservists, and military spouses working to strengthen US national security through careers in the advanced energy industry. The Summit has become a leading forum for experts to share perspectives on new technologies and emerging trends in energy.

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As of today, the number one challenge is keeping energy prices low, accessible, and making sure we’re not reliant on Russian fossil fuel.
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Congressman, 8th District of Illinois

The 2022 Veterans Advanced Energy Summit

The Veterans Advanced Energy Summit is a learning and networking event dedicated to veterans and military spouses working to strengthen US national security through careers in the advanced energy industry.

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Ryan joins Alaska Public Radio to discuss the IRA’s impact on Alaskan mining

ecarpen — Wed, 17 Aug 2022 15:45:28 +0000

Women Leaders in Energy and Climate Fellow

The post Ryan joins Alaska Public Radio to discuss the IRA’s impact on Alaskan mining appeared first on Atlantic Council.

The Inflation Reduction Act gives carbon removal a big boost

Calli Obern — Tue, 16 Aug 2022 14:18:52 +0000

The Inflation Reduction Act of 2022 will soon be law, and it is a massive step for US climate ambitions, bringing $369 billion for climate solutions. In particular, carbon removal will get a big lift.

Carbon removal experts and startups are rushing to prepare for this new wave of funding, which will test if technologies can deliver on their ambitions. Carbon removal startups aspire to take out billions of tons of CO₂ from the air each year. With the new legislation, the United States can deploy policies and technologies to accelerate the sector. But these tools do not guarantee carbon removal will succeed.

Cost and supply hampered carbon removal in the past. Permanently removing a ton of CO₂ from the air today can cost over $500, and there are not enough facilities to meet demand from the voluntary market. Plus, most technologies have low Technology Readiness Levels, like direct air capture and enhanced weathering. This is changing. The bill increases the tax credit for permanent carbon removal (45Q) from $50 to $180 per ton using direct air capture, and lowers how much CO₂ a facility must remove to qualify from 100,000 tons to 1,000 tons. With this new legislation, companies have room to develop their technologies at lower costs and work towards gigaton-scale removal.

But barriers remain between the bill’s provisions and widespread deployment and demand. For one, taxpayers question whether the United States should spend money on carbon removal instead of renewable energy or adaptation, although the Intergovernmental Panel on Climate Change stated that carbon removal is necessary to limit global warming to 1.5°C. (Carbon removal takes CO₂ out of the air and permanently stores it, while point-source carbon capture traps CO₂ from a power plant or industrial facility before it is released into the atmosphere.)

Carbon removal facilities also use resources like energy and water, and organizations fear it will divert attention from cutting emissions. However, there are opportunities to collaborate. Some carbon removal technologies use renewable energy and recycle brackish water in their process, which could aid the development of renewable energy in rural areas and provide a source of clean water. Facilities could also generate revenue for resilience and adaptation in areas affected by climate change. Policymakers and businesses should help build out the synergies between carbon removal and other climate solutions.

Policy and financial support must be paired with dialogue between policymakers, businesses, and communities. Communities and policymakers need to understand how carbon removal technologies work and why removing carbon from the atmosphere could help avoid the worst climate change impacts. Transparency with communities is key to deciding what infrastructure should be built for carbon removal and how to ensure carbon is safely and permanently stored. The Department of Energy developed Community Benefit Agreements for community groups and developers to legally agree on benefits in exchange for support of a project. This framework ensures all stakeholders gain, and is a strong model going forward. Without informing and incorporating feedback from the public, facilities will be difficult to build and carbon removal will face an uphill battle to scale, regardless of tax incentives.

Tax credits also do not guarantee carbon removal will be efficient or effective. Policy changes like a technology-neutral 45Q tax credit could expand the market by allowing novel technologies to participate beyond direct air capture and point-source methods, an update to the language since approved by the Congress in 2008. Using “sticks” —like a price on carbon—instead of “carrots” like tax credits could accelerate deployment by ensuring future demand for carbon removal. These changes could support a range of carbon removal solutions, driving down costs and allowing flexibility as technologies improve.

In addition, scaling to gigatons of removals in the United States requires a framework to ensure demand for millions or billions of tons of carbon if the voluntary market wanes, whether at the federal or global level. States or the federal government could pledge funds alongside private sector commitments to procure high-quality carbon removals and zero out emissions by 2050. An international body could follow suit, funded by the countries responsible for most global emissions—China, the European Union, and the United States. Policymakers must ensure carbon removal accompanies a decrease in fossil fuel use and not business as usual.

The Inflation Reduction Act incentives could overcome the first-mover problem. If the bill can create a thriving carbon removal sector in the United States, the European Union or China could respond by including technological carbon removal in Emissions Trading Systems. Countries could pledge to be carbon-negative instead of net-zero at future COP climate conferences. Buy-in from businesses and governments could help build facilities around the world and ensure carbon removal is not simply a luxury for developed countries but brings benefits for the communities most affected by climate change.

Efficient policies and technologies are necessary to reach gigaton-level carbon removal and help avert the worst impacts of climate change. It will take time to improve technologies, increase their scale, and see the effects on climate change. The Inflation Reduction Act lays the groundwork—now will come the test.

Calli Obern is a member of this year’s Women Leaders in Energy and Climate Fellowship at the Atlantic Council. She is director of policy at Capture6, a carbon removal startup.

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.

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Calli Obern

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Energy & Environment Geopolitics & Energy Security

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These veterans are on the leading edge of the energy transition

Veterans Advanced Energy Fellows, Cohort 3 — Tue, 09 Aug 2022 13:21:01 +0000

The Veterans Advanced Energy Project is designed to drive US leadership in advanced energy by recruiting, equipping, and empowering military veterans who understand the importance of the evolving energy landscape to our future security and prosperity. As part of the 2021-2022 Veterans Advanced Energy Fellowship, each fellow prepared a policy proposal and a persuasive five-minute presentation on a topic related to national security, advanced energy, and/or military veterans. Both the written and oral presentations of the policy proposal were developed with the assistance of an advisor from the Atlantic Council network.

Each policy proposal diagnoses a problem and proposes a solution to a specific actor or actors. The papers include an executive summary, background on the topic, an analysis of the problem, and a proposed course of action. Fellows also consider the counterarguments of the policy prescription to strengthen the proposed pathway. Fellows were strongly encouraged to select a topic with which they have a professional or personal connection.

The five-minute persuasive flash talks were presented to the Atlantic Council Global Energy Center and Veterans Advanced Energy Project network on June 21, 2022 and on August 9, 2022 during the 2022 Veterans Advanced Energy Summit.

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The Veterans Advanced Energy Fellowship seeks to create a cadre of future leaders within the advanced energy industry. Fellows are peer mentors, advocates, and spokespeople for other veterans, reservists, and military spouses who work to solidify the advanced energy connection to national security and the mission-driven advancement of veterans’ employment in advanced energy.

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How to build on the Inflation Reduction Act and incentivize truly clean electricity

Ameya Hadap — Mon, 08 Aug 2022 19:30:00 +0000

The bombshell Inflation Reduction Act primes the United States for an unprecedented clean energy transformation and demonstrates to international partners a serious commitment to climate action. Though certain compromises had to be struck on oil and gas leasing, the act still creates the incentives necessary for scaled clean energy deployment that brings the US economy along with it.

Of particular significance was the inclusion of production tax credit (PTC) provisions for several clean electricity sources. Among them are new PTCs for solar, geothermal, and existing nuclear; an extension of the wind PTC; and a new, technology-agnostic clean electricity PTC which gives credit eligibility to any carbon-free or carbon-negative generating station—when accounting for sequestered carbon—and unifies several other technology-specific PTCs after their expiration, entering effect at the end of 2024.

But these credits leave a key disconnect unaddressed: in the US electricity sector, clean energy deployment is not synonymous with carbon mitigation. To close this gap, additional legislation is needed to mandate the non-proprietary modeling of data on marginal emissions and, eventually, to craft credits that tie a facility’s tax liability to its actual carbon mitigation value and amplify the impact of a traditional kilowatt-hours-based PTC.

Ultimately, the carbon mitigation value of a clean electricity asset depends on the capacity, flexibility, and generation profile of the grid. Two identical renewable resources can displace vastly different amounts of carbon if one comes online on a grid with high existing renewable penetration and curtailment while the other enters service on a hydrocarbon-heavy grid. The latter will have plenty of room to decarbonize electricity supply, while the former will find its impact heavily constrained. And even on individual grid subsections, carbon displacement varies significantly from node to node.

The various PTCs in the act ease this concern somewhat, incentivizing siting on grids with low levels of renewable curtailment or in higher-penetration states and regions that compensate producers for the lost generation-hours and pay out the commensurate credit amount. But they cannot make up for the weaknesses of the grid planning process itself.

Barriers between deployment and mitigation

There are already 1,300 gigawatts’ worth of solar, wind, and battery capacity in US interconnection queues. Though many of these projects are speculative ventures that essentially secure developers’ place in line, the buildout of even a fraction of this capacity would approach the 39 percent share of the US electricity mix held by renewables and nuclear in 2021.

Evidently, developers are already responding to clean energy incentives and economics in massive numbers. But the interconnection process is tortuous and backlogged due to a multitude of procedural deficiencies; carbon-free electricity projects have to wait an average of three and a half years before connecting to the grid.

Unfortunately, despite recent reforms by the Federal Energy Regulatory Commission (FERC), a queue-clearing miracle looks unlikely, meaning that clean electricity projects will come online in more of a modest stream than a raging deluge. With this in mind, policymakers should look to maximize the clean electricity projects that actually might start generating power in the short term by incentivizing carbon displacement.

The country’s transmission woes further aggravate the issue. Discrepancies in transmission access and quality often mean that otherwise equivalent clean generation assets have drastically different carbon mitigation value depending on their location. And new transmission projects, which remain politically unpopular and did not receive a dedicated ITC in the act, are difficult to execute, even after the broadening of FERC’s transmission siting authority under the previously passed Infrastructure Investment and Jobs Act. There is a cost balance to keep in mind, too; better and longer-range transmission could lessen the $6.1 billion in congestion costs that grid operators passed down to consumers in 2019, but several utilities include the “construction work in progress” costs of their transmission projects in their rate bases, which increases consumer energy bills as well.

The US does not need more renewable projects that ignore emissions-related siting considerations, exacerbate interconnection backlogs, and strain an ill-equipped grid. It needs tools that enable the clear assessment of the actual carbon mitigation value of carbon-free electricity assets. And it needs policy mechanisms that use these tools to guide investment decisions and move closer to a one-to-one relationship between clean electricity deployment and carbon displacement.

Closing the mitigation gap

Marginal emissions should be the cornerstone of this effort. Also called avoided or displaced emissions, this metric measures the emissions produced by the generators that would have been providing power if not for the electricity from a particular clean energy resource at a particular time. Higher marginal emissions mean more potential for carbon mitigation. Measuring marginal emissions would allow buyers, investors, planners, and policymakers to grasp the real carbon mitigation value of that clean energy resource beyond its output, with the understanding that the point of clean electricity is to reduce grid emissions rather than to cast carbon-free generation-hours into the void.

There is already useful data out there for calculating marginal emissions. The Environmental Protection Agency (EPA), through its Clean Air Markets Program Data and eGRID initiatives, scrapes and publishes emissions data for every electricity generating unit in the US. And data that helps identify the generators providing power to any given node at any given time exists in various forms as well: the PJM regional transmission organization (RTO), which operates transmission systems in thirteen eastern states and the District of Columbia, has been collecting marginal emissions data at load nodes for a year and a half; the Electric Reliability Council of Texas (ERCOT) publishes generation schedules that indicate which generators provide power when; and data on locational marginal prices (LMPs) has shown when an energy source is least-cost and likely providing power.

The act’s clean electricity PTC puts another important piece in place by requiring annual publication of general emissions rates for various energy sources, which would be used to certify credit eligibility and are also a key piece in the calculation of marginal emissions rates. But the act failed to fully reflect the fact that the clean energy sources that will undergird the electricity sector of the future are highly variable, sometimes at a minute-to-minute level. Federal climate legislation can do so, first and foremost, by calling on the EPA and the Department of Energy to develop rigorous, standardized, non-proprietary methods to cull and analyze marginal emissions data that will better illuminate emissions dynamics on renewables-heavy grids. It should also direct FERC to create standards for grid operators to harvest temporally granular marginal emissions data at generation nodes using these methods, and it should mandate their adoption by RTOs, independent system operators (ISOs), and transmission owners across the country.

Once such initiatives are up and running, Congress should consider amending the PTCs in the act to include a scaled or tiered credit adjustment based on carbon mitigation, measured in kilograms of CO₂ equivalent per kilowatt-hour. Clean energy generating units could then claim a higher credit amount based on their actual carbon displacement impact. This adjustment could be further fitted to individual grids using an overall carbon intensity factor.

Not only would this incentivize smarter, higher-impact siting of future projects, but it would also incentivize developers of already proposed projects to pick up more of the interconnection and grid upgrade tab, since higher grid quality increases marginal emissions. In conjunction with the inclusion of interconnection costs in the clean electricity ITC, this incentive would be a major boon for grid planners hacking their way through interminable interconnection queues; grid upgrade cost allocation has to this point been an irreconcilable point of contention between developers and transmission owners, stymieing the approval and rollout of carbon-free sources. Such an adjustment might even prove to be a tailwind for private investment in onsite and grid-scale energy storage.

The Inflation Reduction Act goes a long way towards getting the economics of the energy transition right. It will make clean electricity cheaper, and it will generate strong demand signals for key technologies. But a highly variable electricity sector staring down systemic and politically thorny limitations will cause prevailing assumptions about capacity and the value of generation to bend and potentially break. Congress needs to rethink its laser focus on clean energy deployment and create stronger methodologies and incentives for carbon mitigation so that capital can flow to the grids and nodes that really need it.

Ameya Hadap is a program assistant 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.

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Former staff

Ameya Hadap

Energy & Environment Energy Transitions

EnergySource Aug 9, 2022

The balance President Biden needed: How the IRA achieves a durable energy and climate policy

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The Biden administration and the Democratic Party stand to benefit greatly from the passage of the IRA. The bill’s balanced approach to clean energy deployment and support for the US oil and gas sector makes it a political winner.

Energy & Environment Energy Transitions

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The Inflation Reduction Act places a big bet on alternative mineral supply chains

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30 GW by 2030: Policies for expanding US offshore wind capacity

By Joseph Webster

Energy & Environment Energy Markets & Governance

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The post How to build on the Inflation Reduction Act and incentivize truly clean electricity appeared first on Atlantic Council.

Ammar Habib Khan quoted in Dawn: The Russian price Pakistan is paying

Atlantic Council — Wed, 13 Jul 2022 15:57:00 +0000

The post Ammar Habib Khan quoted in Dawn: The Russian price Pakistan is paying appeared first on Atlantic Council.

30 GW by 2030: Policies for expanding US offshore wind capacity

Joseph Webster — Mon, 27 Jun 2022 18:12:00 +0000

The United States aspires to add nearly 30 gigawatts of offshore wind (OSW) generation capacity by 2030, enough electricity to power about 21 million homes. This ambition, if achieved, could aid the United States’ clean energy targets, create a new industry full of middle-class jobs, improve US and allied energy security, and enable green hydrogen. These ends, however, will not be reached with one singular action or initiative. Instead, policymakers and industry leaders should simultaneously pursue several policies.

Reaching the United States’ ambitious offshore wind targets will require streamlining permitting processes and relaxing trade barriers; providing assurance for investors through procurement contracts; carefully building community support; managing stakeholder engagement, especially with respect to fisheries; supporting the emergence of a domestic supply chain; and thinking creatively about how to expand OSW capacity within constraints. Overcoming these challenges will not be easy, but the US has the toolkit to succeed.

Priming wind development through effective policy

National and state-level policies will play an extremely important role in shaping the future of US offshore wind. Federal tax incentives already incentivize project finance and development: offshore wind developers are, under current law, eligible for the business energy investment tax credit, or ITC. This one-time credit covers 30 percent of expenditures for owners and developers of offshore wind facilities that begin construction prior to 2026.

The ITC aims, in part, to spur development of a domestic offshore wind supply chain. Indeed, OSW infrastructure requirements will be substantial. Turbines are massive structures: existing offshore turbine blades often extend further than 90 meters, while the rotors of newer wind turbines exceed 200 meters. Bringing these massive objects from a factory, trucking them across land, and, finally, moving them onto water requires supporting equipment, including highly specialized “wind-turbine installation vessels” (WTIV). These WTIVs are behemoths: the newest jack-up installation vessels have a claimed lifting capacity of 2,500 tons in retracted mode and can install wind turbine components in water depths of 65 meters. As wind turbines become larger and move into deeper waters, installation vessels will become increasingly critical for the US OSW industry.

But the ITC has been unable to set the stage for wider OSW turbine installation using WTIVs, in part because of some controversial federal policies that affect the OSW supply chain. The Merchant Marine Act of 1920, commonly referred to as the Jones Act, requires all vessels providing domestic shipping services to be US-built, US-owned, US-flagged, and US-staffed. Opponents of the Jones Act suggest that it increases the costs of wind turbine installation vessels and hampers the US OSW industry.

Offshore wind developers are pushing for more effective oversight, as many in the industry are grumbling about persistent permitting challenges and delays. Indeed, some industry leaders are calling for the federal government to increase appropriations at relevant regulatory agencies to streamline approval processes.

While federal policy sets macro conditions for the OSW industry, state-level policies can make or break projects. Offshore wind developers often praise New York and New Jersey for creating a “steady diet” of state procurement contracts, which reduced investment uncertainty and helped catalyze further investment in local port facilities. Furthermore, in contrast with Massachusetts and its doomed Cape Wind OSW project, strong, sustained leadership from New York and New Jersey state officials helped to stem local, “not in my backyard” opposition to offshore wind development. The unparalleled insight of state and local actors into community stakeholder concerns means that state policy and leadership can be highly effective and even necessary for successful OSW development.

Building community support for OSW

Project developers can increase support for OSW through early and sustained engagement with various community stakeholders. Some developers and state-level policymakers have found success in emphasizing the economic development benefits for local communities: OSW can generate significant numbers of permanent, middle-class jobs for local communities and provide even greater short-term construction employment. And the revitalization of long-dormant ports can inject dynamism into local communities. Indeed, the New Jersey Wind Port will support up to 1,500 manufacturing, assembly, and operations jobs, in addition to creating hundreds of short-term construction jobs. Importantly, policymakers can easily “pitch” these job-creating investments to local communities, which may be harder to do for other renewables that might be unable to sustain the same levels of long-term employment or reach grid scale in certain communities with limited solar or onshore wind resources. Finally, working with local unions can generate community support for OSW and create stakeholders amenable to wind development.

The fishery industry, an unnatural ally of the offshore wind industry, is a useful case study. Competition for limited port space and personnel, diversion of fish migratory patterns, disruption of established routes, and dangers posed by subsea cables drive tension between the OSW and fishing industries. Still, domestic and international actors have found ways to engage with fishery stakeholders, address concerns, and, in some cases, offer compensation. For instance, Massachusetts has convened a working group on fisheries, with stakeholders from across the industry; the European Commission has identified fourteen mitigation and adaption solutions for fisheries and offshore wind; and the Biden administration has studied direct payments to fisheries to compensate for any OSW impacts. Future OSW projects can use these experiences as templates for their own interactions with the fishing industry, or even develop new, creative approaches.

Industry and supply chain localization can also drive community support. In South Carolina, Nexans, an advanced cabling solutions company, is constructing new manufacturing facilities and creating 160 new clean-energy jobs for a project that will supply 620 miles of subsea cabling to OSW projects. Industry experts have praised New York and New Jersey’s initiatives on supply chain management: New York has announced an intent to invest $500 million in ports, manufacturing, and supply chain infrastructure, while New Jersey has created a supply chain registry for state and local firms. By creating economic opportunities for local constituencies, policymakers can build sustainable support for OSW development.

A holistic approach to a thriving OSW ecosystem

Community support is critical for OSW projects. From the beginning of project development all the way through maintenance phases, industry and government must partner with local stakeholders, including OSW-skeptical fishing industry participants, to inform communities about the economic and environmental benefits of offshore wind.

There is a widespread recognition across both industry and government that the US must develop its own domestic OSW ecosystem, as many experts are skeptical that Europe possesses the manufacturing capacity that the US requires. Further support for the wind industry could provide additional capacity, expand supply, and potentially reduce energy-related inflation over the medium-term. At the same time, policymakers should consider lifting the Jones Act for key partners, such as NATO and other treaty allies, or at least easing Jones Act restrictions specifically for the wind industry.

Other alternatives to rolling back the Jones Act may prove more achievable. If stakeholders wish to preserve US shipbuilding capacity—a key national security priority—policymakers should consider directly supporting the industry. Similarly, policymakers may wish to consider a dramatic expansion of the US Merchant Marine fleet’s size and scope. Since Merchant Mariners already have a remit to advance the nation’s economic and security interests, an expanded fleet could include wind turbine installation vessels and play a role in OSW development.

US offshore wind has come a long way. Investment tax credits, determined political leadership at the state level, and innovative state procurement contracts have played a big role in preparing the industry for the part it will play in the energy transition. Still, the challenges facing OSW are serious. There is a risk that offshore wind ambitions will outrun existing supply chains, particularly with respect to wind turbine installation vessels. Clumsy, slow-moving, and ineffective regulation could strangle promising projects—or, worse, deter them—while a failure to engage local communities at the project and state levels could spark backlash. Supporters of US OSW must move quickly and tenaciously, but carefully.

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

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Joseph Webster

Central Asia China

EnergySource Jun 10, 2022

How Nordic wind and wealth can wean Europe off Putin’s gas

By András Simonyi and Morten Svendstorp

Denmark and Norway are uniquely positioned to drive the European hydrogen economy of the future. The two countries’ wealth, renewable capacity, and ambition make long-term replacement of Russian gas—and indeed of gas in general—viable.

Energy & Environment Europe & Eurasia

EnergySource May 3, 2022

Transatlantic cooperation on green steel: Building effective standards

By Kelsey Forren, Maia Sparkman

Plenty of work has already been done to develop comprehensive transatlantic standards on green steel. When choosing from these options, policymakers should keep certain priorities in mind.

Energy & Environment Energy Markets & Governance

EnergySource Apr 28, 2022

The US should leverage 45Q for the graphite supply crunch

By William Tobin

Energy & Environment Geopolitics & Energy Security

Learn more about the Global Energy Center

The post 30 GW by 2030: Policies for expanding US offshore wind capacity appeared first on Atlantic Council.

Disarming Russia’s energy weapon: Ukraine begins electricity exports to Moldova

Aura Sabadus — Wed, 18 May 2022 15:32:01 +0000

Less than two months after synchronizing with the European electricity grid, Ukraine has begun landmark commercial energy exports to neighboring Moldova in a move that is likely to further dent Russia’s grip over the region. Ukraine’s state-owned hydro producer Ukrhydroenergo has booked between 80-150MW per hour of transmission capacity to Moldova and the first imports by the Moldovan state-owned wholesaler Energocom started on May 12.

The deal is of critical importance to both countries on several accounts. Firstly, it opens up a source of revenue for Ukraine at a time when domestic demand has been devastated with thousands of consumers disconnected from the grid as a result of Russia’s war and the destruction of civilian infrastructure.

In the immediate days and weeks after the invasion began, Ukrainian energy companies could barely recover 30% of payments. Although the collection rate has since improved, cash flow is still a major issue and Ukrainian energy companies need to find immediate sources of revenue to stay afloat. The start of commercial exports to Moldova is therefore vital to companies such as Ukrhydroenergo and electricity grid operator Ukrenergo.

Earlier in April, Ukrenergo announced it had also opened up an isolated transmission line for electricity exports to Poland, auctioning capacity amounting to 210MW for all hours and expecting to expand the cross-border capacity in the upcoming months.

Although Ukraine and Moldova jointly synchronised with the European grid operating under the umbrella of the European Network of Transmission System Operators for Electricity (ENTSO-E), flows with neighboring EU states Hungary, Slovakia and Romania are still technical. Commercial flows are expected to start next year and remain subject to some upgrades that need to be carried out in Ukraine.

In Poland’s case, the transmission line with Ukraine operates in isolated mode which means companies on both sides of the border can use it for commercial flows. The new commercial flows with Moldova are possible because the transmission grids of the two countries have always operated in synchronous mode. Ukraine and Moldova were connected in Soviet times but jointly disconnected from the Russian grid in February 2022. They continue to remain synchronised as part of ENTSO-E.

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A second reason why Ukraine’s exports to Moldova are of particular significance is because they help the Moldovan authorities reduce Russian control over the country’s energy supplies.

Moldova has historically depended heavily on electricity supplies generated by the 2.5GW MGRES power plant in Transnistria, an unrecognised breakaway republic controlled by the Kremlin. Last year, Moldova relied for 80% of its electricity consumption on supplies from the Transnistrian gas-fired plant, while 20% of electricity was produced in Moldova itself.

Thanks to the latest Ukrainian imports, which cover 24% of demand, the overall share of electricity supplies from Transnistria has dropped to 56%. The remaining 20% continues to be generated in Moldova.

Since the interconnection capacity between Ukraine and Moldova is 600MW and Ukrenergo can allocate cross-border profile capacity at electronic auctions via a dedicated platform, the share of Ukrainian exports within overall Moldovan consumption could potentially grow further this year.

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

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The start of commercial exports between the two countries is likely to bring considerable changes in the structure of their markets and the way they conduct business, while also downgrading dependence on Russian gas.

Imports of clean Ukrainian hydro-electricity are helping Moldova to move away from fossil fuels and align closer with Europe’s wider green transition. Moldova may also tap Ukraine’s other sources of clean energy such as nuclear, solar and wind generation.

Equally important will be the way electricity is purchased in Moldova and the measures that are taken to clamp down on corrupt practices. Moldova typically organizes tenders for a one-year supply contract each February. This year’s tender was pushed back to mid-April because of Russia’s invasion of Ukraine, but was subsequently scrapped.

The auction, which included both MGRES and some Ukrainian companies, was officially cancelled because bidding prices were significantly higher than Moldovan expectations. However, a Moldovan source close to discussions said there were also concerns that one of the bidders was linked to Russian oligarchs with Kremlin ties.

Going forward, the most important goal for Moldova will be to reduce dependence on Russia for natural gas and curb the country’s Russia-related debt which has been spiralling out of control.

Moldova currently imports around three billion cubic meters of natural gas from Russia but two-thirds of this are sent to the MGRES gas-fired plant for electricity production. This means that the Transnistrian unpaid debt for gas supplies is now close to USD 9 billion. As the nominal importer, Moldova is expected to pay.

Securing electricity from Ukraine to reduce the need for electricity supplies from Transnistria will help Moldova limit its Russian dependence, just as it will further diminish Moscow’s ability to use cash from gas sales to wage war against Ukraine.

Maxim Timchenko — Wed, 11 May 2022 15:06:49 +0000

It’s time to admit that the European Union’s (EU) energy security system has failed. Since Russia’s brazen invasion of Ukraine, member states have paid around one billion dollars per day for Russian energy—effectively financing the killing of Ukrainians and possibly fueling a wider war in Europe.

Weaning the continent off Russian gas and oil is perfectly doable. The European Commission has already said the bloc can replace one hundred billion cubic meters of Russian gas by the end of the year—nearly 70 percent of all its imports come from Russia—and, according to Greenpeace, could theoretically cut Russian oil imports by 28 percent immediately if it takes the right measures.

But as the head of Ukraine’s largest private energy provider, I’ve seen how Ukraine itself can play a vital role in a new European energy security system.

After Norway, it has the largest gas deposits in Europe and was producing almost twenty billion cubic meters of gas a year before the war. That figure is expected to grow by one-third within the next three years, according to estimates from my company, DTEK. The EU could also make use of Ukraine’s underground natural-gas storage facilities for its plans to form a strategic gas reserve (which would also allow it to join the EU’s common gas market and increase its own energy security).

Ukraine has much to offer in terms of electricity, too. After being connected to the European energy grid in March—a task long in the making, but which accelerated amid the war—the country is already in the position to export up to 1.5 gigawatts of electricity to the EU. We estimate that amount could increase to 3-4 gigawatts within a year if the grid’s power stability is properly ensured. Energy storage systems, which my company has explored, could play a vital role in this area.

Also important for Europe’s clean-energy revolution: Around 55 percent of Ukraine’s electricity is produced by nuclear power plants, while the country generates around 12 percent from renewable energy such as solar and wind farms. Industry insiders say Ukraine’s vast, windswept terrain is a strong asset for wind energy.

But the full integration of my country into Europe will require something of a “Ukrainian Marshall Plan” aimed at rebuilding Ukraine with an eye toward long-term economic stability—and energy should be one of its priorities. This will be beneficial not only for Ukraine, but for all of Europe.

Here are four key points such a plan must tackle to help boost Ukraine’s already promising energy sector:

The first phase should begin immediately and include preparations for reconstruction as soon as hostilities end. The original Marshall Plan for post-war Europe was announced only in 1947 and launched a year later—three full years after peace was won on the continent. Neither Europe nor Ukraine can afford to wait that long to start establishing energy security.
Implementation would also require robust institutional and human capacity. That means overseeing the stable and reliable handling of recovery funds, as well as assisting in the successful conclusion of anti-corruption reform in Ukraine (which would boost transparency and maximize efficiency). I believe this is a crucial point for a trustworthy relationship between the EU and Ukraine.
The private sector will play a vital role in reconstruction, so creating transparent market conditions by continuing the liberalization of the energy market will be the key to attracting investment in the energy sector. Today, the private sector has turned into the driver of change and development, and a business environment based solidly on market economy principles is the foundation for rapid recovery and forward-thinking innovation in Ukraine.
Reinvent, not restore: Renewables, hydrogen technologies, small modular reactors, smart grids, and other innovative projects will be able to replace and strengthen the energy sector of Ukraine and, consequently, the EU. The plan should become a roadmap for implementing new technologies—perhaps even some experimental ones—and creating new business models based on those. There is no need to rebuild what has been destroyed; we may be able to build the future of our dreams.

Russian President Vladimir Putin is using energy as a weapon to blackmail much of the world. Cutting off his primary source of finance—and instead buying energy from Ukraine—will not only hamstring the Russian military, but also help rebuild a peaceful country that would embrace European values and contribute to Europe’s long-term energy security.

Maxim Timchenko is the chief executive officer of DTEK, Ukraine’s largest electricity producer. DTEK’s parent company, System Capital Management, is an Atlantic Council donor.

The post Help Ukraine now, and it could power Europe later appeared first on Atlantic Council.

Colombia can lead the energy transition in Latin America

Juan Gomez — Fri, 06 May 2022 17:48:49 +0000

As the gateway to South America, Colombia has the potential to be a world-class producer of renewable energy. Access to both the Atlantic and Pacific Oceans—the only such place in South America—allows for the formation of mature, global maritime networks for renewable energy exports. Colombia’s northern coast, specifically, boasts high wind speeds and solar radiation prime for exploitation.

Recognizing this potential, the Colombian government has made concerted efforts to push the country towards becoming a regional renewable leader.

The Guajira region, located in northeastern Colombia, is at the epicenter of the domestic wind energy industry given its advantageous peninsular location and arid flat terrain, where winds move uninterrupted with speeds ranging from 8.5 to 8.75 meters per second, above global averages. President Duque’s administration is developing a series of sixteen new wind farms across the region. The first, the Guajira I wind farm, is estimated to become operational this year and provide 20 megawatts (MW) of power. If all projects are completed on schedule by 2031, the wind farm network could power 17 percent of the country’s electric grid. Municipalities are following in the national government’s footsteps. Barranquilla, the largest Colombian city on the Caribbean coast, signed an agreement with Copenhagen Infrastructure Partners for a feasibility study to explore a 350 MW offshore wind farm.

Wind energy represents only a part of the country’s long-term renewable prospects. Colombia is also expanding its hydrogen capabilities, drawing investors and pilot projects to its rapidly growing market. In March, Ecopetrol, the country’s state-owned hydrocarbon company, inaugurated Colombia’s first green hydrogen pilot project at its Cartagena-based refinery. The project will be paired with a $140 million annual investment until 2040 for green hydrogen production. Colombia’s Caribbean coast is well positioned for green hydrogen due to its advantage in clean energy generation—evidenced by Guajira—alongside well-established ports that have easy access to the Americas and Europe for potential export. The levelized cost of hydrogen in Colombia is expected to reach parity with other hydrogen market leaders, such as Chile and Australia, by 2030. Estimates indicate that green and blue hydrogen production together could reach between 3.2 and 5.8 megatons by 2050.

However, political and technical barriers have inhibited Colombia’s clean energy development and continue to strain scalability. To legally construct infrastructure in the Guajira territory, the government must retain approval from its residents, the indigenous Wayúus, a community that faces high rates of poverty, malnutrition, and unemployment compared to national averages. Critics allege that the region has been historically neglected from partnerships and development opportunities in the region, and that improper compensation has been given for land bought for project development. This trend continued in the creation of the country’s first wind farm, Jepírachi, in 2004, and similar complaints have been alleged in ongoing wind power projects. The Wayúus argue that wind projects take large swaths of land from the community and do not compensate them adequately for the land’s worth. Tense relationships in the region have thus sapped the region of its advantageous geography’s utility.

The Jepírachi wind farm also typifies the technical hurdles faced by wind farm investment in Colombia. Mismanagement and improper upkeep have caused long-running delays in operation and weakened the effectiveness of plant capabilities. Beyond the issues this disuse presents to steady generation, it deprives green hydrogen facilities of the energy inputs they need, dimming domestic hydrogen prospects.

To meet the country’s renewable potential, the Colombian government should follow a two-pronged approach: foster an environment to attract foreign and domestic investment across a diverse project portfolio, and include local communities and municipalities as leaders in renewable project development.

Existing government initiatives, such as the Energy Transition Law No. 2099, create a fiscal frame and tax benefits for unconventional renewable investment, which includes green and blue hydrogen. Bill 365, which promotes non-traditional fuel sources, is another good starting point. The passage of a domestic emissions trading system and more expansive tax benefits for companies investing in hydrogen would provide even more robust pathways for blue and green hydrogen development.

Adequate private and public investment is a necessity but must also be paired with accountability to ensure the proper inclusion of disadvantaged and local communities in the development of renewable projects. The inclusion of Colombian municipalities on the Caribbean coast would expand continuous clean power access to a region that is partially disconnected from the national grid and faces frequent outages. But inclusive rhetoric alone is insufficient. When appropriate, concessions should be made both to pursue environmental justice and to ensure the wind farm project’s longevity.

The path towards Colombia’s decarbonization is not simple. The country will continue to confront significant hurdles as it looks to leverage its advantages in renewable energy potential. However, should the government follow a holistic strategy, it would be poised to successfully deploy its expansive resources and emerge as a renewable leader in Latin America.

Juan Gomez is a Spring 2022 Young Global Professional at the Atlantic Council Global Energy Center.

EnergySource May 3, 2022

Transatlantic cooperation on green steel: Building effective standards

By Kelsey Forren, Maia Sparkman

Plenty of work has already been done to develop comprehensive transatlantic standards on green steel. When choosing from these options, policymakers should keep certain priorities in mind.

Energy & Environment Energy Markets & Governance

EnergySource Apr 28, 2022

The US should leverage 45Q for the graphite supply crunch

By William Tobin

Energy & Environment Geopolitics & Energy Security

EnergySource Mar 11, 2022

As the US struggles to “green” supply chains, new EU battery regulation offers lessons

By Emily Burlinghaus

The EU’s pending Batteries Regulation is an ambitious framework to impose strict sustainability standards on the technology most important to electrification. To secure access to the lucrative EU market, global battery manufacturers will need to clean up their supply chains. US policymakers should take heed.

Energy & Environment Energy Markets & Governance

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The post Colombia can lead the energy transition in Latin America appeared first on Atlantic Council.

Ellinas quoted in Le Monde on Athens’ natural gas

lbowen — Wed, 04 May 2022 15:51:00 +0000

The post Ellinas quoted in Le Monde on Athens’ natural gas appeared first on Atlantic Council.

The US should leverage 45Q for the graphite supply crunch

William Tobin — Thu, 28 Apr 2022 16:41:05 +0000

The global shortage of graphite—a key ingredient in the lithium-ion batteries used in electric vehicles (EVs)—could reach 40,000 tons this year. Barring a significant uptick in mining output for this critical mineral, the United States will need to seek creative solutions to empower the EV revolution and enable the production of batteries for grid storage. But amid insufficient investment in mining graphite ore, there is an opportunity to exploit the fact that graphite is simply carbon, albeit in solid crystalline form. Connecting the carbon capture and synthetic graphite industries is an underexplored solution which demands heightened attention, particularly with the 45Q tax credit already in place to bridge these sectors through incentives and market fundamentals.

The stress on graphite supply chains is only going to intensify. In December 2021, Europeans bought more electric than diesel vehicles for the first time. As electrification accelerates, demand for graphite is anticipated to grow threefold by 2030 and up to 4,000 percent over the next several decades. These projections accompany forecasts of insufficient production to compensate for this growth. In fact, despite a recent focus on lithium’s supply woes, graphite’s supply risk rating is higher, per the US Geological Survey.

Risks abide not only in the scale of production, but in the geopolitics of graphite supply chains. In 2021, China produced an estimated 79 percent of the world’s graphite, an uncomfortable figure given the lessons learned from Russia’s actions in Ukraine and Europe about the dangers of overconcentration of any key commodity in the hands of a single, potentially hostile player. If the mining industry is ultimately not able to meet rising graphite demand from the auto industry without entrenching problematic dependencies, aspirations in electric vehicle deployment will hinge on finding alternate solutions.

Synthetic graphite—produced from a carbon-based feedstock through an industrial process, as opposed to natural graphite mined from the ground—can alleviate these woes. In fact, anodes made of synthetic graphite can even feature a higher energy density than natural “flake” graphite, as manufacturers can produce a more porous substance which holds more electrons. However, the multi-step and energy-intensive manufacturing process for producing synthetic graphite results in a product that is more expensive than natural graphite by twofold and typically uses petroleum coke as its feedstock, raising carbon intensity.

Encouragingly, there are avenues under development which could enable production of synthetic graphite without refinery byproducts while simultaneously providing a “commodified” end-product for carbon capture. A consortium of Australian researchers from RMIT University has developed a method for instantly converting carbon dioxide to a permanent solid, via the use of a liquid metal catalyst. As a proof of concept, this technology will soon be integrated into a modular prototype the size of a shipping container. Invigorating this line of research could enable a direct path for captured carbon to be converted to graphite using this solid carbon as a feedstock. But despite a lack of reliance on petroleum byproducts in this and other potential approaches to carbon capture-based synthetic graphite production, their present economics do not make them an attractive option for carbon producers.

The Section 45Q carbon capture tax credit thus represents an ideal policy lever for policymakers to solve the graphite supply problem while finding a more beneficial on-ramp to improve the economic fundamentals of the CCUS (carbon capture, utilization, and storage) industry at large.

Specifically, Congress should expand 45Q by creating a tailored credit for the production and sale of captured carbon for use as a feedstock for synthetic graphite. This would enhance the economy of scale for utilization of captured carbon, where the objective is to enable the carbon product to be offered at prices which are competitive both with natural “flake” graphite and synthetic graphite from petroleum coke. In the presence of decreased feedstock costs, synthetic graphite prices would fall organically, potentially spurring a cycle of private investment once this captured carbon feedstock is integrated into value chains as an input. This could lead to further efficiencies and innovation, such as providing an avenue to commercialize novel technology that converts gaseous carbon dioxide directly to the solid carbon flake ideal for making synthetic graphite. While finding market incentives to bury captured carbon underground is an understandably arduous venture, the opportunity to commodify it as graphite is one to be exploited.

This could also revitalize 45Q. Presently, the tax credit primarily subsidizes enhanced oil recovery—the injection of carbon dioxide into oil and gas wells to maximize extraction—which constitutes roughly 75 percent of all current utilization of captured carbon in the United States. While well-intentioned, the merits for subsidizing enhanced oil recovery as a means of achieving net-zero are subject to considerable debate, and it is disputed whether this process is truly carbon-negative.

Producing synthetic graphite through captured carbon is a verifiable pathway to creating an economy for captured carbon in earnest, and it provides a crucial component of what must eventually be an all-of-the-above strategy towards abating the graphite supply crunch. There should be little doubt that minerals such as graphite are to the energy transition what hydrocarbons were to the industrial revolution, and forward-thinking governance will be required to avoid the pitfalls of the latter. Kickstarting a robust ecosystem for synthetic graphite production from captured carbon is the kind of market-driven solution a mineral-intensive future will demand.

William Tobin is a program assistant at the Atlantic Council Global Energy Center.

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William Tobin

Africa China

EnergySource Apr 25, 2022

The EU’s plans to replace Russian gas: Aspiration and reality

By John Roberts and Julian Bowden

The implementation of the EU’s REPowerEU plan looks to be a monumental task. The authors offer insight into the EU’s various options in its effort to remove Russia from its gas balance and greatly reduce its hold over the continent.

Energy & Environment Energy Markets & Governance

EnergySource Mar 21, 2022

Beware: Russia’s new energy sources down but not out

By Leslie Palti-Guzman

Current EU sanctions on Russia leave open the possibility of future Russian dominance in the trade of LNG and hydrogen, both crucial fuels in the energy transition. But there are policy options that would both prevent Russia from establishing supremacy in this trade and maintain EU unity.

Energy & Environment Europe & Eurasia

EnergySource Mar 11, 2022

As the US struggles to “green” supply chains, new EU battery regulation offers lessons

By Emily Burlinghaus

Energy & Environment Energy Markets & Governance

Learn more about the Global Energy Center

The post The US should leverage 45Q for the graphite supply crunch appeared first on Atlantic Council.

Ellinas quoted in Financial Mirror on solar energy production in Cyprus

jgomez — Fri, 22 Apr 2022 18:41:00 +0000

The post Ellinas quoted in Financial Mirror on solar energy production in Cyprus appeared first on Atlantic Council.

How the G7 can fund its clean green plan

Hugo Dixon — Fri, 22 Apr 2022 18:20:02 +0000

This is the second of two pieces on the G7’s vision for a clean green plan. Read the first installment here.

While the West’s vision to decarbonize the Global South and fight Chinese influence is promising, it’s nothing like a green version of the Marshall Plan yet. It needs to be.

First outlined at least year’s Group of Seven (G7) summit, it will only reach its full potential if the West’s leaders make it a priority. Covering geopolitics, climate, trade, investment, and aid, it cuts across multiple government departments—and only the leaders have the capacity to break down the bureaucratic silos inside their governments.

For now, it’s unclear whether the West will show unity of purpose in driving forward its vision, which is comprised of American, European, and British plans. This is partly because the leaders are distracted by Ukraine, and because various actors—especially the United States and the European Union (EU)—have very different approaches to climate policy.

This, among other reasons, is why the G7 must be clearer about what it is trying to do. For example, at the moment, US President Joe Biden sometimes sees Build Back Better World (B3W), the American component of the strategy, as a catch-all infrastructure initiative. But it will achieve more if it is sharply focused on helping the Global South with fast and fair transitions to net-zero carbon emissions. These G7 powers also have vastly different approaches to their own climate policies, with the EU and United Kingdom being the most aggressive, which will make it harder to approach the rest of the world with a unified plan.

Having different names—B3W, the EU’s Global Gateway, and the United Kingdom’s Clean Green Initiative (an idea I helped shape in a pitch to British Prime Minister Boris Johnson in March 2021)—doesn’t help either. But the exact name is less important than picking a single one and coordinating more closely under it: The G7 will then be able to sing from the same hymn sheet and motivate all the relevant stakeholders, from politicians and policy makers to financiers and international financial institutions.

The G7 should also think big. The United Kingdom, which has been leading on a deal to decarbonize South Africa and is still president of the 26^th United Nations Climate Change Conference of the Parties (COP26) until November, is aiming to push decarbonization plans for a few more countries this year. France has proposed that the EU add five more African countries, including Egypt and Morocco, to the list. And Germany, as this year’s president of the G7, has produced a master list with each G7 country being given responsibility for one or more countries in the Global South. Meanwhile, several large emerging countries, including Indonesia and Vietnam, are interested in partnership deals.

This is a useful start; but to be transformational, the plan needs to cover the bulk of the 130 or so countries that make up the Global South over the next few years.

The G7 also needs to be clear what it is looking for: ambitious 2030 carbon-reduction targets and net-zero dates of around 2050. Some developing countries will argue that this is too much of a stretch, rightly pointing out that because they haven’t caused most of the emissions responsible for climate change, it’s not fair to keep them trapped in poverty.

Yet they all signed up to the COP26 Glasgow Climate Pact, which called for net zero targets of “by or around mid-century” and committed them to revisit and strengthen as necessary their medium-term decarbonization plans.

Developing and emerging countries have much to gain from rapid transitions to net zero. Not only will they avoid the worst ravages of climate change, but hundreds of millions of people will gain access to electricity for the first time; millions of lives will be saved each year from lower levels of air pollution; and their industries will be at the forefront of the next industrial revolution. Finally, switching to clean energy will save them money as oil and gas prices soar.

But funding for this grand collective plan remains an issue.

Turning billions into trillions

The Glasgow Climate Pact emphasized the need to take “different national circumstances” into account—and clearly one of the most relevant circumstances for developing countries is that they lack the resources to hit mid-century net-zero targets. Many were suffering from debt loads even before the COVID-19 pandemic; now, they must cope with the higher food and fuel prices unleashed by the Ukraine crisis.

The G7 leaders say they will scale up climate finance from “billions to trillions” to fund their plan. Experts estimate the Global South will likely need one trillion dollars a year for the rest of this decade to make the switch.

But how can the West mobilize such a large amount of money? This is ten times the one hundred billion dollars per year in climate finance the rich countries promised to mobilize for developing countries by 2020—and still have not delivered. They, too, are loaded up with debt from fighting the pandemic, and their finances will take a further hit as a result of the Ukraine war thanks to increases in defense spending and subsidies to cushion their own consumers from energy price hikes.

Still, if G7 countries think outside the box, they can make relatively small amounts of taxpayer money go a long way. They can tap capital from various sources that don’t hit their budgets—private capital, guarantees, and international financial institutions—and thus turn billions into trillions.

But the lion’s share of the investment must come from the private sector and go to private-sector projects. The plan is a huge opportunity for Western investors, companies, and technologists to drive forward green industrial revolutions around the world by leveraging their entrepreneurial skills.

What’s more, Western banks, insurance companies, and pension funds are under increasing pressure to align their activities with the 2015 Paris Agreement. Large numbers of them have joined the Glasgow Financial Alliance for Net Zero, which accounted for $130 trillion in assets as of last year’s COP26. But little of this money is flowing to emerging and developing economies because the risks (such as bureaucracy, corruption, or political conflicts) are too high.

Developing countries can make themselves more attractive to private investment by cutting bureaucracy and corruption, ending fossil-fuel subsidies, introducing carbon pricing, restructuring bankrupt power utilities, and so forth. Meanwhile, Western governments can absorb some of the remaining risks themselves.

Rich countries have traditionally helped developing countries through grants or cheap loans. But guaranteeing private investments—something the EU and United Kingdom have promised to do—would be a better bet.

Multilateral multipliers

The West can also mobilize the multilateral development banks (MDBs), led by the World Bank, which have huge expertise in dealing with developing countries but haven’t yet been adequately focused on climate change. Nor have they worked sufficiently with the private sector.

Routing funds through them can be extremely cost-effective. They operate on the principle of “callable capital,” meaning their shareholders (the biggest of which are Western governments) put in a small fraction of their capital with the rest supplied only if there are losses. The MDBs can also leverage their capital by borrowing and they, too, can crowd in the private investors to work with them on common projects.

Now, G7 countries need to use their controlling shareholdings in most of the MDBs to give them a new climate-focused mission by devoting more of their resources to green projects. They should also top up the capital of those institutions, showing enthusiasm for the task.

Further sources of funding which don’t hit rich countries’ budgets are the International Monetary Fund’s “special drawing rights” (SDRs). These are something akin to global money-printing: While SDRs aren’t cash, they can be converted into hard currency. Last year, the IMF issued $650 billion in SDRs to its members in response to the pandemic. This followed the issue of $250 billion during the global financial crisis.

The snag here is that most SDRs have gone to rich countries that don’t need them, because the amounts are based on a country’s contribution to the IMF. That’s why the organization is working on a plan to channel $45 billion of the rich countries’ excess SDRs into a trust to help countries build resilience to climate change, among other shocks. But this is not nearly ambitious enough: The West should think ten times that number. After all, rich countries already have about $500 billion in SDRs that they don’t need.

Critics might say there is no magic money tree. Even though guarantees, callable capital, and SDRs don’t hit government budgets immediately, they could do so in the future; these are so-called “off-balance-sheet liabilities.” While that’s true, they pale in comparison to the off-balance-sheet liabilities that the West is running by not tackling climate change decisively—and by reacting too late to the threat from China.

The West has the basis of a clean green plan which not only helps save the planet but also has huge geostrategic benefits. But it will only achieve its potential if it shows ambition and unity of purpose while nailing down exactly where the money will come from.

Hugo Dixon is a journalist, campaigner and entrepreneur. A version of this article was published by RUSI.

The post How the G7 can fund its clean green plan appeared first on Atlantic Council.

How Putin made the case for the G7’s clean green plan

Hugo Dixon — Fri, 22 Apr 2022 18:18:25 +0000

This is the first of two pieces on the G7’s vision for a clean green plan. Read the second installment here.

Imagine a policy that simultaneously turns the screws on Russia, sends a powerful message to China not to flex its muscles, and helps save the planet. It sounds like snake oil—but the West already has the bare bones of such a policy.

Think of it as a green “Marshall Plan,” or a green alternative to China’s Belt and Road Initiative (BRI), the massive infrastructure project launched in 2013. The Group of Seven (G7) large industrial nations communicated their vision for this loosely coordinated strategy at their summit last June with an alphabet soup of acronyms.

Its components include the United States’ Build Back Better World (B3W), the United Kingdom’s Clean Green Initiative (CGI)—which I helped shape with a proposal to British Prime Minister Boris Johnson in March 2021—and the European Union’s Global Gateway. Collectively, it is designed to help the Global South (in Asia, Africa, and Latin America) decarbonize their economies rapidly, fighting climate change while preventing them from falling into China’s orbit.

Now, the G7 needs to turn its vision into reality to respond to Russian President Vladimir Putin’s invasion of Ukraine, which has highlighted European dependence on Russian energy. While it’s unclear whether the West will show unity of purpose in driving this plan forward, or if it can mobilize the trillions of dollars in private capital needed to fund it, its geostrategic and planetary rationale is undeniable.

First, it broadens the anti-Russia coalition to include more of the Global South. While rich liberal democracies have united to oppose Putin’s invasion, many poorer countries have been reluctant to condemn it. The war and ensuing sanctions have already jacked up global energy and grain prices, threatening massive hardship for any poor country that is a net importer of these basic commodities.

The embryonic green Marshall Plan speaks directly to two of the Global South’s main needs: to develop its economies and avoid the worst ravages of climate change.

Putin’s invasion of Ukraine makes this plan doubly relevant. Developing and emerging countries desperately need cheaper alternatives to hydrocarbons, but their already rickety finances have taken a further clobbering, so they have little money to invest in renewable energy. The West needs to encourage private capital to flow by targeted financial engineering.

What’s more, it will be hard to cut off Putin’s source of income so long as he sells hydrocarbons to the Global South. While the West could try to bully poor countries into ditching Russia, it would be more effective to help them meet their energy needs in an alternative, cleaner way.

Finally, some emerging countries may be able to produce renewable energy not just for themselves, but also for the West. For example, North African countries are particularly well placed to send clean energy across the Mediterranean and help the EU wean itself off Russian gas.

Countering China

With Washington concerned about Beijing helping Moscow evade sanctions, or supplying it with military equipment, it’s looking to send a powerful message.

But the effectiveness of any economic threats to Beijing will depend on how big a coalition the United States can muster. Chinese President Xi Jinping will calculate that the rest of the West will be reluctant to hit China with sanctions, given how much Western economies depend on trade with his country (China’s economy is ten times the size of Russia’s—and the gap is growing). Xi will also be comforted by the fact that China has developed deep economic and diplomatic ties with large chunks of the developing world through the BRI.

But if the West builds up alternative suppliers of goods and raw materials such a rare earths in the Global South, it will cut its dependence on Chinese imports. Then, Xi won’t be able to blackmail it the way Putin has blackmailed the EU through the bloc’s dependence on Russian gas.

Although China got a head start, the BRI has been losing momentum. Chinese investments into BRI nations, which peaked at $125 billion in 2015, fell to $47 billion in 2020. Recipient countries are finding it hard to service their debts to Beijing. Meanwhile, 35 percent of BRI projects are struggling with corruption, labor violations, environmental pollution, and public protests, according to a recent survey.

This means the West can still catch up. The G7 set out various principles to guide its plan, many of which stand in stark contrast to the BRI: It’s a values-driven vision providing for transparency and sustainability, and a market-led approach instead of China’s reliance on loans from state-owned banks.

The emphasis on harnessing private-sector finance and business is the G7 plan’s competitive edge over the BRI. Meanwhile, the focus on transparency could bring big governance benefits to developing and emerging countries (although some governments in the Global South may balk at adopting this principle).

A clean, green planet

A healthier planet, of course, would be the plan’s other chief benefit. The core idea is to help the Global South make fast and fair transitions to net-zero carbon emissions through partnerships with individual countries, often known as “country-led platforms.” Carbon-intensive industries would be rapidly shuttered and clean ones created, while workers in old industries would be retrained so they could benefit from the transition.

South Africa, a coal-dominated economy, signed the first deal along these lines last year. The United Kingdom, France, Germany, the United States, and the EU agreed to provide it with an initial $8.5 billion in concessional finance—with the idea that much more private capital would flow in. South Africa also announced a net-zero target of 2050, making it one of the few large emerging markets with such an early target (China and India, for example, have set targets of 2060 and 2070, respectively).

Rich countries, especially the United States, will also need to do much more to cut their own emissions. But a rapid transformation of the Global South will make a big contribution to the overall goal as Africa, India, and other parts of the developing world will not need to follow the West and China down the dirty path to growth.

An ambitious G7 plan could even set off a virtuous circle that prods China to decarbonize. If Beijing wishes to stay in the game of providing infrastructure to developing countries, it may respond by further “greening” the coal-, steel-, and concrete-intensive BRI. The result would be a competition between the West and China to green the Global South.

At the very least, the plan can help the West pressure Beijing into to decarbonizing its own export industries. After all, it cannot credibly threaten to switch away from carbon-intensive Chinese exports unless it helps build up alternative green suppliers in other emerging economies.

The EU already plans to apply “carbon tariffs” on some carbon-intensive imports from China and elsewhere. The German government will likely use its G7 presidency to bring other countries with ambitious net-zero plans into a “carbon club,” which would then collectively impose tariffs on non-members.

The snag? It is easy to portray tariffs as a protectionist measure that will keep countries poor, so the EU’s plans could backfire in the Global South. India, Brazil, and South Africa have already expressed their “grave concern” (jointly with China) over carbon tariffs.

But things would look entirely different if the West first helped developing and emerging-market countries build up green industries. Countries that signed partnership deals could then be exempt from the carbon tariffs. They might even start clamoring for tariffs to be imposed on countries such as China that continued to use dirty technology.

The time is now

The Ukraine crisis underlines the importance of the G7’s green Marshall Plan. Currently, the West is paying the price for failing to react to Putin’s invasion of Georgia in 2008 and Crimea in 2014. It should not make the same mistake with China—which is likely a longer-term threat.

And while it will take many years to foster green industrial revolutions in the Global South, Beijing will get the message now if the West drives its plan forward with ambition.

Hugo Dixon is a journalist, campaigner, and entrepreneur. A version of this article was also published by RUSI.

The post How Putin made the case for the G7’s clean green plan appeared first on Atlantic Council.

Ellinas quoted in Financial Mirror on new EU Directive to promote RES

lbowen — Fri, 22 Apr 2022 15:54:00 +0000

The post Ellinas quoted in Financial Mirror on new EU Directive to promote RES appeared first on Atlantic Council.

Ellinas in CyprusMail: European hydrogen development and opportunities

lbowen — Sat, 02 Apr 2022 15:54:00 +0000

Flagship event Mon, March 28, 2022 • 1:30 pm ET

The post Ellinas in CyprusMail: European hydrogen development and opportunities appeared first on Atlantic Council.

Why South and Southeast Asia are pivotal to global climate and energy ambitions

Atlantic Council — Fri, 01 Apr 2022 20:03:00 +0000

Watch the full event

2022 Global Energy Forum

The Atlantic Council Global Energy Forum is the premier international gathering of government, industry, and thought leaders to set the energy agenda for the year. This year’s event took place on March 28-29, 2022 in Dubai.

Event transcript

Uncorrected transcript: Check against delivery

Speakers

Robert Fee
Vice President of International Affairs and Commercial Development, Cheniere Energy

Kavita Gandhi
Executive Director, Sustainable Energy Association of Singapore

Binu Parthan
Head of Regions, International Renewable Energy Agency

Desiree Tung
Deputy Director of External Relations, Energy Market Authority of Singapore

Derek Wong
Senior Director, Government and Public Affairs, Excelerate Energy

Moderator

Reed Blakemore
Deputy Director, Global Energy Center, Atlantic Council

REED BLAKEMORE: All right, so, I guess, welcome, everyone, to our third set of breakout sessions of the day: Climate and Energy Opportunities in South and Southeast Asia.

I think this is a particularly relevant panel because, obviously, coming out of COP-26, and headed into COP-27 and COP-28, where I think the global South is going to have a voice to say, the—it’s—it’s clear that nowhere is the challenge greater, or perhaps the opportunities richer, than in Southeast Asia.

I think you’re going to see—we all know we’re going to see the majority of energy demand growth come from the region until 2050. You know, major economies in the region continue to show significant economic growth potential, growing populations. I think this is a really dynamic region, and particularly one where, as you look to climate action, you know, an urgent priority continues to be the displacement of coal from the energy mix. And I think we have a number of different pathways we can use to pursue that transition, and that’s all still happening in a period now that we’re finding ourselves in, where the conversation around energy security is also incredibly important.

And so, this is a region now that is really at the starting block of pursuing both energy transition, climate goals, and solidifying its energy security at the same time. And that makes the pathways that it can take extraordinarily diverse.

And to that end, we have a fantastic panel with us today. We have Robert Fee, vice president of international affairs and commercial development at Cheniere Energy. We have Kavita Gandhi, executive director at Sustainable Energy Association of Singapore. We have Binu Parthan, head of regions at the—at IRENA. We have Desiree Tung, deputy director of external relations at the Energy Market Authority of Singapore. And it’s particularly good to see Desiree, because I haven’t—I haven’t seen her since, like, two years ago, before the pandemic started. And I’m going to use this opportunity to head—make sure I get back to Singapore International Energy Week. So I’m looking forward to that. And then lastly, we have Derek Wong, senior director of government and public affairs at Excelerate Energy.

How I want to start this panel—I think I’d like to turn to each of you for some opening thoughts, and then open it up to the audience, of course, for Q&A at some point.

But Binu, I’d like to—I’d like to start with you. Head of regions is an awesome title, to say the least. But it means I’m going to pin you with a bit of a tough ask, which is, you know, can you paint a picture of the region for us? You have a lot of diversity across the various, you know, country contexts, each pursuing their own pathway—again, as I mentioned. Where do you see the development of the region’s energy and—energy security and climate story evolving? And what are the particular opportunities and challenges you see arising?

BINU PARTHAN: Yeah, thanks very much. And again, thanks for having IRENA on this panel.

We just launched earlier today the World Energy Transitions Outlook, which provides a clear pathway for the world to decarbonize, including in this region. And one of the key highlights there is that it is possible to have an energy transition aligned with the temperature goals of the Paris agreement in a manner which there are positive economic, environmental, and social benefits. So it’s not something which adds cost, but there are benefits. For example, things like jobs—we see that there could be significant job growth in the region. So the overall picture is positive.

And I just came here from the MENA Climate Week, where we had one of our members, Egypt, confirm to us today that energy transition will be on top of their COP-27 agenda. So I think there is a clear direction in which the energy transition is happening, and it’s not happening simply because of the environmental challenges are so—the climate change rationale. It’s happening because of the economics and the socioeconomics of it.

Now, for the region as such, I mean, we do work closely with ASEAN. And we are developing an energy transition roadmap for ASEAN-10, which we will publish later this year, which will show a clear pathway for countries in the region to move forward. And taking advantage of the fact that Indonesia is the G-20 presidency, and you will see that energy transition is in their global agenda, and we are working with the G-20 presidency to ensure that this is underlined.

Now, one of the big issues, or one of the main opportunities in the region, has been around coal powering energy. And our cost analysis showed that coal is longer viable as a power option. And for the last seven to eight years or so, renewable energy investments have outpaced coal and other power options consistently. And we are also increasingly seeing in the region and beyond, is that it costs more to keep operating coal-powered plants, compared to renewable energy investments. So until then, things are clear.

Now, when you try to increase the share of renewables in the region and beyond, there are concerns and there are challenges. And obviously, a lot of utilities in the region are worried about the instability of the grid when you go beyond 30, 40 percent or so. So where we see a significant opportunity in the region is the flexibility of technologies. So one is energy storage, and there are opportunities to make the grid a lot smarter and intelligent to address some of this variability. But also, what we see as an interesting option is the regional interconnections, connecting grids across the ASEAN region. There have been a lot of efforts there; it needs to be supported by the political will, to ensure that the countries are connected. So every 1 degree longitude that you go, you do have a saving of about one hour of energy storage or so. And that is something you can achieve by—by interconnections.

And something which we are seeing there’s a lot of interest from the region and beyond, is the role of green hydrogen, and how that compares to other options like gas, et cetera. And here, again, the WETO, which we launched today, we believe that green hydrogen will be an important… technology to storage, et cetera. But again, it may not be the answer for all the challenges that you may have. There are sectors like aviation, navigation, could also be some industries like chemicals or iron and metals, et cetera. So it’ll have an important role for the green hydrogen, as well.

So going forward, I think we are very clear that there is a roadmap with renewable energy at the center of it, with electrification of the end users, particularly transport, driving a lot of demand for electricity, and an important role for green hydrogen and also flexibility technologies. And here, as an example, we are working with the Indonesian government on an Indonesian energy transition outlook, which we hope we will launch in Bali around September. And being the largest economy in the region, we believe that what Indonesia will do could actually be a model for other countries in the region. So we remain very optimistic.

There are certain challenges currently around energy security, which we believe are short-term, and probably driven by more emotional and other considerations. But again, if you take the long—medium- to long-term, the options are very clear, which is electrification, and with that, electricity coming from renewable energy, supported by flexibility technologies and green hydrogen.

So this is where we see the region going, and we will continue to work with all our member countries in the region, to support them on this pathway.

Thank you.

REED BLAKEMORE: Thank you, Binu. I—you know, I—it’s a great macro-level overview of the region. And I think it’s a—it sets us up well to dive into, you know, what I hope is a bit of a country-level case study, in a way.

And I’d like to turn to Desiree. Singapore is a—is a major hub in the region, across any number of areas—you know, economics, innovation, what have you. It’s also one that set several very aggressive, and very ambitious, sustainability targets for itself. Can you walk us through those targets? And I think in particular, what’s of interest is, what is the underlying strategy that helps you reach those targets? And again, I think pulling off of, you know, what Binu just mentioned, you know, how do those issues around climate ambition and energy security—how are those interwoven with those various efforts?

DESIREE TUNG: Thank you very much, Reed. And a big thank you to the Atlantic Council for inviting us back. I think it’s lovely to be back in the UAE. I was just saying, it’s been two years since we’ve been back. So it’s lovely to see old friends. It’s great to be here with Kavita and IRENA, and of course, new friends. I think we’ve just met our friends from Chiniere and Excelerate.

So I think Singapore—like every other nation, we are committed to our climate change goals and cutting our emissions… We are committed to halving our emissions by 2030, peak to 33 million tons of CO2. So, to that end, we’ve recently released the Singapore Green Plan. And this sets out, basically, Singapore’s plans over the next 10 years to really drive the low carbon energy transition. One of the key pieces of that is the energy reset. So the energy reset really looks at our four key supply switches for Singapore.

So the first switch is natural gas. Currently, we’re about 95 percent powered by natural gas. It is the cleanest fossil fuel, and it will remain the mainstay of our generation’s system. But of course, we are looking at—you know, we have CCGT, so we have highly efficient power plants. We are also looking at, you know, how we can drive efficiencies through maintenance, reliability of our plants, and all of that.

The second big switch is solar. Singapore—I mean, those of you—I don’t know how many of you have been to Singapore. We’re a small island. We’re blessed with great food, beautiful gardens, but unfortunately, we don’t have a lot of natural renewable resources. So the most viable option for us is solar. But I think, also, as you know, as a small country, we can’t cover the whole island with solar panels. But nevertheless, we do press on. We have actually increased our install capacity by four times over the last 10 years. So it’s been a huge achievement for us, and we continue to increase the deployment. In fact, we have committed to 2-gigawatt peak by 2030.

So that doesn’t sound like a lot. But the other third piece is, obviously, we’re looking at imports from within the region. So we’re actually looking at low carbon renewable imports. So we’re hoping by 2035, that will make up about 35 percent of our energy mix.

And the final piece that we look at is low-carbon alternatives. So we’ve recently invested over 55 million Singapore dollars into low-carbon research—into hydrogen CCUS. I think that’s one of the key pillars of Singapore, is we’re really looking at, you know, how we can look at research and development, and new technologies. I think at the end of the day, that’s why I think we—we come to events like this, and—and look to build connections. It’s because it’s about the creativity of the human mind, and technologies that’s going to get us there, and really push the needle.

So, yeah. Thank you very much.

REED BLAKEMORE: Thanks, Desiree.

And, I guess I might ask a quick follow-up question, which is, you know, Binu—both you and Binu mentioned, you know, the ability of the interconnectedness of the region in so many ways, right? And does Singapore’s, you know, relatively advanced, you know, economic development—and energy story, in some ways—position it to be a leader in the facilitations, in terms of facilitating those transitions of its neighbors? And what does—what do—what does that inter—international cooperation piece play within your clean energy strategy?

DESIREE TUNG: Absolutely.

Hello?

REED BLAKEMORE: Yep.

DESIREE TUNG: Thank you very much for that.

Actually, international cooperation is a very important part. I think building not only regional but international connectivity is a really important part of the whole energy transition. One of the big pieces that the energy market authority does, is we organize the annual event, the Singapore International Energy Week, which we’ve had the privilege of Atlantic Council, IRENA, as well as SEAS join us. In fact, I know Chiniere also speaks, and hopefully Excelerate, too, will be able to join us. It’s held at the end of October, so it’s been running for the last 15 years. And really, what SIEW is about is really pulling together different players, different stakeholders, to come together, to really look at what are some of the energy issues that impact Asia? And how can we come together, to really kind of push the needle, to bring us to that, you know, next level of the transition? You know, what are the pathways? How are we going to get there? And how can we work together to do it?

REED BLAKEMORE: I’m taking that as an invitation, and I’m going to run with it.

DESIREE TUNG: Absolutely.

REED BLAKEMORE: Here we go.

DESIREE TUNG: Open invitation, anytime.

REED BLAKEMORE: Exactly.

I think, you know, I might now turn to Bob and Derek. There is—what Desiree just mentioned, is a part of this process. You know—I mean, to quote you, Desiree, gas, still going to be a part of the picture. And I think when you look in the other parts of the region, you know, again, where you’re trying to quickly displace coal—and that appears to be in a lot of ways, you know, a significant short-term goal, what does the role—what does gas—what role does gas have to play, both in terms of, you know, A, displacing coal; but, B, positioning gas as a way to facilitate additional clean energy transformations throughout the region?

I might start with you, Bob, and then we’ll go to Derek.

ROBERT FEE: Yeah, sure. Thank you.

So one thing I think it’s always important to remember when you talk about, you know, south or Southeast Asia—because we’re focusing on Southeast Asia today—is how diverse the region is. And so we’re able to hear kind of the experience of Singapore. But within the region, we have a vast difference in kind of, where those countries are, in terms of their energy mix, as well as their climate ambitions.

And so, I think that’s a good baseline to remember, that we need to think about what those countries are going to pursue, and they might have different strategies. And so I think part of those strategies, of course, has to be a heavy component of renewable deployment. But because of the infrastructure and the near-term demand for energy, natural gas has to play a role. And you know, I think in Southeast Asia, a lot of the demand drivers are even going to be more pronounced in the next few years, with the current kind of geopolitical situation and demand in the LNG market. And that’s economic growth, and population growth, industrialization, as well as—I think one of the key components on the natural gas side is, you’re going to have a lot of declining indigenous production in the region.

And so in order to meet those economic growth targets and kind of fit in the infrastructure, as well as meet environmental targets such as improving air quality, and climate targets through coal-to-gas switching, you know, natural gas can play that—natural gas and LNG can play that critical role, supplying the region. And you know, I think going forward, one of the, you know—we know how to do this in the United States, in terms of building infrastructure and getting LNG on the water. In the region, we’ve had some difficulties of late in terms of building regasification infrastructure, and kind of having regulatory reforms. And so, I think in order to kind of ensure that we have the coal-to-gas switching benefits in the near term, from a climate perspective, we really need to make sure that we focus on building that infrastructure on the gas side. And then that helps compliment the growth on the renewables side.

REED BLAKEMORE: Derek, I might actually pitch you the same question, which—and I think—you know, Excelerate is an interesting case study here, because as Desiree mentioned, you know, not a lot of geography, you know, to put an import terminal on. And that makes a floating storage option like Excelerate particularly interesting. How are you—what’s your outlook on the region? And I think, again, similarly, you know, how do you see your presence in the region, you know, being a value-add to these clean energy transitions, that are still a significant priority over the long term, especially?

DEREK WONG: Yeah, thanks for that. And I’ll just first echo what Robert just said. South and Southeast Asia is a diverse region. You have a lot of different economies. You have a lot of different types of geography, of island nations, you have nations that suffer from flooding. And so the idea that you have an energy mix and a transition that is specific to—so the country is really important.

For Excelerate, we’ve got almost two decades of experience building, developing, and operating floating LNG terminals. And so we have a fleet of floating storage and regasification units. It’s a bit of a mouthful, so we say FSRUs. But one of the biggest benefits of FSRUs are the flexibility, the fact that they are scalable; the fact that they can be deployed more quickly, and they don’t need the land requirements of land-based terminals. So if you have—if you’re—if you’re constrained, like a Singapore, or other countries in the region that have, you know, chains of islands, you can think about different deployment options, different docking and mooring options, in order to be able to deliver that natural gas in the form of LNG.

And earlier this month—I’m based in Houston, and so CERAWeek came to Houston; it was back in person. And John Kerry, the special presidential envoy for climate change, said very clearly, natural gas is a key component of the energy transition.

Now, obviously, there are—there are ways to make it more efficient, to abate the emissions. But a lot of the countries that we’re talking about are trying to have an offramp from coal. And so, LNG is a great way to bring down emissions, but be able to fuel economic growth. In South Asia, Excelerate has been operating in Pakistan since 2015, and in Bangladesh since 2018. And we’ve seen a difference in the deliveries and the diversity of supply options. When domestically produced gas is on the decline, you need to be able to have that security of supply to accompany the pathways to decarbonization. And so being able to quickly and responsibly build out that infrastructure, I think that’s a really key part of the equation.

REED BLAKEMORE: Kavita, I want to turn to you. And I apologize for making you wait. You know, I’d like you to kind of bring us back out to this perspective on, you know, how do we make this all sustainable, right? How do we make sure that we keep our climate targets at the center of our, you know, of our ambitions, as, you know, as the region continues to grow, and becomes more energy-hungry, natural gas and LNG providing a strong, you know, base of production there. But also, you still need to pursue those renewable energy opportunities, you know, even if it’s limited solar, if—you know, it’s electrification. Hydrogen, as Binu mentioned, is a huge—is a huge piece of that. You know, how do all of these pieces fit together, into a sustainable energy ecosystem?

KAVITA GANDHI: So I think if I take the Singapore example to start with, there’s a need for clear messaging. So in Singapore, like what Desiree mentioned, you know, there’s very clear messaging from the government, via the Singapore Green Plan, which sets the goals. And it’s—like we say, it’s a live document, where it can change, but it always changes for the better. So that’s one thing that I think we need in the region, is very clear policies.

If you ask me, there’s one thing that’s really—could accelerate, would be policies. The minute that you see that there’s a will from the government—if you look at Indonesia, we can see that shift in the last couple of years, and you can see things moving already. And we see it very clearly, because our members—while Singapore is a great market, but it’s not a big enough market. So we look at Southeast Asia as a market for our members. And you can see which are the countries that they are able to deploy projects in.

So I think diversity—and there’s no one-size-fits-all, so it’s going to be different. And even in terms of mix between the type of renewables, or it’s gas, it’s going to be different for each country. That’s what I feel. And we should not try to box it up, or have a formula that applies everywhere.

The other thing I think, which I have seen, working in this space for a long time, is that there’s a lot of need for capacity-building in the countries around us. And as SEAS, we have a program together with the Singapore government, Asian Development Bank, and—and we execute those sort of capacity-building programs, where we work specifically with policymakers. And—and you talked about grid intermittency. I think that is a nightmare for a lot of policymakers in the region. What is going to happen to my grid when you start pumping in all those renewables?

But then we have solutions, like you mentioned. I mean, in Singapore, we’ve—we have a lot of emphasis on demand response. There’s storage technologies, there’s various softwares that are available now to even out that intermittency. So, yeah. So I think we need to talk more about it, and talk a lot more to—I think the private sector is ready, but what is stopping them is very stable, clear policies. That will make it work.

REED BLAKEMORE: I want to draw on an item that’s been mentioned a couple times thus far. And that’s the—that’s the international partnerships and cooperation piece. And I’ll turn—Binu, I’ll toss this to you. You mentioned, you know, cooperation within the region on, you know, interconnections, et cetera. But yet, you know, we’ve just heard from Kavita that, you know, looking outside the region for assistance, for shared learning. And of course, you know, both Bob and Derek, you know, are bringing their resources to the region. How does the international partnership piece work?

And I think, you know, how does the international partnership piece work, which—in which non-regional countries, you know, operate in the region on good faith, right, as good partners? And what are those principles that should be adopted, as folks continue to engage with the region’s energy development story?

BINU PARTHAN: Yeah, at the regional level, just to take an example of Africa—although out of context—we are working with the African Union to develop a continental master plan for electrifying all the countries, and creating a single electricity market. So at the regional level, it’s important to have institutions with the right mandate to create common markets for electricity and energy. And that’s a major important factor. And again, having institutions like, you know, ASEAN, hopefully with the roadmap could do more. And then, it’ll be followed by national policies.

But at the international level—and you made this important point—that we’ve now created, for example, the collaborative frameworks at IRENA, where our 184 members, which account for, like 98 percent of the global energy consumption, where we have this space, where, as you mentioned, Kavita, there are countries in Southeast Asia which are worried about if the renewable energy share goes up beyond a certain point, what do we do? Do we bring in natural gas, or do we bring in some spinning reserve from coal to support that? And they have an opportunity to talk to Colombia as to how they integrate grid-level storage on their supply side, et cetera. So we are creating that framework.

But again, that just two policymakers or regulators talking to each other, that needed to be followed up by action on the ground. And here again, as Kavita mentioned, like, Indonesia has now put in place a carbon tax. And it’s coming right from the top, from the finance ministry. And that’ll give the right signals as to which are the energy options that the country would like to promote. And that actually translates to actual revenues, or incentives for the private sector, and it sends a very clear signal to the private sector, and then they can make these investments.

And so, I think in a sense, there needs to be more cross-fertilization of ideas, like the collaborative frameworks. And just as an example, something which we launched last week is an issue on critical minerals, which we believe that, whether it’s going to be natural gas or electrical storage, will be determined by critical minerals—where they come from, at what price point they are. And I think there is an opportunity to collaborate on that.

So in a similar way, IRENA will create more platforms for exchange of ideas, but again, that needs to be driven in the regions by very strong regional institutions, with the mandate and the drive to implement that, and then to the national level. And then we will have successful cases. And I think in West Africa, we have seen institutions like ECOWAS do that to some extent, and we have this in Central America, also. And we do hope that Southeast Asia can—it has the potential and the leadership in several countries. And if we can do that at the region level and move that to the national level, then we have a very good model in the region, I think.

REED BLAKEMORE: I’m going to resist the urge to jump into the critical minerals bag, because that’s one of my favorite issues. And we’ll just—it’ll ruin the topic of the session. I’ll spend all the time talking about that.

But I think it does bring up an issue that I might—I might respectfully disagree with you, slightly, in reference to your comments about energy security, and whether or not those are, you know, short-term considerations, and just considerations of the moment. Because I think when you—when we start thinking about the, you know, the balancing, you know—balancing which supply chains we are or are not dependent on, whether that be a—you know, a natural gas supply chain, or a—or in minerals and materials supply chain—those are considerations that I think have to meet.

And to be, you know, to be fair to Bob and Derek, I think there is a little—I think there is a justifiable concern, in some ways, that, you know, as the rest of the world begins to think about, you know, LNG as an energy security solution, you begin to—you know, the region can also run into supply—you know, a tightened supply chain of its own.

And how—you know, from your perspective—and I’d also be interested to hear Desiree’s thoughts on this, given, you know, that natural gas is, I think, number-one—switch number one, if I remember correctly. You know, you’re looking—if gas is that solution, you’re looking at a tightened market. You’re looking at a market that, you know, might not offer as much energy security as other options. Or will it? I think it’s an interesting debate.

So I’ll turn to Bob, and then Desiree. And then of course Derek and Kavita, I’d love for you to weigh in.

ROBERT FEE: Yeah, so I think a panelist on the last panel talking about European energy security used a quote that diversity is the only form of security. And I think that’s true in Europe, and that’s true in Southeast Asia, and that’s true whether you’re talking about energy sources, or you’re talking about critical materials. You know, diversity is the only form of security, and you need to pursue all of these different—all of these different policies, and all of these different sources. And I don’t think that they have to be, you know—natural gas infrastructure is going to support renewable development, and so they can kind of—they can work in tandem, especially when the demand is so great.

And I also think it’s important to—I really liked kind of thinking about this from, you know, adding the climate perspective comment that Kavita mentioned about policy and messaging—is we need to be, I think, consistent about how we think about these issues. You know, in the last few years, particularly in the West, we’ve had this pretty aggressive shift on natural gas. And I think that that, you know, at least in the West, kind of misses the role of natural gas in Southeast Asia and the rest of Asia.

You know, in COP-26 in Glasgow, we just talked about, and reached an agreement, to phase down coal. We didn’t reach an agreement to end coal. And so thinking about, kind of, are we ending coal and gas at the same time, I think, is going to leave nations not only insecure from an energy perspective, but also, you know, not able to meet their economic demand.

And so I think, you know, again, thinking about the diversity of these countries, many of these countries have natural gas as a key part of their climate commitments. Now, some of them have different climate commitments than Singapore, which is more advanced, or European countries—India talking about, kind of, net-zero by 2070. But that has to be aligned with their development. And so I think that the climate aspect actually goes hand in hand with the energy security aspect, if you take a, you know, realistic view of the market.

And I don’t think that doesn’t mean that we have to be ambitious. I think that that—we just have to think about where that comes from. So you talk about critical materials and where those come from, they have supply chain issues. You know, I think the onus is on the producers, on the suppliers—for us, Chiniere and the United States—to think about how we improve our supply chain, and reducing methane emissions, increasing the transparency around the quantification of greenhouse gas emissions, that then benefit our consumers of our product in Southeast Asia.

You know, upstream methane emissions are 30 percent of the emissions chain—or, sorry, upstream of kind of the combustion of natural gas is 30 percent of greenhouse gas emissions. Methane is a huge component of that. If we’re able to reduce methane emissions upstream in the US, that does have tangible benefits for Southeast Asia in their—in their consumption of LNG, and globally.

So I think the—I don’t think that those have to be, you know, exclusive of one another. But I do think that we need to be both ambitious and realistic about who should bear what burden, as we think about achieving climate goals, while also meeting energy demand.

REED BLAKEMORE: Desiree, I’m going to—I’m going to pick on you again, because you’re our—you’re our country-level representative here.

You know, energy security playing a role, we’ve talked about, you know, the various security considerations within, you know, both supply chains. And I think, Bob, you correctly outlined how, you know, cleaning the supply chain is equally as important a responsibility on the supply side, as it is on the demand side.

So how does—how is Singapore thinking about these issues? And I—you know, I think, you know, how is it thinking about these issues in the context of the region, as well?

DESIREE TUNG: Absolutely.

I mean, I think one of the things that we’ve all become acutely aware, is how sensitive the energy market is to geopolitical. I think the one big theme that I take away from here is not only is everyone driving toward the path of sustainability, but I think energy security has certainly come to the forefront.

I mean, in Singapore, when we look at energy security, I agree with your comments on diversity. I mean, even though we are, you know, going to be powered by gas, we are looking at imports. We are looking at solar. We even have geothermal, if you’re not aware. We are also tapping into geothermal. Those of you who have been to Singapore, we actually have a hot spring. If you come and visit us, you can boil an egg. It’s a nice tourist thing to do.

But I mean, from a policy standpoint, we do look at what we call the energy trilemma. I think you can’t look at energy security in isolation. I mean, when you look at policy, you also have to look at sustainability, and at the end of the day, we’re also looking at cost. So I think the three things need to be looked at in balance. I mean, I think when you look at the region, I think international cooperation is a key part of it, as well. You know, Singapore, we are very open in working with our, you know, international and regional partners, both in sort of ASEAN, APEC, G-20. I think this is where international organizations such as IRENA also have a big part to play, and SEAS within our ecosystem. So, yeah. So that’s kind of our take.

But I think one of the other areas—I think Kavita and I were also talking about—related to energy security, actually—is not as, maybe, as a sexier topic, but also energy efficiency is something that we’re pushing a lot in Singapore. It also underpins, because in Singapore we price electricity right, so we don’t subsidize. So it’s about sending the right price signal of our consumption. But I think maybe, Kavita, you can add to that.

KAVITA GANDHI: Yeah. So, exactly. I think you said it. Diversity is the best security. I think that’s the mantra for the day.

So I think in Singapore, we are looking at every option that’s available, starting with energy efficiency. So electricity has never, ever been subsidized, even though being the association, there was a time when the whole world was offering feed-in tariffs, and Singapore was not. And we were literally telling the government, you know, our members are going to die if there’s no feed-in tariff. But you know, there was no—no going, there was no distortion of the electricity market.

And eventually, you know, the prices became very competitive, and now, we’ve looked at every option, you know. So there’s 35 square kilometers of roof space in Singapore. We’re going to make that’s scoured with solar panels, and not just any solar panels. We are pushing at efficiencies. We have a lot of dollars going into research and development. We are looking at floating solar. We are looking at BIPV. We are looking at every surface that we can cover with some renewable.

And I think the other thing that works very well in Singapore is the cooperation, the way the government and the private sector works together. So I think before people invest in a specific technology, they are very, very sure that they can go in and make the big investments there, and that there will be more flipping and flopping in terms of the message that’s coming.

I mean, carbon tax is one such example, where it was declared that we will have carbon tax, and we’ll increase it at a certain pace. The pace got picked up this year, which was very happy news for all our members, and it’ll continue to grow. And I think that’s what is providing the space for renewables to play in Singapore.

So I completely understand that every country in the region is not like Singapore. But I think what is interesting is that all the countries are at different stages of development. And we have so much to learn from each other. I mean, Singapore doesn’t have everything. We don’t have the market. We don’t have the big market. We need to depend on Indonesia, maybe Thailand, Vietnam for the markets. We may have certain advanced technologies or certain solutions that have been tested in the Singapore market—maybe can be applied in these countries. And we are constantly looking to work with organizations, like the ASEAN Center for Energy, or Asian Development Bank, World Bank, to see how we can take some of these solutions to the region.

And that’s an effort that goes at every level, at G2G level, you know, where the energy market authority is working with the different electricity authorities in the region. And we as an association are trying to do a lot of that work at the private sector level, as well.

REED BLAKEMORE: Thank you, Kavita.

I think, you know, first off, totally agree, energy efficiency, vastly under-talked about, particularly when you’re talking about, you know, limiting demand growth or the severity of demand growth, at least, it’s a—it’s a critical solution.

I think, Derek, I said I would come to you on this supply chain issue, so I don’t want you to, you know, be left out of this. And I think—and particularly, you know, when you talk about Excelerate’s business model, I think you’re talking about a flexibility of solution, right, with that floating storage option. How does that flexibility play into this discussion around energy security and supply chains?

DEREK WONG: Absolutely.

So, you know, getting back to this diversity brings security argument, I heard yesterday from the Albanian minister for infrastructure and energy. Albania is a country that is largely dependent on renewables, almost 100 percent hydro. And she was talking about the need to diversify, because if you have a particular dry season, you’re worried about blackouts and brownouts. So as countries think about the targets for renewables and the continued intermittency and storage issues, how can other sources, like natural gas or LNG, be an onramp, or even a stabilizer, to meet seasonality of demand?

And our experience in Brazil—which, again, has a lot of hydro—has been that they’ve relied on LNG to be able to meet those times of the year. Last year, there was severe droughts, the worst droughts in 90 years in Brazil. And so there were a lot—there was a lot of LNG coming in, and the sort of security of supply that our FSRUs were providing, really helped Brazil navigate through that period.

And if I—come back to the region, in Bangladesh, LNG has only been a part of the energy mix since 2018. And today, LNG accounts for about 25 percent of natural gas supply. But because of the experience of having that security of supply and the reliability, the Bangladesh government is able to make certain decisions around canceling planned coal-fired power plants, increasing the distribution of gas, and allowing that to accompany their renewables targets. So, really being able to plan, based on that idea that you have—you can secure the energy transition, that’s a term I’ve heard a bit this week, that’s important.

And the way we think about it at Excelerate, because we operate our FSRUs as a fleet, we could, you know, start with a smaller vessel that has, you know, less storage, less regas capacity, and then scale up, and maybe do a swap, or expand the capacity as the needs change for the countries where we operate.

REED BLAKEMORE: You mentioned, you know, gas as a ramp-up. And as we kind of talk about this, you know, the intersection of energy security and climate action, you know, I continue to actually return to a comment, Binu, you made. And hydrogen seems to sit at the nexus of that.

You mentioned green hydrogen in your, you know, in your initial remarks. You know, and I don’t want to have a conversation about, the, you know, all the colors of the wind, when it comes to, you know, hydrogen. But I think, you know, can you—tell us more about the hydrogen potential in the region? You know, especially given that, you know, at least in the short term, we see a lot of gas potential in the region. And you know, that opens up blue hydrogen. That opens up additional storage opportunities through hydrogen. Could you speak a little bit to that, please?

BINU PARTHAN: Yeah, no, absolutely.

I mean, first of all, we did publish a report on the geopolitics of hydrogen. But an important point is, we don’t really see green gasses and green hydrogen traded in the current way it is being done now, with somebody producing gas and then it’s being supplied elsewhere. So hydrogen is primarily going to be something which will be produced—hopefully from renewable energy, the green hydrogen—locally, and as a means to balance the grid, plus decarbonize some of these hard-to-abate sectors. And I think the share of green hydrogen which will be supplied around the world will be a very small amount, so I think that’s important to make that distinction.

And within the region, I think the potential or the opportunities are literally small compared to what is happening globally, where we see that Africa to Europe or Middle East to Europe are the major green hydrogen supply points that we see, particularly in the short term or so.

But also, I just wanted to make a point regarding energy security. In an interconnected grid, where you connect across countries in the region, those—when you look at a particular country, small or big, and you only look at your electric grid, which is constrained by your national boundaries, that actually accentuates your energy security. In an interconnected grid, these are not an issue, or non-major issues.

Today, France, for example, is having major issues with its nuclear power plant, and the electricity for that country comes from renewable energy from up north. And that’s happening because Europe has an interconnected grid. So I think interconnections is going to be important. And that will give you a lot more flexibility and energy security.

And again, it’s important to take a longer-term perspective, to 2040, 2050, where some of these options are much clearer. When you look at a short-term energy planning, some of these energy security issues of supply of your fuel actually comes up much stronger. But again, when you talk about supply of a particular equipment or a generating option—which has got some security issues, though—but again, once it’s installed, then it can… use local resources to generate electricity for the next 20, 25 years. So there is a distinction between security of fuel supplies, and the security of the initial renewable energy conversion equipment. And they are, by orders of magnitude, very different.

But I think the important thing to understand is that if you look at the longer term, 2050, we are moving from a mechanical world, which is powered by direct fuel combustion, to an electricity-powered world. And this is really where the energy security paradigm will change. And there, the interconnection across countries is very important. Having a common electricity market, like in Europe, is going to be very important. And there will, of course, be importance of diversity there. But again, if you look at the longer term, but of course, make sure that the short-term actions are consistent with that, then we may have a clearer view on that.

ROBERT FEE: If I can make a quick comment, I think, you know, I generally agree with what you’re saying. But I think we do need to be considerate of the fact that interconnectivity can also bring its own challenges.

And just thinking about the gas market this past year, and what’s going on in Europe, so one, obviously, the interconnectivity of the gas market in Europe is leading to this. But prior to the Russian invasion of Ukraine, the LNG and global gas market was already experiencing a significant tightness, because of global interconnectivity, and then weather events that then affected electricity markets. So kind of low hydrogen in Brazil—sorry, low hydro in Brazil, a cold winter in Europe, less wind in the North Sea, all of that can contribute then to a shortage.

And so, I think going forward, both in the short and long term, there’s going to be no silver bullet. And I think certainly, interconnectivity brings a lot of benefits, but we also have to think about what are the challenges that those could do, particularly in a, you know, really, you know, interconnected electrified market. And so I think having, again, kind of that diversity aspect, whether it’s fuels or electricity, having that diversity and multiple redundancies is going to be important.

I’d also say that, I think, you know, you never know you need energy security until you already have needed it, right? And so, you know, to use the example of Germany, on LNG terminals—where I think Excelerate would be very helpful—you know, Germany could have—is talking about bringing those LNG terminals online now, and they could—they had been talking about it for a number of years. And so, you know, making sure that you have that infrastructure today to meet those needs, and I think we’re going to be into a really acute challenge in the next few years, given the situation in Europe, and how that will cascade to the rest of the world.

And then, you know, in the future, you know, if hydrogen is able to be commercialized at scale, then we can think about we repurpose natural gas infrastructure for, kind of, other gasses, whether they are any color of the rainbow.

REED BLAKEMORE: We have about five minutes left, and I don’t see any questions in the audience, so—which is disappointing, guys.

Oh, right there, yes.

Q: You’ve got to ask first.

REED BLAKEMORE: You got to—I thought I asked for questions earlier on. I thought we had a shy crowd.

Q: I guess, just going off of what you just said, talking about LNG as sort of this energy security solution that you’re thinking about moving forward, is there, like, an understanding, or a thought given to how you design LNG infrastructure in the present, so that it’s functional as that solution in the future? Like, I’m just talking about CCGT turbines, the utilization rate on those, and, like, the flexibility of those turbines, even though they’re more efficient in, like, a baseload capacity, they’re less efficient than OCGT as flexible capacity. And you’re building infrastructure that’s going to be there for 30 years, so you build CCGT that’s effective as a baseload today, becomes a flexible—a flexible fuel in the future, and that has the potential to basically be a stranded asset, or an asset that becomes less and less effective, because of—just the usage profile of this infrastructure is different.

ROBERT FEE: Okay, that’s a great question.

I think—so, I’d break the two questions up. In terms of how you ensure whether or not natural gas and LNG infrastructure can be used for hydrogen in the future, I don’t—definitely do not have an answer for you on that. I think it’s something that we and others are looking at.

I heard recently at CERAWeek, that hydrogen being the smallest atom, leaks as much as methane, and it could—although it’s not directly warming, it could have kind of indirect warming effects. I don’t know anything about that. That’s the extent of my knowledge. So I think, something that we need to look into.

You know, in terms of, you know, stranded assets, I think if you—if you build the asset and think about, from a company perspective, right, you know, we are going to build infrastructure in a way that makes sense, and we can get a return—and get a return on that investment, so it’s paid for. And then in the future, if you’re able to then switch the—the profile of how you use it, then that’s going to be a different commercial case. And so I think that businesses can handle those risks with clear and consistent government policy.

REED BLAKEMORE: We have Phil Cornell in the back.

Q: Thanks, very much.

I was very interested to hear about some of Singapore’s sort of diversification options. And one of the most interesting, I think, that’s out there is the sun cable project and the proliferating kind of energy interconnections that are going on. And in fact, they’re happening sort of across the region. That’s a major change of policy in a place like Singapore, and obviously it raises questions in Bangladesh and others, where we’re seeing a lot of political implications, really, of grid interconnection.

I just wanted to—you know, maybe you could speak a little bit about that. What do you think is the future of a regional grid, and what are some of the challenges?

DESIREE TUNG: Thank you very much for that question.

Actually, a regional grid has been something we’ve been talking about in ASEAN for many years. We’ve been talking about regional interconnectivity on a power basis, as well as the trans-ASEAN gas pipeline.

So one of the projects that Singapore is working on is a pathfinder project, which involves importing electricity from Laos, through to Thailand, to Malaysia, to Singapore. So we actually do have an interconnect with Malaysia for security reasons. But as I mentioned earlier, we are actually now looking at actively importing this renewable or low-carbon energy from within the region.

So of course, you know, we are open to all options. I mean, I think sun cable was also mentioned, the opportunities within, you know, moving from Australia to Singapore. I think in addition to that, we’re also looking at—I mean, you brought up hydrogen, for example. I mean, in Singapore, we can’t produce the hydrogen. So we’re also looking at what are the opportunities to import hydrogen. I won’t get into the colors of the rainbow, I know that’s a big debate. But I mean, all of these, you know, underpin, I think, what we’ve been talking about, which is diversification, energy security.

And I think for Singapore, we are open to all options. And we are a price taker, we import all of our energy. So I think whatever to us is reliable, secure, competitive, and is also sustainable, is going to be an option that we’re going to want to address.

KAVITA GANDHI: Maybe I could just add something.

So, yeah, there has been a lot of discussion in Singapore about importing clean energy. And I think some of our members have been involved in that. And there are RFPs out for that.

So one of the things we’ve done before that can happen is talk a little bit about standards and renewable energy certificate standards, and all our measurements and verifications, so that what we get into Singapore is truly clean energy, because that’s another area that can be a little bit controversial. So we want to ensure—and we’ve just—I think we are the first country in Asia to launch the REC standard. And when we import clean electricity, we are looking at how that complies with that standard. That means that electrons that are flowing in are truly clean.

REED BLAKEMORE: Okay, I asked for questions, and I got enough questions to take us over time. But I do want to wrap up the panel with one lightning round. We’re going to start at one end; end down here. And so I want each panelist to say—you know, this is, I think, regardless of how you land on the debate between, you know, which supply chain offers more security, which part of the energy mix needs more examination, you know, what the innovation horizon actually looks like—it’s a dynamic region, right?

So I might, you know, start by saying to each one of you, like, what about the region most excites you, right? And what do you think is the—is the next big thing to happen in the region?

DESIREE TUNG: Well, I think what excites me about the region, you know, is that it is a very dynamic and exciting region. I mean, I think we know, you know, as Asia is where there is a lot of growth, I think energy demand continues to grow.

I think one of the key takeaways that I want to leave everyone with is that, you know, the end goal of moving towards the energy transition is not something we can do single handedly. It is a collective goal that we have to work towards together. Which is why I would like to invite all of you to join us in Singapore at the end of October, where we run the Singapore International Energy Week. It really is that platform to bring everyone together, to really kind of bring the brightest, most creative minds, to really find the solutions to some of the energy challenges that we have out there, not only in Asia, but as well as globally.

KAVITA GANDHI: Okay, so she has had the first stab, so.

So, I think what excites me most is that a big part of the clean energy is going to be produced in our part of the world. And there’s so much opportunity, and I think it’s just something that’s waiting to take off. And that’s very exciting.

And also, the number of technologies and new solutions: Actually, it’s not only technologies; it’s also business models that are coming out, which are very interesting, like solar leasing, where you don’t need to own the system; you just buy the clean electricity.

I think there are going to be many such innovations, both on the technology side and on the market side, which will really drive this forward.

DEREK WONG: Yeah, I would say innovating to manage growth. You’ve got a really dynamic region, population growth, economic growth, and some constraints. And so it’s going to take a lot of innovation and technology and out-of-the-box thinking to really be able to manage that growth.

BINU PARTHAN: Thank you.

We’ve been very impressed with the just energy transition mechanism, which the region is showing how you can create a financing mechanism, now with the ADB and the Indonesian leadership as to make sure that the energy transition is orderly, that there is financing for some of the assets which are likely to be stranded.

And again, this is very different to the South African just energy transition partnerships. So the region is probably showing a more market-oriented way to transition, and we find that quite exciting. And we will hope that the lessons from the region in this just transition can be applied to other regions as well. So we are very excited about seeing that just energy transition efforts. Thank you.

ROBERT FEE: So, personally, I’m going to go to something that Desiree said, and that was the food. Incredible diversity. Very delicious.

But professionally, the demand, I think, from the region—obviously, from my corporate hat—incredible demand for natural gas and LNG, demand for energy. There’s a demand for solutions. It’s going to require—no one supply chain is secure. You need everything to get even close to meeting the demand in the next coming years and decades. And so there’s going to be a number of opportunities or solutions that are going to be required.

REED BLAKEMORE: All right, well, there you have it.

And it looks like everybody showed up for the last, like, three minutes of the panel. So to our panelists—Desiree, Kavita, Derek, Binu, Rob—this was wonderful. Just as a logistical announcement, we’re going to be convening at 4:30 in the hall next door for our next round of plenary sessions, so why don’t we head all over there?

But for now, I’d like everybody to thank our panelists for a wonderful session, and thank you.

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The post Why South and Southeast Asia are pivotal to global climate and energy ambitions appeared first on Atlantic Council.

Eser Özdil quoted in Deutsche Welle on Turkey’s expansion into EU renewables market

Grady Wilson — Wed, 30 Mar 2022 20:52:00 +0000

Flagship event Mon, March 28, 2022 • 1:30 pm ET

The post Eser Özdil quoted in Deutsche Welle on Turkey’s expansion into EU renewables market appeared first on Atlantic Council.

These innovators are generating new approaches to a net-zero energy system

Atlantic Council — Mon, 28 Mar 2022 21:15:15 +0000

Watch the full event

2022 Global Energy Forum

Event transcript

Uncorrected transcript: Check against delivery

Speakers

Chris Hulatt
Cofounder, Octopus Group

Gus Wiseman
Deputy Director, Investment Opportunities and Propositions, United Kingdom

Julie Chen
Chief Executive Officer, The Cheeky Panda

Ian Mackenzie
Chief Executive Officer, Trojan Energy

Ernst Van Orsouw
Chief Executive Officer, Roslin Technologies

Jo Parker-Swift
Chief Executive Officer, Solivus

Ben Turner
Chief Executive Officer, Origen Power Limited

Moderator

Eithne Treanor
Managing Director, E. Treanor Media

EITHNE TREANOR: Welcome back. Distinguished guests, ladies and gentlemen, I hope you had a lovely lunch. Welcome back. I know there’s lots to talk about. It’s great to be here, and it’s wonderful to have every one of you here with us.

We have an action-packed afternoon; in fact, a full day and a half left, great content to share with you, some great speakers. But before we do that and before we get back to, I suppose, the formalities and the panels of what we’re doing here with the Atlantic Council, we’ve brought you some of the great minds, the young minds in the world. We hear from many of the organizers, many of the CEOs, that everybody wants to work with, startups in the industry. They see tremendous disruption in the industry. And again, they welcome this disruption.

So what we’ve done is we’ve got together with the UK Department, actually, of International Trade. And they have the winners of the Green Builders of Tomorrow competition. So we’re going to share some views with them. They’re going to talk to you in terms of their great projects. These are all startup projects. They’re probably projects that you could all invest in as well, if you’re looking at that.

So I’m going to hand over now to the—to Gus Wiseman. And Gus is from the Department of International Trade. And, of course, Gus leads on the investment side from the UK. So let me hand it over to Gus.

GUS WISEMAN: Salam alaikum. Excellencies, ladies and gentlemen, it gives me great pleasure to introduce this session where the UK government, alongside our partner Octopus Group, have brought five companies illustrative of the opportunity and innovation within the UK to speak with you.

The UK is the fastest-growing G7 economy this year. We know that companies need three things to scale fast, and on each of these the momentum in the UK is clear.

First, they need capital. And in the UK, you’ll find a deals environment where deals are happening quicker and at bigger scale. And government reforms are going to make that capital market deeper and more agile still.

Second, they need talent. And UK universities are already amongst the best in the world, but what you’ll find is universities which are getting even better at spinning out and commercializing their intellectual property.

And third, you need an environment that’s fit for those companies. And we have strong clusters across the UK leveraging the industrial skills and heritage of different regions and parts of the UK and combining that with the capital that I’ve mentioned to launch the UK towards our net-zero future.

We have five companies with us today who see the world differently. Each of them has real breakthrough potential. They’re mature leaders and outstanding innovators in their field. So I’d invite you to hear their pitch and be part of the UK’s growth story.

First I’d like to introduce Chris Hulatt, the co-founder of the Octopus Group, to say a few words.

CHRIS HULATT: Thanks very much, Gus.

Good afternoon, everyone. Very good to see you and very good to be here in person today for this event.

There are two parts to the Octopus Group. The first part is a… vision we’ve been building for the past two decades that is active in renewable energy, in real estate, and in venture capital. The other part to our group is Octopus Energy, an energy-supply business we set up five, six years ago that today is active in around 13 countries around the world, with about 3 million customers.

We’re sponsoring this competition in collaboration with DIT because we really care about innovation and entrepreneurship. In the 22 years since we set up our business, we’ve seen that very directly ourselves. We’ve seen the power of starting a company, trying to tackle the big challenges facing the world. Our mission is very simple. We want to invest in the people and the ideas that will help change the world for the better.

Now, this Green Builder competition very much shines a light on companies that are playing their part in making a difference. They’ve got big ambitions and plans. They’re really exciting companies. It’s where sustainability, net zero and entrepreneurship comes together. And it’s great to be able to celebrate these fantastic companies with you today.

I think there’s also a very strong alignment between these companies and the ambitions of the UK government. There is that need to build a path towards renewables and to scale up the renewable sector as quickly as possible. There’s a new UK government strategic-energy plan on the way, out probably in the next few weeks, for which we think renewables has a really important part to play. The government has its 10-point plan about its own journey to net zero. And as you’ll hear, many of these companies have a role to play in achieving that.

At Octopus, we’re also looking very closely—looking forward to working very closely with the UAE in the months and years ahead. We think that’s a fantastic opportunity to partner with organizations here, particularly with COP28 on the horizon, a very exciting time for this part of the world.

But I think, with no further ado, I should hand over to the companies themselves so you can hear directly from them. And the first speaker is going to be Jo Parker-Swift from Solivus. Thank you.

JO PARKER-SWIFT: Hello, everybody. It’s really exciting to be here today. Thank you for the opportunity to speak with you, and particularly to the UK to partner in international trade.

I’m Jo Parker-Swift. I’m the CEO of Solivus. We are thin-film solar specialists, and we install thin-film solar on large commercial buildings. And it has low-embedded carbon. And we also create ground-mounted solutions using this thin-film technology, one of which you can see on the screen here today, our first product, our Solivus Arc, which generates more energy in a small area of ground space.

I wonder if you’ve ever seen large commercial buildings like this and wondered why they don’t have solar on the top. Well, many of these buildings, you know, in the UK cannot take the weight of conventional solar. If you put conventional solar on those, in many instances wind will take the roof off or the structure of the building won’t be able to take the weight of the solar. But these buildings are assets that can generate energy, megawatts of energy. And we’re putting thin-film solar on these buildings.

In the UK, a lot of people don’t wish to put solar on their roof because they don’t like the look of it. They can’t take it with them when they move. And we have problems getting scaffolding up to people’s homes and such like. So this is a ground-mount solution for the home in the UK. It’s got very low embedded carbon. It generates more energy in a small area of ground space and enables people to contribute to charging their cars and powering their homes.

So we have integrated solutions with companies that we collaborate with. It always starts with thin-film solar. So we have Cotswold Airport, which is the largest private airport in Europe, and we’re putting thin-film solar on the aircraft hangars there that can’t take the weight of conventional solar. This is going into an electrolyzer, which is an electrolyzer provided by Octopus Energy, and this creates hydrogen on site, green hydrogen on site, that’s going into an electric plane and decarbonizing flight—flying a plane with hydrogen. And we’re then talking about setting up similar things in other airports, creating flight paths.

We’re talking to housing developers about lots of our Solivus Arcs and our good-looking thin-film solar on roofs. And for large commercial buildings we’re helping people decarbonize their fleet.

This is a stadium where we’ve installed, and this is our vision to really contribute towards the energy transition by saving our clients money, enabling them to decarbonize their properties.

This is a very large market. In the UK there’s 2.5 billion square meters of south-facing roof, and only 5 percent of these currently have solar. So our market alone in the UK is about 5 [billion pounds] or 6 billion [pounds], and we intend to explore globally as well. In the Middle East, for example, our thin-film solar is particularly suited to hot climates, and it can cope with sand abrasion as well.

So the three things I mentioned, we decarbonize buildings, save people money. And you can see there’s a case study on here. So this is one building that’s so big you can fit seven megawatts on this building. It costs 8.5 million [pounds] to install the solar. But this customer would save 45 million pounds. We have a very large pipeline of opportunities through our clients. And this is really just because we’ve got a small number of clients that own a large number of properties.

So we’re looking for investment. We’ve already raised 5 million pounds, and we’re looking for 2.5—2.5 to 5 million [pounds] to expand our rapidly growing team. We need as many people as possible to meet demand and to invest in our product development.

Our plans are to have 10 million [pounds] revenue this year, 50 million [pounds] next year, and 100 million [pounds] the following year, where we will start to explore exit routes. Our team has grown enormously in the last year. And I’m really proud of them, and it’s an awesome team.

We have a number of products in the pipeline that we can develop going forward—products.

And for the last slide here, you can see these are examples of our installations. In the UK we have a number of historic buildings that you don’t want to spoil with solar. So there’s an installation on our historic building to keep it looking nice, a smooth roof where we just stick it on, adhere the thin-film solar to the roof, and here a sports stadium, where we have an IP for a backing sheet to put it on the stadium.

Thank you very much.

IAN MACKENZIE: Hi. My name is Ian Mackenzie. I’m founder and CEO of Trojan Energy.

And so around the world, about 30 percent of cars park curbside overnight and not in a drive. So that’s about 10 million cars in the UK, about 1 million here in the UAE, about 120 million in Europe and about 400 million worldwide. And the challenge is, how do we get these cars, as they move to electric vehicles, how do we charge them up without cluttering our streets with lots of ugly on-street charging posts?

And this is the solution that we’ve come up with. So essentially what we’ve designed is a charge point that gets embedded into the pavement that’s flat and flush with the pavement, allowing users to, whenever they want to charge, they have a charging lance, which you’ll see in a sec, which they can offer up to the charge point. It recognizes one of our lances, unlocks, allows them to insert. It locks in place. It plugs into their car. And it can charge up to 22 kilowatts and charge these vehicles quite fast.

And when they want to finish charging, they simply use their own car keys and unlock their own car, and that same signal we can use to take the lance out of the street. And it leaves the street completely clear of clutter, which is super important to actually keep our streets beautiful in all these cities.

So we’ve got a number of—well, I should say it’s about 50 percent of the price of traditional on-street charging, much faster. And it’s a scalable solution for cities to allow lots and lots of charging points to go into cities.

So we’ve got a number of technologies that complement it. We’ve got the Baywatch technology, which has sensors that look down on the street and send signals and push notifications out to EV owners to say there’s a charge space available for your car that you can come and get charged. And that way we can drive utilization up on the charge points.

And then, finally, for some streets that are not so busy, we have individual charge points that tie back into people’s homes so that they can get charged up and actually take advantage of those low-cost overnight tariffs.

So where are we as a business? Well, our team has been growing. We’re up to 18 people now. We’ll be 40 by the end of the year and continue to expand. We expect to be about a hundred by this time next year.

In terms of the market opportunity, we’ve been through—current deployments, we’ve putting about 175 charge points into London at the moment, and we’ll be about a thousand charge points by the end of the year.

We have world—we have the patent on flat-and-flush charging, and we’ve globalized this in several regions around the world. And we also have intellectual property on several other parts of our intellectual-property portfolio.

In terms of funding, at the moment we’re raising a convertible loan note around about 10 million [pounds]. And… next year, we look to raise about 25 million pounds.

In terms of our revenue growth, we’re looking—we’re going to do about 5 million [pounds] this year, and we’re looking to do about 40 million [pounds] next year and then growing on strongly from there. The opportunity is a massive opportunity in this space. And the on-street charging market is one of those last unsolved puzzles of the EV charging business.

OK. If you have any questions, I’ll be around afterwards and I’ll be happy to take them. Thank you very much.

JULIE CHEN: Hello, everyone. Hello, everyone. My name is Julie, co-founder and CEO of the Cheeky Panda. We are a tissue and hygiene-products disrupter.

The business was co-founded by my partner Chris and myself with our baby Leo in mind. We want Leo to grow up in an eco-friendly world using natural products that’s kind to his skin as well as the environment. We are multi-award winning. We have won over 20 awards. Products are sold in over 25 markets.

Climate change is a big issue facing our climate at the moment. CO2 is the largest contributor to global warming. Trees are being cut down for things like toilet paper, causing deforestation. Our water and riverways are increasingly polluted by plastic.

Our solution is bamboo, simply because it’s the world’s fastest-growing plant. It grows 30 times faster than trees. It absorbs 35 percent more carbon and releases 30 percent more oxygen. It’s a grass. When it’s harvested, it grows back from its own root, requiring no fertilization or replantation.

Our products include toilet paper, facial tissue, kitchen rolls. We also have baby wipes, baby nappy, as well as facial cleansing wipes and antibacterial wipes. We also offer toilet jumbo rolls to businesses and bamboo paper straws to restaurants, to those businesses who are looking for low-carbon, high-quality, sustainable solutions.

Our products are ultra-sustainable, carbon-balanced, and plastic-free. We use 100 percent of certified bamboo. One ton of Cheeky Panda toilet paper can remove 20 tons of carbon from atmosphere. One ton of Cheeky Panda toilet roll saves 240 trees and 11—32 kilograms of plastic.

Our products are FSC-, vegan-, and cruelty-certified. We are a certified B Corporation as well as certified ethnic-minority business. We work with charity the World Land Trust and all products are dermatologically tested by SGS.

In just under six years, we have gained retail listings worldwide. We work with premium retails… Today, we have saved 8,000 kilograms of plastic, we have removed 18,000 tons of carbon from the atmosphere, and we have saved 230,000 trees. Our goal is to save 1.1 million trees by 2025. Our vision is to build the Cheeky Panda brand to be a signpost for 21st century sustainability. These are some examples of our products we sell in supermarkets worldwide, such as Carrefour in China, Whole Foods Market in Australia, Whole Foods Market in London, and Boots in London. You can also buy our products in the UAE market, as well…

Thank you very much. We are looking for potential business or retail clients, as well as potential investors. Thank you very much.

ERNST VAN ORSOUW: We are at the forefront of one of the most consequential changes in our food system. Cultivated meat is meat grown directly from cells and bioreactors without the need to raise animals. The promise is going to be massive. We can eradicate animal-welfare issues, we can improve human health, and we can reduce the environmental footprint of food production.

More importantly for the Middle East, the Middle East can not only become a meat producer for themselves. They can actually have the opportunity to become a meat exporter for the world, with low-cost energy.

At Roslin Technologies, we deliver the foundational ingredient for this sector. And my name is Ernst Van Orsouw, and I’m leading Roslin Technologies.

Cultivated meat was invented in 2013 in the Netherlands, where the first doctor made a hamburger grown from cells in a Petri dish. That cost $300,000. Fast-forward to 2022. There’s now 150 companies focused on this. More than $3 billion have been put into this business, and large producers in meat are stepping into the sector.

To make cultivated meat viable, it needs to be safe, nutritious, and affordable. And to achieve that, the costs need to come down and billions of dollars of capital are needed. Making cultivated meat requires four capabilities. You start with the cells. You add media, which is the nutritional solution to help the cells grow. You add a scaffold for texture. And you put it all in a bioreactor and you feed it with low-cost energy.

Cells are the starting material for this process, and they impact each step of the production process and impact in total 70 percent of the cost base. The cells that you need need to grow fast, efficiently, and need to deliver great meat. And that’s where we at Roslin Technologies come in.

Roslin Technologies is a biotech company backed by the University of Edinburgh in Scotland. We are based at Roslin Institute that was primarily famous from the invention of Dolly the sheep back in 2006—1996. She was the first mammal that was cloned from an animal cell, and this was a major scientific breakthrough.

Today we are once again at the forefront of stem-cell innovation. We can produce cells that form the foundation of sausages in the United States, chicken nuggets in Europe, and lamb kabobs in the Middle East. All this meat will be made without slaughtering animals and with a positive impact on the environment.

So what do we do at Roslin Technologies? We focus on pluripotent stem cells. We can take cells from an animal. We can reprogram those cells to become pluripotent stem cells, which means they self-renew forever and can differentiate into any tissue, including muscle and fat. Each cell can produce millions of tons of meat.

And let me illustrate that. Our cells, they double every 24 hours. If I started one cell on day one, I have two on day two. I have four on day three. After 42 days, I have enough cells to fill a bottle. And after 63 days, I have enough cells to fill an Olympic-size swimming pool. Wait one more day, and I have two swimming pools.

We make our cells available to producers globally, whether they are large or small, beef or chicken or lamb, whether they’re in rich nations or developing nations. We want to empower cultivated meat producers to make the most sustainable meat, whether it’s dumplings in Asia, the chicken nuggets that we made in our lab in Roslin Technologies, or the sausage that happens to not be on the slide.

As a company, we’re the first ones to provide cells to this industry. We create the cells. We create the market, and we will lead the market. We ship our cells in vials this size across the globe, and that comes with instructions on how to grow them and make meat. We started to commercialize last year, and today we ship our cells across the United Kingdom, the European Union, the Americas, and Asia.

And I want to go to the Middle East as well, because I believe that the Middle East can be a leader in this space. Not only is it a strategic fit for this region to become more food-independent. I also believe that with your local energy, whether it’s fossil fuel today or renewable in the future, you actually have a massive cost advantage over the rest of the world.

We are on an incredible journey. We have made great progress today and have ambitious plans. We invite you to be part of the journey, because with better cells we can have cultivated meat reach consumer masses faster, improve the sustainability of the food system, and capture that here, right here in the Middle East and in the United Arabic Emirates.

Thank you.

BEN TURNER: Hi. Good afternoon, everybody. My name is Ben Turner. I’m the CEO of Origen.

And at Origen, we’re decarbonizing an industry that very few people know about but contributes a huge amount of carbon dioxide to the global problem, and that is the lime industry. That industry alone is responsible for 400 million tons of carbon-dioxide emissions, 1 percent of the global total. And the beauty of lime is it can actually be repurposed for the purposes of carbon-dioxide removal.

So why do we need to remove carbon dioxide from the air? It’s not enough to stop the 40 billion tons of carbon dioxide we put into the air each year globally. We actually need to remove the carbon dioxide that is already in the air. The problem with that process, however, is it’s very expensive today. And I believe, we believe at Origen, that lime is a perfect material for doing so. It is cheap, it is robust, and it is scalable.

But the problem with lime today is that for every ton of lime produced, a ton of carbon dioxide is emitted into the atmosphere. And that rather renders the use of conventionally produced lime completely ineffective for CO2 removal. So we need a process to make lime with zero carbon emissions, a process that we call zero-carbon lime.

And this is what we’re doing. So we’re not just talking about it. We are actually building it. The picture on the left is our pilot plant in the Humber region in the UK. It’ll be the world’s first zero-carbon lime to be produced. In about eight weeks’ time—it’s actually the culmination of nine years’ worth of work—we’ll be producing that zero-carbon lime.

And why is that important? Well, it’s important for three real reasons. First up, it makes this industry zero carbon, avoiding those 400 million tons of emissions. Secondly, this is scalable, ready for deployment now. And actually, and most importantly, this opens up a huge range of opportunities in climate-related applications. I’m talking direct air capture, removing CO2 from the air. I’m talking about cements, sustainable building materials. I’m talking about point-source capture, capturing CO2 from the emissions of chemical industry, oil and gas, various other industries. I’m also talking about ocean liming, which, if there’s any questions about, afterwards we can talk about.

But from a commercial perspective, we’re focused on decarbonizing a sector, the lime industry, and leveraging that capability to deploy into those markets. The size of this opportunity is humongous. And if I can get the slide—there we go. So the lime industry alone is a $6 ½ billion revenue opportunity. That’s what we’re going after today. But carbon dioxide removal itself is gigantic. We need to remove a trillion tons of CO2 from the air. This is the next trillion-dollar industry.

From a team perspective, we have got some of the best minds working on this. We have experts in combustion technology, lime-kiln technology, CO2-removal technology. We have oil-and-gas veterans who are experts in carbon-dioxide storage. And we have deployment experts, like our CTO, who’ve worked in industries like nuclear, deploying this at billion-dollar scale.

Why is this relevant to this region, the UAE in particular? First off, CO2 removal is a necessary must to achieve net zero. Secondly, the resources to make this work are abundant in the UAE, Saudi Arabia, the Middle East generally. They are natural gas, limestone, and carbon-dioxide storage. Sorry.

And the final point here is financial opportunity is massive. It’s not just about decarbonizing a relatively small industry today. It’s about solving the problem of climate change and the climate issues of CO2. The opportunity is humongous. And why is this important now? So we just raised about $10 million, but we’re looking to raise about 25 [million dollars] to $50 million later this year to take our technology to the next scale. We’ve got a really important earl-mover advantage here. We’re working with an industry already. We’re partnering with that industry. We know how to store carbon dioxide. That provides us with a clear route to revenue. And as I mentioned previously, the use of lime in climate-related applications is a huge opportunity.

Thank you very much for your time; much appreciated. I don’t know what’s our plan now. OK. Well, thank you very much.

EITHNE TREANOR: Thank you all so much, and I wish you the very, very best of luck. We have some great minds. There are some great projects. So well done to you all. And, of course, thank you so much. You heard from all of them there in terms of the great work that they’re doing, the projects they have put in place. And so often the energy industry is looking for interesting startups to back, to get behind. If there’s spare cash in the bank, these are the type of people that are looking for them as they actually put new, different, and sustainable projects together. Ultimately, that is all of the great work they’re doing.

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The post These innovators are generating new approaches to a net-zero energy system appeared first on Atlantic Council.

Meet the global leaders powering the world’s energy transition

Atlantic Council — Mon, 28 Mar 2022 04:06:12 +0000

The return of pre-pandemic energy consumption. Threats of cyberattacks on critical infrastructure. And a generation-defining war in Europe with global repercussions.

All have dampened hopes for a swift energy transition—but none have discouraged the world’s movers and shakers in the energy industry from finding solutions. The Atlantic Council’s sixth annual Global Energy Forum, which took place March 28 and 29 in Dubai, is where they discussed the tools, policies, and models essential to responding to these and other major trends in the sector.

Here, you’ll find the highlights from the event, which was hosted by the Atlantic Council’s Global Energy Center in partnership with the United Arab Emirates’ Ministry of Energy and Infrastructure and in conjunction with the 2022 World Government Summit.

Here’s the latest news from GEF:

Getting off Russian gas: Practical steps for Europe
South, Southeast Asia consider decarbonization
After the war in Ukraine: New energy for a new Europe?
Where does environmental, social, and corporate governance go from here?
Resilience and reliability in the face of evolving threats
Big problems for small island nations
How nuclear energy can power a Just Transition
Is there a future for natural gas in the Eastern Mediterranean?
Think ‘transformation,’ not transition
How helpful could hydrogen be?
This is how the United Arab Emirates does it
Don’t count out Iraqi Kurdistan
Meet the Green Builders of Tomorrow
Why natural gas is staying—not going
Will energy security derail the transition? (Part two)
In Europe, ‘the writing has been on the wall’
Leading oil and gas into a net-zero world
Will energy security derail the transition? (Part one)
Urgency and reality collide as GEF kicks off
Pakistan: The next great infrastructure connector
The United States, Canada, and the minerals challenge
Unearthing potential: The value of geothermal energy to US decarbonization
The 2022 Global Energy Agenda
In the wake of the pandemic, new thinking on the way to net zero
Catch up on last year’s Global Energy Forum

MARCH 29, 2022 | 11:37 AM WASHINGTON, 7:37 PM DUBAI

Getting off Russian gas: Practical steps for Europe

The war in Ukraine has sparked serious discussion about how Europe can quit Russian fossil fuels. But what can it do right now to reduce its dependence on Russian natural gas?

In a Tuesday GEF panel, Richard Morningstar, founding chairman of the Atlantic Council’s Global Energy Center, emphatically argued that the United States must clearly assert the role of natural gas in a decarbonized world. This message must be relayed to Europe, to the finance community, and to the oil and gas industry and exporter companies, he said. But in the near term, Morningstar suggested a strategy that focuses on critical interconnectors around the Balkans and existing pipelines.

Charles Hendry, a professor at the University of Edinburgh, offered a similar view—recommending that Europe carefully review new potential sources of supply, such as Turkmenistan, Kurdistan and others. He also argued for using existing infrastructure to its fullest capacity, and that the EU Commission should consider rapidly approving projects already in consideration to improve the energy security situation quicker.

In the longer term, Michał Kurtyka, the president of COP24, argued that Poland’s efforts to diversify its energy options have shown the way forward, adding that the EU Commission must show leadership in moving away from Russian natural gas even if the near-term economic pain proves significant.

Ana Birchall, special envoy for strategic and international affairs for Nuclearelectricak, argued from the Romanian perspective: that acknowledging the role of natural gas and nuclear energy in the new European Taxonomy for Sustainable Finance is a key step to supporting European energy security.

All agreed that the challenge ahead remains enormous—with a difficult winter likely ahead for Europe, even in an ideal scenario.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 29, 2022 | 10:51 AM WASHINGTON, 6:51 PM DUBAI

South, Southeast Asia consider decarbonization

The rapidly developing economies of South and Southeast Asia are ripe for decarbonization—but require a nuanced understanding of the region’s unique needs, according to a GEF panel of think tank, government, and private sector experts.

Desiree Tung, deputy director of external relations at the Energy Market Authority of Singapore and Kavita Gandhi, executive director of the Sustainable Energy Association of Singapore, used the island nation as an example of what can be achieved when sound policy design meets robust, clear government signals.

Tung pointed to the Singapore Green Plan, which set out new targets for decarbonizing the economy; she and Gandhi both highlighted the pivotal role this document played in catalyzing key investments in that country’s clean energy sector. Both also noted the challenges facing Singapore and other countries in this region—particularly around availability of renewable resources and land use constraints (though thoughtful Singaporean leadership has managed these challenges, they said). Regional trading of renewable electricity, for example, is one concept that’s being actively explored.

Another key theme of the panel was the role of natural gas. Robert Fee, vice president of international affairs and commercial development at Cheniere Energy, and Derek Wong, senior director of government and public affairs at Excelerate Energy, highlighted the importance of gas to balance and support a wide expansion of renewable energy in the region while also achieving significant emissions reductions.

More broadly, the panelists all agreed with a key theme of the Global Energy Forum: Strength in energy security lies in energy diversity. They felt confident that the South and Southeast Asia region is very capable of achieving diversity of energy supply while also meeting its climate objectives.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 29, 2022 | 9:45 AM WASHINGTON, 5:45 PM DUBAI

After the war in Ukraine: New energy for a new Europe?

Despite Russia’s brutal assault against his country, DTEK CEO Maxim Timchenko predicted a brighter energy future for Ukraine, grounded in deeper integration with western Europe. More specifically, he pointed to the existing gas transit infrastructure, the capacity of Ukraine to supply Europe with its own natural gas, as well as the considerable potential for renewable energy—especially wind—as particular assets. Ukraine, he added, could also be at the cutting edge of advanced nuclear energy deployment.

But above all, Timchenko stressed that countries and companies should end their purchases of Russian energy (and other commodities) as soon as possible to help end the violence.

Other panelists focused on steps Europe should take in the eventual aftermath of the war. Paula Dobriansky, senior fellow at the Harvard Kennedy School of Government, said the United States and European Union should build upon a new spirit of collaboration and unity in the face of Russia’s weaponization of energy.

Charles Hendry, a professor at the University of Edinburgh, added that the West should develop a “Marshall Plan” for Ukraine with an emphasis on rebuilding Ukrainian energy infrastructure.

Finally, Ana Palacio, a former Spanish foreign minister, noted that ending Europe’s dependence on Russian natural gas is far easier said than done, and the continent has a great deal of work left—particularly on energy storage—to shore up its energy security.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 29, 2022 | 8:25 AM WASHINGTON, 4:25 PM DUBAI

Where does environmental, social, and corporate governance go from here?

From being just another buzzword around the energy transition to a fundamental component of how all companies operate—that’s where environmental, social, and corporate governance (ESG) should head next, according to a GEF panel representing corporate voices throughout the financial, investing, and consumer-goods sectors.

Neil Brown, managing director of the KKR Global Institute and KKR Infrastructure, argued that every company can do its part by integrating ESG into its business in meaningful ways—and improve their overall asset performance along the way. In his view, the future of ESG will focus on bringing the principles into high-emissions (or otherwise challenging) sectors that are still essential to the modern economy.

But the panel also highlighted transparency and verifiability as key aspects of making ESG effective in every business environment. Alain Bejjani, chief executive officer at Majid Al Futtaim Holding, noted that transparency is a strength, not a liability, for his company, while Kristen Siemen, chief sustainability officer at General Motors, added that ESG is now so integrated into her company’s culture that it’s part of every employee’s job.

There was also discussion around the importance of a global framework for ESG that would put all companies on a level playing field to reassure investors. Such a component—combined with independent verification of companies’ ESG metrics and achievements—could facilitate a much deeper understanding of ESG by all stakeholders.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 29, 2022 | 7:31 AM WASHINGTON, 3:31 PM DUBAI

Resilience and reliability in the face of evolving threats

Cyberthreats are among the key challenges to an increasingly digitalized, decentralized, and electrified energy system as the world moves toward a transition from conventional energy, another GEF expert panel agreed Tuesday.

André Pienaar, founder and chief executive officer of C5 Capital, said cybersecurity is increasingly at the heart of a new notion of “collective defense,” while Leo Simonovich, vice president and global head of industrial cyber & digital security at Siemens Energy, agreed. Simonovich added that the billions of new devices coming online in the next few years each represent a critical vulnerability, and argued that climate change and security should go hand in hand. “Very often, security seems to be an afterthought,” he said. “It is not built in—it is bolted on.” That, Simonovich added, prevents users from perceiving risk and being ready to stop it.

He pointed to Siemens’ new partnership with the New York Power Authority to create a school, monitoring center, and lab that would bring new cybertechologies to the market at scale quickly.

Other panelists noted that the flexibility and reliability of the power system are key to security. Abdurrahman Khalidi, chief technology officer at GE Gas Power EMEA, argued that the world must fund and incentivize many options to power the grid—not just renewables—to ensure future grid stability.

Kara Mangone, managing director and global head of climate strategy at Goldman Sachs, added that carbon capture, utilization, and storage, as well as the mining and steel sectors, among others, are “under-owned” sectors. It’s also crucial, Mangone argued, to move beyond the binary idea of “good” and “bad” sectors when considering where to invest.

In sum, the panelists’ remarks suggested that an “all of the above” approach is the key to a truly secure energy system.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 29, 2022 | 7:02 AM WASHINGTON, 3:02 PM DUBAI

Big problems for small island nations

Dignitaries from small island nations on Tuesday expressed their frustration with the state of the current global action—or lack thereof—on addressing climate change. Moderated by CNN anchor and correspondent Eleni Giokos, the session included Wavel Ramkalawan, president of the Seychelles, Gaston Browne, prime minister of Antigua and Barbuda, and Aminith Shauna, the Maldives’ minister of environment, climate change & technology.

“With all the loud speeches…when you compare [with] the reality, it is a totally different story,” said Ramkalawan. Browne, meanwhile, suggested that many countries make pledges they don’t intend to honor, and Shauna detailed the exhaustion of small island countries watching climate change up close.

Browne called for “an all-of-society approach” and added that the world must commit to prioritizing the lives of islanders over the profits of a fossil-fuels driven economy. Ramkalawan argued that there should be legal liability for the high-energy-emitting large countries that are fueling the crisis the most.

Still, all the panelists agreed that the people of island states will continue to do all they can themselves to prepare for the impacts of climate change.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 29, 2022 | 6:28 AM WASHINGTON, 2:28 PM DUBAI

How nuclear energy can power a Just Transition

A featured GEF breakout session Tuesday considered whether a shift to nuclear energy can keep people (and their rights) at the forefront of decarbonization.

Christopher Levesque, president and chief executive officer of TerraPower, believes it’s possible—and said his company is doing exactly that right now. He described how TerraPower will build the first of its new reactors in Wyoming on an existing coal-fired plant site while repurposing the facility’s existing 200 workers. Levesque also described his hope for the mountainous region of the western United States to become a “hub for advanced nuclear technology.”

Amy Roma, partner and global energy practice leader with Hogan Lovells, added that there are benefits to working at a brownfield site which allows a developer to dovetail into a preexisting environmental analysis, thereby reducing costs and increasing project certainty. She emphasized that community engagement on the benefits of nuclear energy—especially the socio-economic benefits for those who previously relied on coal-fired power plants for jobs—is essential.

But regulatory and policy support are crucial to the future of advanced and conventional nuclear deployment.

Rumina Velshi, president and chief executive officer of the Canadian Nuclear Safety Commission, noted that an effective regulatory framework must promote certainty and predictability while also minimizing risks. George Agafitei, state counselor of the Romanian government, noted that Eastern Europe carries vast potential for nuclear power, but that, at least in Romania’s case, its infrastructure’s inclusion in the EU Sustainable Finance Taxonomy is crucial to the country’s plans to implement its own pro-nuclear policies.

Meanwhile, Zbigniew Kubacki, senior policy advisor at the Polish Ministry of Climate and Environment, said his country has similar goals and hopes to pursue a range of nuclear technologies (including large, conventional nuclear, and small modular reactors), but that Just Transition principles must be at the forefront of policy choices.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 29, 2022 | 3:33 AM WASHINGTON, 11:33 AM DUBAI

Is there a future for natural gas in the Eastern Mediterranean?

A Tuesday GEF expert panel believes there is—but only if regional leaders can overcome their governments’ longstanding differences. Political challenges, they said, continue to undermine energy development in the region.

Defne Arslan, senior director of Turkey & Turkey Programs at the Atlantic Council, argued that Turkish President Recep Tayyip Erdoğan has a genuine desire to improve his country’s relationships with its neighbors, notably Cyprus and Greece, with potential benefits for regional natural gas development. But she cautioned that Ankara demands equitable development of the resources it shares with them.

Arslan also added that Washington’s method of resolving the development rights issue, its involvement in the 3+1 scheme, and its equivocating position on the Eastern Mediterranean pipeline, aren’t constructive enough. “It is not realistic to keep Turkey out of the solution in the Eastern Med, whatever it is,” she said.

Meanwhile, the panel pointed to another problem: mixed messaging when it comes to potential natural-gas customers in Europe.

Charles Ellinas, chief executive officer of EC Natural Hydrocarbons, said the Eastern Mediterranean has struggled to adopt a cohesive energy development approach because future demand for natural gas in Europe is utterly unclear. He argued that Europe’s twin messages—that it wants to reduce Russian gas consumption, but will also dramatically slash its overall gas consumption by 2030—makes long-term investment in regional energy infrastructure extremely difficult.

Arslan pointed to the Trans Adriatic Pipeline as an example which demonstrates that key gas infrastructure from the region to Europe can be built if there is clear, concerted political support. She added that the currently uncertain outlook for the Eastern Mediterranean pipeline could improve if Europe clearly signals that it needs the pipeline and its gas.

Ellinas added that Egypt, Lebanon, and others will also become long-term customers if the region can focus on collaboration and effective cooperation.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

Don’t miss the Atlantic Council’s recent report on the issue:

Report

Feb 16, 2022

Energy and geopolitics in the Eastern Mediterranean

By Charles Ellinas

Fossil fuel development in the Eastern Mediterranean is both laden with promise and fraught with tension. Member states of the East Mediterranean Gas Forum (EMGF) have established joint ventures for exploration and drilling, pipeline building, and LNG export across the region, creating an international web of proposed infrastructure to tap its abundant reserves. But Turkey […]

Energy & Environment Energy Markets & Governance

MARCH 28, 2022 | 1:23 PM WASHINGTON, 9:23 PM DUBAI

Think ‘transformation,’ not ‘transition’

How does the world move forward from the energy-supply crisis as a result of the war in Ukraine? That’s what panelists in Monday’s final session grappled with, agreeing that Western policymakers must now adjust their thinking around the energy transition to account for the new reality.

Regina Mayor, KPMG’s global head of energy and natural resources, recommended thinking in terms of energy “transformation” (rather than “transition”) to describe how the global energy system is likely to evolve. Joseph McMonigle, secretary general of the International Energy Forum, lamented that the world has gone from “lower for longer” oil and gas prices to “higher and volatile” in the space of just two short years—suggesting that the role of fossil fuels in the transition has been poorly understood. Both believe low-cost hydrocarbons would play a prominent role in the future.

Meanwhile, former government officials on the panel agreed that a new framework is necessary for navigating the energy transition. Neil Chatterjee, former chairman of the US Federal Energy Regulatory Commission, recommended that policymakers in the United States focus on managing the twin threats to electricity reliability in extreme weather events (caused by climate change) and growing levels of intermittent renewables on the grid (as a response to climate change).

Likewise, Charles Hendry, former British minister of state for energy, argued that Europe must be more alert to (and prepared for) the dangers of reliance on single suppliers for any fuel or resource. He argued that Europe has belatedly learned that security of supply still matters.

That said, he and other panelists said they’re hopeful for the future of low-carbon innovation at a time of tremendous enthusiasm for climate-positive innovation.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 12:40 PM WASHINGTON, 8:40 PM DUBAI

How helpful could hydrogen be?

Few emerging fuels have generated as much interest—or controversy—as hydrogen in recent years. An expert GEF panel tackled the challenges facing hydrogen economies of scale and explored what a scaling of hydrogen supply and demand would require.

David Livingston, senior advisor to US Special Presidential Envoy for Climate John Kerry, argued that it’s the role of government to “cut the Gordian knot” by both catalyzing the demand signals for low-carbon hydrogen today, and also preparing the regulatory framework to support stable markets for hydrogen in the future. He pointed to the Biden administration’s key initiative, the First Movers Coalition, as an example of government actively working to secure credible demand-side signals for decarbonized hydrogen. Other panelists pointed to the importance of standardization throughout the hydrogen industry, verifiable metrics, and carbon accounting processes.

They also focused on the need to reduce costs for low-carbon hydrogen while also setting the foundations for future hydrogen trading networks. Meg Gentle, executive director of Highly Innovative Fuels USA, pointed to the established global trade of natural gas via pipelines and liquefaction as a model for hydrogen fuels, such as methanol and e-fuels.

For Germany, said Tim Holt, member of the executive board of Siemens Energy AG, hydrogen trade will be crucial for its security of hydrogen supply, arguing that the country “will never be able to produce enough green hydrogen for consumption.” But he added that there are tremendous trading opportunities with potential low-cost green hydrogen producers in Latin America and the Middle East.

Broadly, the panel felt strongly that hydrogen’s moment has finally arrived—but also that numerous pieces of the market puzzle have yet to be solved before the hydrogen economy emerges as a major decarbonizing force.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 12:24 PM WASHINGTON, 8:24 PM DUBAI

This is how the United Arab Emirates does it

In a fireside chat with Atlantic Council President and CEO Fred Kempe, Musabbeh Al Kaabi, CEO of UAE investments at the Mubadala Investment Company, highlighted his country’s unique approach to economic diversification and sustainable development, which was crafted through decades of thoughtful, forward-looking investment.

He noted that his company, which is involved in a range of sectors ranging from energy to healthcare, is a prime example of that approach—particularly given both the challenges and opportunities presented to the Middle East by global decarbonization. Al Kaabi emphasized his optimism for the UAE to be a provider of all types of energy: conventional, new, and emerging. He argued, for example, that the UAE’s exceptionally cheap solar power positions it to be a major green-hydrogen supplier, while the country’s robust oil industry is already pursuing blue hydrogen.

When asked about volatility in the region, Al Kaabi pointed to the recent Abraham Accords as an example of what can be achieved by the UAE’s forward-thinking approaches to economic diversification and societal transformation. He cited a new gas hub with UAE investment support, which will supply both Jordan and Israel with natural gas, as part of a trend he hopes will continue.

But he cautioned that the world must not wed itself to one particular energy solution, and that it will need all available technologies—including hydrogen, carbon capture utilization and storage, renewables, natural gas, and more—to make the current 2050 targets possible.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 11:36 AM WASHINGTON, 7:36 PM DUBAI

Don’t count out Iraqi Kurdistan

That was the message delivered by Masrour Barzani, prime minister of the Kurdistan Regional Government, in a keynote message during a special session moderated by Eithne Treanor, managing director at E. Treanor Media.

He offered an emphatic vision of Kurdistan’s future as a major regional oil and gas supplier—one that is capable of meeting both the needs of its own people and supporting the natural-gas demand of Turkey, and perhaps even Europe. Barzani applauded the efforts of the United States and other countries and private-sector players to invest in the region’s ongoing revitalization of its hydrocarbons industry. He concluded: “A strong, independent Kurdistan is no threat to its neighbors…in fact, it is the opposite.”

An expert panel including several oil and gas industry representatives active in Kurdistan largely agreed. Bill Higgs, chief executive officer of Genel Energy, said his company strongly believes in Kurdistan, while Jon Harris, chief executive officer of Gulf Keystone Petroleum, pointed to his company’s plans to double its current oil production in the region.

Crescent Petroleum CEO Majid Jafar, meanwhile, focused on Kurdistan’s natural-gas potential, saying the “importance of the region is becoming increasingly recognized.”

All expressed strong support for sustainability and the economical usage of natural gas to displace other local fuel sources (especially diesel) by capturing gas to provide electricity to local communities.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 10:34 AM WASHINGTON, 6:34 PM DUBAI

Meet the Green Builders of Tomorrow

Winners of the United Kingdom’s Green Builders of Tomorrow competition—aimed at supporting companies at the intersection of sustainability and entrepreneurship—showcased their innovative approaches to achieving net-zero in a GEF session Monday afternoon. Each chief executive officer presented their company’s unique approach to disrupting a carbon-intensive industry, providing a new option for emissions mitigation, or supporting renewable, clean energy economies.

Taken together, each unique proposal demonstrated the growing and robust market interest in emerging technologies and business opportunities in the clean economy.

Julie Chen, of The Cheeky Panda, explained how her company’s tissue and hygiene products are disrupting deforestation through the use of sustainable bamboo paper products.

Ian Mackenzie, of Trojan Energy, showcased his company’s electric car charging point—which is embedded into the pavement to make EV ownership easier for both drivers and cities.

Ernst Van Orsouw, of Roslin Technologies, discussed his company’s approach to stem cells in the production of cultivated meat, which has the potential to bring nutritious non-farm-based meats to new customers all over the world without the considerable emissions associated with traditional farming.

Jo Parker-Swift, of Solivus, described how her company is using thin-film solar panels on conventional buildings, such as stadiums and shopping malls, which cannot take the weight of solar panels made from conventional materials.

And finally, Ben Turner, of Origen Power Limited, described the potential for his company to disrupt the emissions-intensive lime industry by producing a carbon-neutral lime product.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 9:37 AM WASHINGTON, 5:37 PM DUBAI

Why natural gas is staying—not going

Natural gas—and particularly its role in the transition—stole the show in a GEF panel about oil and gas in a net-zero world. The panelists, who represented a range of private and national oil companies, suggested that much of the narrative around it has lacked nuance, or proven problematic.

Sharif Al Olama, undersecretary for energy and petroleum affairs at the United Arab Emirates’ Ministry of Energy and Infrastructure, said natural gas is critical in his country’s energy strategy alongside renewables, and that it plans to supply both its domestic population and growing global demand for natural gas.

Dan Brouillette, president of Sempra Infrastructure and a former US secretary of energy, added that transitions usually involve using more—not less—energy, and that dense types of energy (such as fossil fuels) will be used for many years to come as a complement to renewables. He also suggested that an “all of the above” energy policy is a fundamental US one that is unlikely to change soon.

Hunter Hunt, chief executive officer and president of Hunt Consolidated Energy, LLC agreed—adding that some proposals for decarbonization through 2050 are simply not sensible.

Just Transition was also a focus. Mele Kyari, group managing director of the Nigerian National Petroleum Corporation, emphasized that the specific energy-access and poverty issues in Sub-Saharan Africa must be carefully considered in transition strategies—and that investments in natural gas and liquid natural gas are crucial to the continent’s future growth and economic success and its ability to support fuel supply to Europe.

Helima Croft, managing director and head of global commodity strategy at RBC Capital Markets, similarly noted that the world cannot expect the energy transition to be cost-effective or “geopolitically benign,” and that lessons learned from the current crisis must be applied in order to ensure as minimally volatile a transition as possible.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 8:58 AM WASHINGTON, 4:58 PM DUBAI

Will energy security derail the transition? (Part two)

The new US-EU Task Force for Energy Security is well-positioned to play a key role in US national and international-security policy. That’s what Amos J. Hochstein, US presidential coordinator for Build Back Better World, told moderator Helima Croft, managing director and head of global commodity strategy at RBC Capital Markets, during a one-on-one chat about the challenges of the energy transition Monday.

He emphasized that the United States must supply Europe with additional gas supplies immediately and in the future, as well as speed up the transition to reduce dependency on natural-gas supplies in the long term. That’s why Washington is working to ensure that all available liquid natural gas (LNG) terminals in and around Europe are importing at maximum capacity, that piped capacity is full, and that available gas storage is being optimized, he said.

Hochstein also noted that the war in Ukraine has fundamentally transformed the European view on the need to diversify away from Russian oil and gas supplies.

On domestic oil and gas production, Hochstein said “we need to make sure that our system and our economy is well-supplied to sustain growth and avoid inflationary action.” He added that US oil production could rise by 1 million barrels per day this year and suggested that investor and fiscal pressures are the key issue holding back rapid US production growth in the short term. He noted, for example, that the Biden administration has allowed significant oil and gas permitting, particularly in LNG infrastructure. Hochstein also indicated growing European support for more long-term contracts, which will ease financing for US LNG export projects.

In the long-term, he added, the energy-security challenge is as much about finding new fuels and supply chains—such as those around critical minerals—as it is about cutting back on conventional fuels, and that the Biden administration is keenly aware of these issues.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 8:24 AM WASHINGTON, 4:24 PM DUBAI

In Europe, ‘the writing has been on the wall’

In a discussion about Europe’s energy security, Maxim Timchenko, chief executive officer of Ukrainian private energy giant DTEK, was among those who made impassioned pleas for leaders to finally confront the reality of Russia’s weaponization of energy supplies in Europe, and to cut their purchases of Russian hydrocarbons. He painted a grave picture of millions of Ukrainians struggling with no electricity or natural gas for weeks amid the Kremlin’s invasion of that country, and also argued that all money which goes to Russia from its oil and gas sales is converted directly into bullets to murder civilians.

Multiple panelists concurred. Alexander Nikolov, Bulgaria’s energy minister, noted that “the writing has been on the wall” not for months, but for years. He added that a laser focus on “green” energy solutions in Europe—at the expense of natural gas and nuclear power—facilitated this crisis.

Wolfgang Ischinger, president of the Foundation Council of the Munich Security Conference Foundation, said the prevailing view in Germany continues to be that sanctioning Russian oil and gas now takes a crucial tool off the table if Russia chooses to escalate further—a view he believes is short-sighted.

Atlantic Council President and CEO Fred Kempe agreed with what he described as Ischinger’s “minority view,” adding that the conflict is increasingly about who is going to shape global order. He concluded that “sanctions have to be toughened” and that strong energy-sector sanctions will need to be ultimately rolled out in Europe. He suggested that the global narrative around this war is changing, and that citizens are becoming increasingly determined to prevent Russian President Vladimir Putin from winning the war.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 8:06 AM WASHINGTON, 4:06 PM DUBAI

Leading oil and gas into a net-zero world

The urgency of climate action has clouded the future of oil and gas in the energy transition. Pressure on oil and gas producers to adapt their operations to fit into a net-zero world has grown, from both policymakers and the investment community. But a supply crisis and price spikes have illustrated the danger of moving away from these fuels without a sufficient corresponding uptake of cleaner alternatives. Most models of the energy transition also suggest that continued petrochemical demand and use in transportation will ensure a considerable level of oil and gas demand, even in a net-zero scenario.

Oil and gas will thus continue to play a key role in the energy transition. It will be incumbent on the industry, policymakers, and investors to walk a precarious tightrope, keeping markets stable through sufficient continued oil and gas production while pursuing ambitious decarbonization targets. Technologies like clean hydrogen and carbon capture, utilization, and storage, with the potential to lessen oil and gas’s traditionally emissions-intensive footprint, could help. So could carbon offsetting. But clarity is needed, and without it, supply-demand mismatches could rage on without any meaningful emissions reductions to speak of. For the transition to be both smooth and comprehensive, oil and gas will require both rigorous accountability and support for the practices and technologies that can help make them compatible with a net-zero world.

Report

Mar 27, 2022

Leading oil and gas into a net-zero world

By Alex Dewar, Randolph Bell, Reed Blakemore, and David W. Yellen

Oil and gas may have an important role to play in a net-zero world. This report examines the best ways to use policy and investment levers to set the sector up for success.

Energy & Environment Oil and Gas

MARCH 28, 2022 | 7:06 AM WASHINGTON, 3:06 PM DUBAI

Will energy security derail the transition? (Part one)

A move to clean energy is crucial, but securing today’s supply and investing wisely are also key. That was the conclusion of a GEF panel featuring Tim Holt, member of the executive board at Siemens Energy AG, Anna Shpitsberg, deputy assistant secretary for energy transformation at the US State Department, Majid Jafar, CEO of Crescent Petroleum, and Claudio Descalzi, CEO of Eni.

Holt highlighted how the current moment in energy geopolitics has “accelerate[d] the transition,” and that the world faces a crucial test of reducing natural gas in Europe while pushing harder to achieve the energy transition as quickly as possible. He added that while the world has “a lot of the ingredients, it’s just the implementation” when it comes to following through on the transition. Shpitsberg largely concurred, adding that the United States is pouring billions of dollars into energy diversification through hydrogen and also carbon capture, utilization, and storage. She also argued that compromising on one goal to the detriment of another shouldn’t be an option.

Meanwhile, Jafar and Descalzi agreed—but also argued for a more nuanced perspective, given the level of energy poverty throughout the world (for example, billions still lack access to clean cooking). They viewed the push to divest from oil and gas as deeply problematic and counterproductive; oil, for example, is still used in a wide range of products while natural gas has massive decarbonization potential in various parts of the world still reliant on coal. That’s why underinvestment in conventional energy—especially hydrocarbons—could actually undermine energy security, they said.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 4:15 AM WASHINGTON, 12:15 PM DUBAI

Urgency and reality collide as GEF kicks off

Atlantic Council President and CEO Frederick Kempe, UAE Special Envoy for Climate Change and Minister of Industry and Advanced Technology Sultan Al Jaber (also managing director of Abu Dhabi National Oil Company), and UAE Minister of Energy and Infrastructure Suhail Al Mazrouei opened this year’s Global Energy Forum by acknowledging the urgency of the moment in global energy security—but also the need to balance a long-term transition with immediate, near-term energy security needs.

Kempe noted the challenges of 2022—the ongoing pandemic, inflation and, most recently, the Russian invasion of Ukraine—and said energy is central to the global drama. The current crisis in European energy security is clear evidence of this reality, he added, proving that the energy transition “is not a light switch” but will take years to navigate. Rising energy prices are putting the transition at risk by threatening the global cohesion that is necessary to realize a net-zero emissions world. Kempe added that the choice between climate action and energy security is a false one.

Al Jaber (who noted the achievements of Dubai Expo 2020) argued that long-term underinvestment in oil and gas has left markets exposed to these challenges—with those markets tightening amid rising global demand year-on-year. While the world must embrace the transition, he said, policies must be tailored to “real world scenarios,” and that “if we fail to plan, our plan will definitely fail.” Al Jaber also said many in Europe and the United States are beginning to accept that the transition will take time, which has resulted in a belated pivot to reconsider near-term energy security, and added that the United Arab Emirates is taking leadership on both near-term energy security and the long-term energy transition with long-term sustainable economic growth at the forefront of its strategy. He argued for a clear, global roadmap with strong foundations—but without defunding the current energy system before a new one can replace it.

Al Mazrouei argued that the current global crisis was predicted years ago, particularly the need for more investment in hydrocarbons and supply diversity, and emphasized that the geopolitical situation is negatively affecting all aspects of energy and human security. He added that diversifying the global natural gas supply is especially important, and that failure to invest and develop resources in this area will lead to even tighter markets. He noted that the United Arab Emirates will continue to work with the Organization of the Petroleum Exporting Countries (OPEC) to ensure stable global markets, and will also aim to produce the lowest carbon barrels in the world. Al Mazrouei also discussed his commitment to bringing affordable hydrogen to market—first blue, then green—and highlighted three pillars of a realistic energy strategy: secure, affordable, and sustainable supply.

Speaking with Kempe at the end of the opening session, Al Mazrouei reiterated the importance of OPEC in stabilizing global energy markets and argued that politics around sanctioned countries (such as Russia) must not interfere with the organization’s broader mission. On raising oil and gas production immediately, he noted significant production declines in recent years and that at least 5-8 million barrels need to be replaced each year through investment. He added that pressure on the international oil companies from their shareholders to leave hydrocarbons has, in turn, pressured national oil companies, and he highlighted the need for a viable long-term perspective on energy now. In particular, financial and analytical institutions, such as the International Energy Agency, must adopt realistic perspectives on long-term investment in oil and gas and recognize the needs of global consumers who need affordable energy and commodities.

—Andrea Clabough is a nonresident fellow at the Global Energy Center.

MARCH 28, 2022 | 3:11 AM WASHINGTON, 11:11 PM DUBAI

Pakistan: The next great infrastructure connector

Pakistan sits at the crossroads of the abundant resources of Central Asia and the Middle East, and the lucrative markets of China and India. It, therefore, has the potential to play a significant connecting role.

But Pakistan’s network, though rapidly advancing, is not yet ready to take on these responsibilities. However, there are considerable opportunities; from energy transportation and roadbuilding to digital connectivity and rail access, if Pakistan pursues significant infrastructure improvements, it has a chance to assume the mantle of the region’s great connector.

Issue Brief

Mar 28, 2022

Pakistan: The next great infrastructure connector

By Ali Jehangir Siddiqui

Pakistan sits at the crossroads of the abundant resources of Central Asia and the Middle East, and the lucrative markets of China and India. It therefore has the potential to play a significant connecting role, one that enables broader regional interdependency while boosting domestic economic prospects.

Energy & Environment Energy Transitions

MARCH 27, 2022 | 2:00 PM WASHINGTON, 10:00 PM DUBAI

The United States, Canada, and the minerals challenge

The onus now falls on policymakers in the United States and Canada to develop resilient, sustainable, and transparent mineral supply chains. As two of the world’s most advanced economies, the US and Canada have the opportunity to take the lead in preempting the emergence of some of the hazards that characterize the oil and gas-based system. It will not be easy; value chains are full of chokepoints, and mining operations have not always followed best practices. But to both enable a smooth energy transition and ensure that procurement does not negate minerals’ carbon-reducing benefits, the US and Canada must act now.

Report

Mar 27, 2022

The United States, Canada, and the minerals challenge

By Reed Blakemore, Paddy Ryan, Randolph Bell

Americas Energy & Environment

MARCH 17, 2022 | 1:13 PM WASHINGTON, 9:13 PM DUBAI

Unearthing potential: The value of geothermal energy to US decarbonization

Achieving US climate goals requires the development and widespread deployment of all available clean energy solutions. Geothermal energy, while currently only a marginal component of the US energy economy, can contribute significantly to the climate action effort. It has the potential to support deep decarbonization through clean baseload generation, efficient heating and cooling, lithium co-production, and a host of other applications.

However, current policy towards geothermal energy has, thus far, prevented the emergence of a vibrant market that would stimulate sector growth. To realize the potential of geothermal energy, public- and private-sector leaders must support policies that encourage geothermal industries and address regulatory, technical, and economic barriers. This report and accompanying two-pager make several recommendations with the potential to optimize US geothermal policy to set the sector up for a central role in the fight against climate change.

Report

Mar 17, 2022

Unearthing potential: The value of geothermal energy to US decarbonization

By Zachary Strauss

Energy & Environment Energy Transitions

JANUARY 19, 2022 | 12:23 AM WASHINGTON, 8:23 PM DUBAI

The 2022 Global Energy Agenda

The year 2021 began with high hopes for climate action, as many members of the international community—including, once again, the US—rededicated themselves to the effort and looked to deploy resources accordingly. But as global economic demand roared back from its pandemic-dampened level in 2020, energy supply failed to keep up, inflating hydrocarbon prices, driving countries back to dirty coal generation, and underscoring the challenges of the “transition” part of the energy transition. It became clear that countries will need to thread the needle between pushing for ambitious emissions reductions and keeping prices down and the lights on in the interim, all against an ever more precarious geopolitical backdrop.

Our experts offer ways forward for the energy transition in the face of hazards like Russian aggression, supply-demand mismatch, and a transition that threatens to leave the global poor behind.

Global Energy Agenda

Jan 19, 2022

The 2022 Global Energy Agenda

By Randolph Bell, Jennifer T. Gordon, Ameya Hadap, and Paul Kielstra (Editors)

Energy & Environment Geopolitics & Energy Security

JANUARY 18, 2022 | 11:15 AM WASHINGTON, 7:15 PM DUBAI

In the wake of the pandemic, new thinking on the way to net zero

In January, the Global Energy Forum made its way to Abu Dhabi Sustainability Week to address the outcomes of COP26 and discuss opportunities to move forward on climate goals.

Global Energy Forum virtual programming at ADSW

The Atlantic Council Global Energy Center hosted a series of virtual events to complement ADSW programming, bringing together government, civil society, and the private sector to discuss the pathways to net-zero.

Catch up on last year’s Global Energy Forum

Last year our Global Energy Center gathered leaders, officials, and experts to focus on the post-pandemic energy system, net-zero carbon goals, the Middle East’s role in the energy transition, and the Biden administration’s energy priorities.

Top UAE officials assess renewables, peak oil, and the post-COVID energy market

The world is about to embark on a big energy transition. Here’s what it could look like.

How to design an energy transition that includes everyone—including the most vulnerable

The post Meet the global leaders powering the world’s energy transition appeared first on Atlantic Council.

Ellinas in CyprusMail: Global energy markets upended for good

lbowen — Sun, 27 Mar 2022 16:00:00 +0000

Explore the #BritainDebrief series

The post Ellinas in CyprusMail: Global energy markets upended for good appeared first on Atlantic Council.

#BritainDebrief – Can Decarbonization Disarm Putin’s War Machine? A Debrief from Laurie Laybourn

Ben Judah — Sat, 12 Mar 2022 19:32:12 +0000

Can decarbonization disarm Putin’s war machine?

As European countries have reluctantly started to announce programs to be less reliant on Russian oil and gas, Senior Fellow Ben Judah interviewed Laurie Laybourn, Visiting Fellow at the Chatham House Sustainability Accelerator for #BritainDebrief. What have the UK and Europe announced so far in addressing their reliance on Russian oil and gas? How can the UK and Europe face the new “petro-aggression” from Russia? What long-term steps must be taken in encouraging sustainability to prevent more petro-aggression in the future?

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

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listen to #britaindebrief as a podcast

MEET THE #BRITAINDEBRIEF HOST

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Ben Judah

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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.

The post #BritainDebrief – Can Decarbonization Disarm Putin’s War Machine? A Debrief from Laurie Laybourn appeared first on Atlantic Council.

What to expect from Mexico’s energy reform bill

Angela Chavez — Thu, 03 Mar 2022 14:33:00 +0000

Mexico’s Congress is currently debating a proposed amendment to the constitution to allow the state to increase control over the country’s energy market. The bill would grant the state electricity company – Comisión Federal de Electricidad (CFE) – 54 percent of the power output market and control over the terms and conditions of private energy producing companies.

However, approval requires support from two-thirds of both the higher and lower legislative chambers. At the moment, the ruling party MORENA does not have supermajority in either. Supporters of the bill claim that it will end preferential treatment for private energy companies and projects funded by foreign private finance, while detractors claim it will hinder global clean energy efforts and increase energy costs.

Looking ahead, upticks in oil prices stemming from Putin’s invasion of Ukraine could alter the proposed timeline and viability of this energy reform bill.

Download Infographic

The hyper-charged appeal of hydrogen in the Arctic

Julia Nesheiwat — Wed, 09 Feb 2022 17:28:41 +0000

It was a good summer for those hedging their bets on hydrogen as the next big thing in energy production, storage, and conservation. The recent US Bipartisan Infrastructure Deal declares hydrogen to be a “comprehensive part” of the American energy mix and devotes billions to applied research in this field. And as seen at COP26, hydrogen has also been the focus of discussion across the world. China´s hydrogen demand has exploded over the past year, and India is looking to become a global player in hydrogen production. The United Kingdom recently launched its Hydrogen Strategy, aiming to replace hydrocarbon-based energy sources with the cleaner energy source. Such language conjures images of hydrogen-fueled sports cars, comprehensive pipeline transport, enormous hydrogen storage tanks, and power plants that have no byproduct except warm water. Many of the current hydrogen energy production technologies are likely to become affordable, scalable, and efficient energy means in the medium term. But while hydrogen looks to be an important part of net-zero energy mixes globally, its potential is especially exciting in low-density communities and fragile ecosystems like the Arctic, where the harsh effects of fossil fuel-induced climate change are most acute.

An important first step to solving these issues is understanding what hydrogen can provide in terms of energy. It can be used directly as a fuel (i.e., burned instead of oil and gas for continuous electricity production) or as a means of storing energy. It can easily be paired with zero-emission power generation and produced by electrolysis, the process of splitting water into hydrogen and oxygen using electrical currents. If hydrogen is obtained via this process, it is considered “green” or “pink” (depending on whether it was produced by renewable generation or by nuclear energy). Most hydrogen is currently obtained as a byproduct of fossil fuels, a quite polluting process, and is referred to as “blue” or “black”, the former is produced from fossil fuel with carbon sequestration processes, the latter produced via the gasification of coal. Ideally, hydrogen would be obtained by electrolysis with electricity from renewable sources. Hydrogen can then be pumped into pipes for transport to gas users as part of the broader energy mix, while excess hydrogen can be stored for later use. This is especially important in the Arctic, where long and dark winters limit solar generation; storing excess power in the form of hydrogen would ensure steady supply through the colder months, while complementing wind power generated during Arctic winters.

However, hydrogen use is not without its drawbacks and pitfalls. Simply substituting hydrogen in for gas is a daunting option, requiring significant investment and manpower to replace the entire gas infrastructure. Additionally, burning hydrogen instead of gas still produces some toxic nitrogen oxides, though insignificant in comparison to natural gas or oil. Further, using hydrogen as seasonal energy storage comes with its own concerns. It would require large quantities of filtered water, which could affect already fragile freshwater supply chains or even damage whole ecosystems. Nevertheless, it is positive that governments are financing research into efficiency improvements, such as materials and procedures that make electrolysis less energy-intensive. A less energy-intensive route for hydrogen production will have multiple benefits across society, including in regions disproportionately affected by climate change, such as the far North. At present, methods currently used for producing energy are still overwhelmingly reliant on hydrocarbons. When hydrocarbons are burned, they produce toxic byproducts including gaseous emissions and black carbon (or unburned hydrocarbon) particles large enough to be seen by the naked eye. In places such as the Arctic, the effects are immediately visible, negatively affecting Arctic ecosystems and communities. Black carbon can cover the Arctic snow, poisoning the local flora and fauna, increasing the rate of snowmelt, encouraging heat absorption, and accelerating the process of global warming and climate change. And though this can be countered in part by already well-established means of relatively cheap, carbon-neutral energy generation, such as solar, wind, and hydro, these means are not perfectly suited to the Arctic context.

But hydrogen’s capabilities are not merely abstract; its role in electricity generation, locomotion, and energy storage are well-established. NASA has been propelling its rockets with hydrogen fuel for over half a century, and hydrogen fuel cell cars (and hydrogen refill stations) are a relatively common sight in California. There are also plans for integrating hydrogen electricity power plants within existing district heating infrastructures. Hydrogen-powered trains are already being operated in the European Union, with further trials yielding promising results. There are also plans to replace kerosene with hydrogen in the aviation industry, along with integrating hydrogen power plants within existing district heating infrastructures. And the shipping sector (a major source of pollution in the Arctic) is strongly considering hydrogen as its fuel of choice in the coming decades, a welcome first step to reducing shipping’s dependency on fossil fuels.

Some claim that in light of the decades-long timeline for hydrogen to become viable, its importance is limited, with batteries rapidly improving, next-generation nuclear technologies showing promise, and leaders focusing aggressively on zero-pollution energy (something that hydrogen is unlikely to ever be). Numerous policymakers and experts are also skeptical about the strategic relevance of hydrogen for mass transportation and heating or electricity generation and argue that the main focus should be the production of green hydrogen for applications where hydrogen use is vital, such as the agroindustry.

For any of these visions to materialize on a larger scale, however, successful policy choices must be carefully considered. These policies must include long-term financing for hydrogen projects, tax credits for hydrogen-powered technology development, and investment in hydrogen infrastructure. While over ninety nations have already adopted hydrogen strategies, they give little insight into practical matters, especially regarding Arctic communities where the need for clean and efficient energy sources is most dire.

Hydrogen is also predicted to become the go-to energy source for a few sources that end consumers benefit directly from airplane and trains travel are the likeliest candidates. Research and development currently focuses on replacing kerosene with hydrogen in the aviation industry. This, however, comes with two hurdles: the supply chain infrastructure doesn’t exist, and plane fuel tanks would need to be four times larger than current kerosene tanks. Railway transport is more developed: hydrogen-powered trains (as a replacement for diesel in places where railway electrification is unavailable) already exist and are operated in the European Union, and further trials are yielding promising results. Repurposing such existing technology to the needs of fragile ecosystems and communities, such as those in the far North, is essential to display the viability of hydrogen as a reliable and efficient fuel. This requires both policy support and large public and private investments, to ensure its timely and successful application. Over the coming years, the storage and transport use of hydrogen will attract more global attention as an alternative way to reduce greenhouse gas emissions.. Nowhere is the fuel better placed to make a difference, however, than in the fragile and besieged Arctic regions. It will take advances in technology, sweeping infrastructure development, and tough policy choices, but support for hydrogen will go a long way toward protecting the Arctic from the worst effects of fossil fuel burning and climate change.

Dr. Julia Nesheiwat is a Distinguished Fellow at the Atlantic Council Global Energy Center, and since December 2020, has served as Commissioner on the US Arctic Research Commission reporting to the White House and Congress on domestic and international Arctic issues.

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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.

The post The hyper-charged appeal of hydrogen in the Arctic appeared first on Atlantic Council.

The 2022 Global Energy Agenda

Randolph Bell, Jennifer T. Gordon, Ameya Hadap, and Paul Kielstra (Editors) — Wed, 19 Jan 2022 05:23:45 +0000

The year 2021 began with high hopes for climate action, as many members of the international community—including, once again, the US—rededicated themselves to the effort and looked to deploy resources accordingly. And there were certainly landmark achievements: the Global Methane Pledge was launched, the Paris Agreement rulebook was completed, and the private holders of $130 trillion in assets under management pledged their collective financial muscle to the fight against climate change, among other victories. But as global economic demand roared back from its pandemic-dampened level in 2020, energy supply failed to keep up, inflating hydrocarbon prices, driving countries back to dirty coal generation, and underscoring the challenges of the “transition” part of the energy transition. It became clear that countries will need to thread the needle between pushing for ambitious emissions reductions and keeping prices down and the lights on in the interim, all against an ever more precarious geopolitical backdrop.

With these considerations in mind, The 2022 Global Energy Agenda details a more pessimistic outlook on the promise of the energy transition, as respondents reckoned with concerns old and new. In these pages, experts offer ways forward in the face of hazards like Russian aggression, supply-demand mismatch, and a transition that threatens to leave the global poor behind. Though the pitfalls that emerged in 2021 gave many pause, this report reveals that leaders are no less determined to find solutions, and to chart a more stable and inclusive course in 2022.

Foreword

The 2022 Global Energy Agenda

By Frederick Kempe

As we begin 2022, still under the shadow of the COVID-19 pandemic, it may seem as though much of the world remains in a holding pattern. 2021 began with optimism but saw the continual resurgence of the pandemic, forcing world leaders to turn their attention and resources to fighting it back repeatedly. Still, 2021 was a significant year in energy and climate and much was accomplished. Crucially, global leaders were able to convene—for the first time since 2019—in Scotland at the 2021 United Nations Climate Change Conference (COP26). And while the outcomes are to be lauded, many observers left Glasgow feeling that more could have been accomplished.

I was fortunate to attend COP26, where I participated in programming in downtown Glasgow’s Blue Zone (with the Atlantic Council’s Adrienne Arsht- Rockefeller Foundation Resilience Center) and at the Climate Action Solution Centre (with the Atlantic Council Global Energy Center) at the stunning Blair Estate. In Scotland, I watched with my own eyes as world leaders—from government, industry, and civil society—recommitted themselves to addressing the global challenge of climate change and putting civilization on a path to net-zero carbon emissions by mid-century. There were reasons for optimism: the Glasgow Climate Pact, which committed to doubling global finance for adaptation; the request that each country present a more ambitious pledge at COP27 (indicating a far greater sense of urgency than before; the Paris COP had only asked for new nationally determined contributions every five years); and, of course, the ability to hold meetings face-to-face and to gather once again as a global community. However, it was clear to all that there remains more to be done and that the path to net-zero will be fraught with challenges and setbacks.

At the time, I concluded that the world is experiencing an energy transition, rather than an energy revolution, and supporting that transition will require significant breakthroughs in clean energy technologies (with commensurate investments in those technologies) and that policy changes (like putting a price on carbon) were also necessary to support the energy transition. I predicted that climate change adaptation strategies will become just as crucial as climate mitigation. Finally, I noted that geopolitical competition and cooperation between countries—especially the US, China, Russia, and India—will shape the global energy future and play as important a role as clean energy technologies and climate change itself. How the US responds to the geopolitical challenge may be shaped by the trajectory of our domestic political landscape, which—having just passed the first anniversary of January 6, 2021—seems to hang in the balance now, more than ever.

I believe that we are up to this set of great challenges, but—as always—the devil is in the details. COP26 took place against the backdrop of an ongoing energy price spike, largely focused on Europe but truly global.

These dynamics will cast a shadow over the energy transition and have the potential to cause a backlash. This backlash could have an impact that reverberates through domestic elections in any number of countries—especially since a world that lacks energy security will also be lacking in political security—and could put a damper on the global movement towards decarbonization.

The course that we chart to net-zero must be steady but also ambitious enough to meet the challenge. Energy access must remain a key priority, especially since the steps we take at this crucial moment will determine what our world looks like by mid-century. It is clear that oil and gas—especially with mitigation efforts like carbon capture, utilization, and storage— will continue to play a role in a low-carbon future.

This second edition of The Global Energy Agenda once again sets the stage for the upcoming year. We have again polled energy leaders from governments, industry, think tanks, and academia, capturing their views of the most important trends to watch and the ways in which we can work together to shape the global energy agenda. As with last year, the key indicator of how respondents answered the survey questions was, on the one hand, respondents who believed that peak oil demand had already occurred or would do so in the near-term and, on the other hand, respondents who believed that peak oil demand would not happen until 2040 at the earliest.

This year, there were two dramatic differences in survey answers from 2020. The first is that respondents’ prediction of when oil demand will peak shifted back by several years, suggesting they now think the energy transition is happening more slowly than they thought last year. Second, respondents’ views on the impact of COVID-19 on the energy system changed. In 2020, COVID-19 was seen as the biggest geopolitical risk to energy supply and production, but this year, cyber attacks were viewed as the greatest geopolitical risk.

As we look ahead to the coming year, I hope it is one of progress, with even greater climate commitments made at COP27 in Egypt (to be followed by COP28 in the United Arab Emirates). Furthermore, I hope this is the year when we leave the worst of COVID- 19 behind, which can only happen through the kind of global cooperation that will also be necessary to combat climate change and all of the other unforeseen challenges that this century is likely to present.

Frederick Kempe is the President and Chief Executive Officer of the Atlantic Council.

Introduction

2021 was supposed to have been a game-changing year of climate action, with the US reentering the Paris Agreement and the pandemic recovery funds of many countries aimed at “green stimulus.”

From the finalization of the Paris rulebook to the launch of the Global Methane Pledge—and from renewal of US-China cooperation on climate to a dramatic increase in net-zero commitments from countries and companies—much was accomplished on climate over the past year. Additions of renewable power capacity likely set yet another record in 2021, and nuclear power might have turned the corner in public perception as a clean power source. Current climate pledges now put the world on track for 1.8 degrees of warming.

But it still was not the year many had hoped for or predicted.

As energy demand recovered from 2020 lows, carbon emissions came roaring back and energy prices skyrocketed, becoming a major driver of inflation and proving a political headache for many global leaders. Natural gas prices in Europe, for instance, hit record highs in December. Brent crude closed the year just shy of $80 but had spent more than half of the fourth quarter above that key threshold. Even a historic coordinated release of strategic oil stocks with US, China, India, Japan, South Korea, and the UK—coincidentally timed with news of the highly transmissible Omicron variant of COVID-19—brought down prices only briefly. And coal demand, which was thought to have peaked globally in 2014, rose dramatically, signaling a possible record-breaking year in 2022. COP26 did not “resign coal to history” as COP President Alok Sharma had declared it would.

So instead of being remembered as the year when the world turned the corner on climate action, 2021 will likely be remembered as the year global leaders began to confront the challenge of managing continued hydrocarbon demand even as they push for dramatic emissions reductions.

At its most basic level, this is exemplified by the seemingly contradictory calls by the Biden Administration for OPEC and US oil producers to increase production while simultaneously encouraging climate action. But in reality, these efforts were not contradictory at all; energy demand obviously must be met in the short term, even as that demand shifts to cleaner sources in the long term. A better example, then, is the Biden Administration’s creation of the still-nascent Net-Zero Producers Forum, which aims to bring major oil and gas producing economies in line with net-zero goals. So too is the EU’s inclusion of nuclear and gas in its green taxonomy.

2021 was also supposed to have been the year that the COVID-19 pandemic ended, or at least became much more manageable. Though the year began with a winter COVID surge during which, at its worst, nearly 20,000 people globally died per day from the disease, the development of multiple effective vaccines was the proverbial light at the end of the tunnel. And by mid-summer, in the developed world, the pandemic seemed to be ending.

Fast forward to December and, due to waning vaccine efficacy against infection (though still high efficacy against severe disease), a significantly more transmissible variant, and populations and politicians leery of additional lockdowns, global case numbers soared beyond anything seen over the previous two years. While severe disease and death seemed less likely

with Omicron than previous variants, hospitals again were stretched thin, and the world was only beginning to understand the economic disruption from so many people infected at once. How this will impact energy demand could be a major story for at least the beginning of 2022 and potentially for much longer.

In 2022, geopolitics will also be increasingly volatile, with Russia amassing troops on Ukraine’s border, Iran ramping up uranium enrichment, and tensions growing over Taiwan. The energy implications of these flashpoints are potentially dramatic—Russia has already been accused of manipulating the European gas market to increase prices and weaken Europe’s hand in responding to its apparent ambitions in Ukraine—bringing yet another year of disruption to energy markets.

The 2022 Global Energy Agenda and essays

To better understand the key issues facing the energy system in 2022, the Atlantic Council Global Energy Center commissioned a series of essays from global experts, corporate leaders, and government ministers. The Center also surveyed a global group of energy leaders, asking them a dozen high-level energy and climate questions. The survey reached hundreds of experts between November 11th and December 6th, 2021, and provides a valuable look at current thinking.1

This is the second annual Global Energy Agenda survey, and the inclusion of various questions from the first survey, conducted in the fall of 2020, also provides useful information on how views are changing.

These essays are not intended to provide a uniform outlook for the year ahead in energy. Instead, through their diversity, they aim to set the terms of debate and outline what possible outcomes might look like, depending on the decisions that governments and industry collectively make.

The survey results will be explored in more detail in the volume that follows. But a few key takeaways help provide overall context.

Fossil fuels will play a larger role for longer. Compared to last year, the energy sector as a whole thinks that fossil fuels will remain a part of the picture for slightly longer. This shift takes two forms. First, in our 2020 survey, respondents on average thought that peak oil demand would occur 10.5 years into the future. Among those surveyed in 2021, the figure has not declined by a year—as one might expect— but is now 12.8 years. Second, while 36 percent of 2021 respondents called the achievement of global net zero emissions by 2050 either somewhat or very likely, that figure has dropped to 27 percent in our current survey.

Two types of energy transition skeptics. Last year, our analysis identified—across age, geography, and, to an extent, area of activity within the sector—three broad schools of thought. The clearest marker of the group into which respondents fell was their estimate of peak oil demand’s likely date. Those we named “transition bulls” thought that this had already occurred or would do so by 2025; “transition bears” believed that it would not happen until 2040 at the earliest, if ever; and “moderates” forecast a year between 2025 and 2040.

In our current survey, the same division is apparent. This year, however, we had more “transition bears” as survey respondents, which permits more detailed analysis. We found that bears who believe that global net zero by 2050 is unlikely—and that, if reached, such an achievement would adversely affect economic growth—have answers quite distinct from fellow bears. The latter group sees political will as the largest barrier to reaching net-zero. The former group, however, largely believes that technology will not be able to deliver net-zero, making questions of policy and political will moot.

COP26 was “more blah, blah, blah.” When asked to rank the outcome of the conference on a scale from “more blah, blah, blah” to “creating a foundation for achieving global net-zero by 2050,” 51 percent of respondents chose the former and only 11 percent the latter. The rest said that it fell in between. Although Europeans and our transition bulls group were slightly more sympathetic, even among these respondents, more had a negative than a positive take.

Divergence on the future of natural gas. While on average, expectations about the long-term future of natural gas appear to have changed little from last year—a substantial majority still think that it will have a long-term future—geography is starting to be a predictor of thinking. 58 percent of European respondents believe that gas has a long-term future, close to the 62 percent in the US, but well behind the 71 percent in the Middle East. More striking, while only 40 percent of bulls think that the fuel has a long-term future, 59 percent of moderates do too, even though the groups gave similar answers last year.

COVID-19 is no longer the biggest perceived risk or driver of change. Last year, 39 percent of those surveyed thought that COVID-19 was the biggest geopolitical risk to energy supply and production. This time, only 11 percent do, with cyberattacks the most frequently cited at 26 percent. Similarly, the pandemic is no longer as widely perceived as a driver of change: the proportion thinking that it will accelerate the energy transition has dropped from 61 percent to 36 percent.

Taken together, we hope The Global Energy Agenda survey responses, analysis, and essays will lay out the contours of the current energy system, assess the events and trends that will shape the energy system in 2022, inform fact-based debate and analysis about the best path forward, and set the shared energy agenda for the year.

1 Please see the Appendix for a demographic breakdown of survey respondents, including geographic, age, and employment sector.

Chapter 1: Climate change and climate action

Climate change and climate action

Essays

How voluntary use of carbon markets can help secure sustainable energy for all

By Rachel Kyte

Projecting COP ambitions across COP27 and COP28

A conversation with: H.E. Dr. Sultan Ahmed Al Jaber, Rt. Hon. Alok Sharma MP, H.E. Sameh Shoukry; moderated by Frederick Kempe

COP26 did not deliver everything we wanted, but here is where key progress was made

By Fatih Birol

COP26 and the Climate Action Solution Centre

By Rt. Hon. Charles Hendry

Resource efficiency is crucial for sustainable development

By Jonathan Maxwell

Nuclear energy is essential to achieving a clean, affordable, and equitable energy system for the future

By Sama Bilbao y León

The role of nuclear power in Japan’s future energy system

By Tatsuya Terazawa

Survey results

On his first day in office on January 20, 2021, US President Joe Biden signed the documents necessary to bring the US back into the Paris Agreement. With an aggressive policy platform and significant star power in senior climate jobs, the US was “back.” And with global momentum behind climate action, renewed US leadership, and a focus on COP26, 2021 was supposed to be the year the world turned the corner on climate action. And in many ways, this was the case; by the end of the year, nearly 90 percent of global greenhouse gas emissions were covered by net-zero targets, up from about 70 percent at the beginning of the year.

However, COP26 was not nearly as successful as many had hoped (though it was not the complete failure that some say it was); “green stimulus” was not as forthcoming as had been predicted; and with energy demand roaring back from pandemic lows, emissions jumped as well. For good reason, this has left the energy and climate community in a more pessimistic mood about climate change than it had been at the beginning of 2021.

Despite continued growth in net-zero pledges from governments and the private sector, expectations about achieving net zero by 2050—already pessimistic in the previous survey—have grown more so. The proportion of respondents who think it is at all likely has dropped from 36 percent last year to 27 percent in the current survey. Meanwhile, those who believe that it is unlikely and not possible without adversely impacting economic growth have risen from 24 percent to 35 percent.

Those in renewables are a bit more hopeful: 32 percent call net zero by 2050 somewhat or very likely, but this is still a significant decline from last year when 46 percent thought so.

To better understand respondents’ thinking about the potential for net zero, the survey asked them to explain—in their own words—the primary barriers to reaching it. Our analysis coded these into broad categories: political will (including everything from general political will among many countries to attitudes of individual governments and international bodies); lagging technology (covering those who believed clean energy technologies could never deliver the power the world needs to those who thought demand is growing too fast for them to do so by 2050); attitudes within populations (including lack of interest, unwillingness to pay, and fear of nuclear power); energy industry pushback and entrenched interests; and the inherent difficulties of carrying out such a transformation given the drag of existing infrastructure and scope of the challenge. Some comments contained more than one of these; others, none.

The biggest issues overall—political will and cost— come as no surprise. Far more illuminating is how views on these barriers diverge between those who see net zero as likely, those who believe it unlikely but possible with little economic cost, and those who think it unlikely and also a costly pursuit.

For those who think net zero is likely or possible without negative economic impact, political courage and vision are, by a substantial margin, the key requirements for change; the other issues pale in comparison. Typical of the comments from this group about the leading barriers to success are that they boil down to “the inability of political leadership to take bold measures with an impact only years to come” and a “lack of courage to adopt the necessary measures.”

For those who consider net zero impossible without an adverse effect on growth, political will matters, but so do prohibitive cost and an expectation that green technology will not deliver the energy needed.

This divergence is even more pronounced when seen through the prism of attitudes toward the future of peak oil demand. The accompanying chart looks at the responses for our transition bulls, moderates, and bears, but divides the latter between two groups we call economic/technological pessimists and political pessimists, where we find a meaningful difference in the reasoning for their pessimism.

This difference— not visible in the 2020 survey because of the size of our survey sample—suggests there is one group of transition bears who consider net zero to be technologically and economically unviable (the “economic/ technological pessimists”), and another whose pessimism about the future arises from pessimism about human, especially political, behavior (the “political pessimists”).

The political pessimists differ little from the transition bulls and moderates on barriers to net zero. Economic/technological pessimists—who make up 13 percent of the entire respondent pool—operate on fundamentally different premises. For them, political will is almost irrelevant. Oil and other fossil fuels will have staying power because clean technology is unlikely to deliver the goods; politicians who try to bring about change in such an environment will not be far-sighted leaders but more akin to King Canute ordering tides. As one respondent put it, the key barrier is “the reality that fossil fuels are abundant, reliable, affordable, and proven for economic development, and renewables cannot substitute for them.” Or, as another said more succinctly, “we need fossil fuels to run economies.”

In line with the optimism at the beginning of 2021, many leaders pinned their hopes on COP26. For instance, in May, COP26 President Alok Sharma said, “The days of coal providing the cheapest form of power are in the past … So let’s make COP26 the moment we leave it in the past where it belongs.” Of course, COP26 was far more of a mixed bag, with parties declaring a “phase down” instead of a “phase out” of coal, for instance.

It is at least fair to argue that there were significant accomplishments at COP26, and that expectations were simply set too high. Our 2020 respondents certainly were skeptical heading into the COP. For example, only 11 percent thought that the meeting would achieve a consensus on global carbon trading under Article 6 of the Paris agreement. Here Glasgow exceeded expectations, with the relevant rule book now finalized. In her essay on carbon markets, Rachel Kyte, dean of the Fletcher School and former CEO of Sustainable Energy for All, addresses how voluntary carbon markets can complement future Article 6 markets and can be used to fund clean, distributed energy in regions that are most lacking, especially sub-Saharan Africa and South Asia.

2 We do not do this for the bulls and moderates as it reveals no meaningful differences.

How voluntary use of carbon markets can help secure sustainable energy for all

By Rachel Kyte

In 2021, the debate around whether voluntary carbon markets would support or delay urgent climate action came to a head due to countries’ increasing and unmet needs for financing and an unprecedented surge in private sector net-zero commitments, including those by the financial sector.

The long-overdue agreement on the Article 6 rulebook at COP26—rules for international carbon markets—provides renewed confidence that carbon credits may play a credible role in decarbonizing the global economy.

But there is much work to be done to ensure that carbon markets are purposeful, i.e., that they reduce emissions and share the benefits with those who have rights to land, sea, and resources. 2022 is crucial in reaching an agreement on achieving integrity in the voluntary use of carbon markets and ensuring the revenues can be used for resilience and speeding energy transitions.

This trajectory for carbon markets opens opportunities for the energy sector in two ways. First, firms can use carbon credits above and beyond decarbonization as part of their transitions, demonstrating credibility. Secondly, voluntary carbon markets can open funding flows to enable clean energy infrastructure in developing economies.

We will only realize these opportunities if we build carbon markets on a foundation of inclusivity and integrity. Inclusivity and integrity are end-to-end prerequisites and will be equally important for those who supply the carbon credits and those who buy and make claims based on them.

Opening up new finance flows to accelerate energy access

Despite early voluntary carbon markets and the Kyoto Protocol Clean Development Mechanism’s focus on renewable energy, over the last few years, voluntary carbon markets have, for the most part, become synonymous with offsets based on protecting and restoring nature.

But, given that projects to generate credits in a high-integrity market must be additional—meaning they would not happen without finance from carbon credits—opportunities abound in the energy sector. In particular, carbon markets could bring a much-needed revenue stream to scale distributed renewable energy infrastructure that might not yet be commercially viable, including those that serve the bottom of the pyramid (for example, scaling the distribution of clean cookstoves). There has been plenty of innovation and experience in the last several years on which we can build.

In my previous role as CEO of Sustainable Energy for All, I saw firsthand the transformative impact of energy access, the resilience that distributed renewables and clean cooking solutions build, and the impact of these efforts on women’s leadership roles within society. Amid the pandemic and with extreme heat on the rise, energizing health systems, reaching the poorest through safety nets with bundled energy and clean cooking, and ensuring access to sustainable cooling are essential elements of resilience in the climate crisis.

We know those without energy are predominantly women in sub-Saharan Africa and South Asia, either living beyond or below the power lines of expensive, low-performing grids. SEforALL and Climate Policy Initiative’s finance tracking published in Energizing Finance reports shows that despite international pledges, the funding for decentralized renewable energy and clean cooking is still too little and too slow for the task at hand. And it is still not a domestic funding priority for many governments. Voluntary use of carbon markets may provide a timely new revenue stream.

Putting voluntary carbon markets on a runway to regulation

While voluntary carbon markets are separate from future Article 6 carbon markets, the newly agreed-upon rulebook establishes guidance to deliver carbon trading aligned with the goals of the Paris Agreement. Therefore, voluntary use of carbon markets cannot undermine the goals of the Paris Agreement and the future Article 6 market that stems from it.

Put another way, voluntary carbon markets can form a runway to regulation and may become part of—or be closely aligned with—future Article 6 carbon markets. How long a runway depends on leadership from governments in putting effective carbon pricing in

place and on initiative from stakeholders committed to forming high-integrity markets.

The Voluntary Carbon Markets Integrity Initiative (VCMI) aims to establish guardrails for private sector climate action claims, like “net-zero,” “climate-neutral,” or the many variations on that theme. These claims will need to be aligned with the Paris Agreement, meaning that carbon credits are being used above and beyond action to meet a science-based abatement pathway. In short, carbon credits must not replace, delay, or obscure decarbonization.

The first step in establishing these guardrails will come in April 2022 when VCMI publishes draft practical claims guidance for firms on how and under what circumstances they should use carbon credits and the claims they can credibly make about this use.

At the same time, we must ensure that rightsholders are at the core of the design and regulation of these markets. The onus to deliver this is not just on project managers or regulators; firms that use carbon credits are accountable for what happens on the ground.

Decarbonizing energy systems that work for all is critical for sustainable development. As we move along the runway to regulation, high-integrity, voluntary use of carbon markets may smooth the shift to clean, affordable, and reliable energy systems for everyone.

Rachel Kyte is dean of the Fletcher School at Tufts University and previously served as special representative of the UN secretary-general and chief executive officer of Sustainable Energy for All (SEforALL).

Agreements on coal and methane were among the other outcomes, although the strength of these agreements, and the extent to which states are likely to adhere to other long-term commitments made at the meeting, remain up for debate.

Overall, this year’s survey respondents do not appear to consider COP26 to be an impressive milestone toward a new energy future. We asked them to assess its outcome on a numeric scale where one described the event, per Greta Thunberg, as “more blah, blah, blah” and five indicated that COP26 created a “firm foundation for achieving net-zero globally by 2050”.

The assessment was noticeably more negative than positive. Over half (51 percent) characterized the outcome of COP26 as yet more blah, blah, blah. Most of the rest (38 percent) put it half-way between the two choices, and just 11 percent considered it a solid foundation.

In every subsection of the energy sector that we look at in this analysis, those with a downbeat assessment outnumbered those who saw the progress as substantial. Two groups that were less negative, however, are worth noting.

First, European respondents were noticeably more sympathetic to the results of the meeting. More than one in five (22 percent) answered with a four or five on our scale, and only 35 percent rated it toward the “blah, blah, blah” end. This is still an overall negative result, but it contrasts sharply with the US respondents of 9 percent and 55 percent respectively. Results from the Middle East respondents—15 percent and 44 percent—were somewhere in between.

Secondly, attitudes about the future of fossil fuels and carbon also have a marked impact on assessing whether a result—which conventional wisdom deems largely mixed—represents progress or hot air. As the chart shows, there is a noticeable difference in how positively our transition bulls, moderates, and bears see the outcome of COP26. For our transition bulls, while not everything they hoped for, 18 percent believe that Glasgow represents more of a firm foundation for progress than yet more talk of little consequence. Among the economic/technological pessimists, fully 77 percent characterized it as “blah, blah, blah.” Presumably, a greater belief that these efforts can make a difference increases the sympathy of those judging their value.

Regardless of one’s take on COP26, there is a tremendous amount of work to do. Our essay contributors provide a number of ideas for immediate and long-term action.

First, in an interview moderated by Atlantic Council CEO Fred Kempe during Abu Dhabi Sustainability Week, COP26 President Alok Sharma, COP27 President and Egyptian Foreign Minister Sameh Shoukry, and UAE Special Envoy for Climate Dr. Sultan Al Jaber lay out their vision for how to build on COP26 to have success at COP27 in Egypt and COP28 in the UAE.

Then, International Energy Agency (IEA) Executive Director Fatih Birol provides his take on COP26, which is far more positive than negative, and outlines several key actions the IEA is taking to accelerate progress on net zero.

The Rt. Hon. Charles Hendry, former UK Minister of State for Energy at the Department of Energy and Climate Change, discusses conversations that happened on the sidelines of COP26 at the Climate Action Solution Centre, where a group of global stakeholders gathered for 12 days to discuss crucial climate issues that could not be addressed under the auspices of the COP.

Jonathan Maxwell, the CEO of Sustainable Development Capital, follows up with a deep dive on energy efficiency, a crucial topic we discussed at CASC but that gets short shrift in international climate conversations.

Finally, Sama Bilbao y León, the Director General of the World Nuclear Association, discusses the importance of nuclear power in meeting net-zero goals; and Tatsuya Terazawa, Chairman and CEO of the Institute for Energy Economics Japan, takes a look at nuclear power in Japan and the complicated role it plays in Japan’s net-zero ambitions following the Fukushima Daiichi accident.

Projecting COP ambitions across COP27 and COP28

A conversation with: H.E. Dr. Sultan Ahmed Al Jaber, Rt. Hon. Alok Sharma MP, H.E. Sameh Shoukry; moderated by Frederick Kempe

This conversation has been edited for brevity and clarity.

Fred Kempe: The success of future COPs relies on sustaining the momentum of those past and identifying pathways forward for the social, environmental, economic well-being of the global community. Think of it as a sort of relay race for the future, and we have three individuals here, very important individuals, passing the baton to each other. I would like to ask each of you to give a brief review of COP26. What did it accomplish? Where did it fall short?

Rt. Hon. Alok Sharma: We set out very early on in our presidency what we wanted to achieve at COP26. Our overarching ambition was to ensure that we kept 1.5 [degrees] alive and what that means is that the Paris Agreement said that world leaders should work together to limit global temperature rises to two degrees and—aiming for well below that—1.5. And that’s why keeping 1.5 alive was so important for us. The way to deliver that was to get much more progress on emission reduction commitments, on finance to support developing nations, on getting support for adaptation and then, of course, to close off the outstanding elements of the Paris rulebook so that that could be operationalized.

If you look at before Paris, the world was heading towards four degrees of global warming by the end of the century. After commitments at Paris, it was at around three degrees. And now, if you take the commitments made in the lead up to COP26, we are heading to below two degrees. So we kept 1.5 alive.

I would just say that we live in a fractured world in terms of politics. And yet, we had almost 200 countries coming together and ensuring that we were tackling this global problem together. So, I think we can be very proud of what we achieved in terms of the Glasgow climate pact.

When we took on this role, less than 30 percent of the global economy had a net-zero commitment. We now have 90 percent. We’ve got a commitment for countries to phase down coal use. For the first ever, in any of these COP processes, we’ve ensured that the $100 billion funding will be delivered by 2023 to developing countries, maybe earlier and, indeed, developed countries agree to double the amount of adaptation finance support to those countries. And we’ve got various work programs in place as well on driving action on adaptation, on loss and damage.

What we achieved is historic. But I also said in Glasgow that this is a fragile win. And that’s because we now need to spend the coming years ensuring that all these commitments are translated into action. And that, frankly, is what the world demands, and that’s what the populations demand.

H.E. Sameh Shoukry: Let me start by congratulating Minister Sharma of the United Kingdom on the success of COP26, both in terms of the substance and what was achieved. And I believe it was important that COP26 was held after a hiatus of about two years due to the COVID-19 pandemic and the lack of engagement at the multilateral level on climate negotiations. There was a particular need at this juncture to finalize the very last outstanding elements of the Paris Agreement work program, and we hope that COP27 will be equally successful, both from a logistical and a substantive perspective.

I think Glasgow was an important step in the direction we need to be taking on global climate action, that is to say, from pledges to actual implementation on the ground. And I think the main element in COP26 is to finalize the provisions on the markets, transparency, and common timeframes for NDCs. It is important that there shouldn’t be any further delay in implementation. What the world needs today is to focus on implementing commitments outlined in NDCs conclusively and expeditiously on issues of mitigation, adaptation, and providing climate finance to developing countries.

More importantly, outcomes from Glasgow reflected the clear political commitment from all parties to step up climate action on all fronts. The call to submit enhanced NDCs, and to phase out unabated coal power and inefficient fossil fuel subsidies are all steps in the right direction.

In addition, we are also very encouraged by the launch of the comprehensive two-year Glasgow Summit – Sharm el-Sheikh Work Program on the global goal on adaptation, as well as the initiation of deliberations on a new collective qualified role on climate finance.

For all of these reasons, we were satisfied with the COP26. Of course, there are issues pertaining to the developing countries’ ambitions and expectations that we hope will be further developed in the subsequent negotiating process. But we recognize that, in the multilateral negotiating context, we should address—especially in view of the dramatic events of the last two years in terms of climate change—that we need to move in the right direction with the necessary political commitment. And I think that Glasgow provided us the groundwork for future endeavors in this regard.

H.E. Dr. Sultan Al Jaber: It is clear, especially now that the dust has settled, that COP26 was a very good steppingstone. In our view, it was a success. It helped instill the sense of urgency across the board. Glasgow united 90 percent of the world’s economy on the path to net zero and that is a phenomenal achievement. The international community made significant global deals on meeting emissions reductions and forest protection. And of course, we got closer—even if not the whole way—to reaching the $100 billion target for climate financing.

COP26 also succeeded in launching many partnerships and coalitions between governments and the private sector to accelerate progressive innovation, like Aim for Climate, which we in the UAE are proud to be part of. It was launched by the US, and thirty-four other countries have joined us in this very important initiative. And, critically, COP26 finally reached a deal on Article 6 of the Paris Agreement. That is a very, very critical success factor because it lays the foundation for effective carbon markets. All of this creates great momentum and a great platform that Egypt and the UAE can, should, and will build on for the progressive approach we are adopting for COP27 and COP28.

Fred Kempe: Egypt’s proposal for the COP27 presidency was “Road to COP27: A United Africa for a Resilient Future.” So, resilience underlines the move toward adaptation. Could you talk about how you look ahead to November 2022 and your biggest priorities in Sharm El-Sheikh?

H.E. Sameh Shoukry: I believe that COP27 will be very important in terms of setting the stage and direction for global climate action in this critical decade. Leading up to 2030, COP27 will be the first step in what we believe should be an implementation decade. The world’s collective effort to implementing NDCs under the Paris Agreement should be stepped up, starting at Sharm El-Sheikh. It will show parties that they should be coming with enhanced ambition in all fronts of the war against climate change, whether in terms of mitigation, adaptation, or climate finance.

COP27 will also build on the outcomes of Glasgow. As the COP-designated presidency, Egypt will focus on achieving progress on the mandates coming from COP26, including the global build-up of adaptation and the new goal of climate finance. This global stocktaking is also an important part of the promises that should be made in in this area, in Sharm El-Sheikh, to allow for assessing where we are and where we need to be implementing the Paris Agreement and achieving its goals.

The impacts of climate change are felt universally all around the world, and those affected most are ordinary men, women and children, and their voices should be heard. We will provide the opportunity for all the stakeholders to be heard loud and clear and to have the necessary impact on the decision makers. It’s important, since their livelihoods are at stake, their wellbeing, and that of their children will be affected.

We believe in strengthening the role of youth and civil society, and we are glad that the first Climate Youth Forum will be convened in Egypt this year. We commit to continuing to engage with the young people around the world, and we believe that this is again an aspect that future COPs should concentrate on.

Fred Kempe: Dr. Sultan, congratulations as well to you on the UAE having the COP28 presidency. You were the first country in the Middle East and North Africa to sign the Paris Agreement, and the first to make a commitment to net-zero by 2050. With this momentum, what will your approach be to COP28?

H.E. Dr. Sultan Al Jaber: Let me respond to your question first by saying that we take on this role with a great sense of responsibility. And as such, I would like to take this opportunity to thank the Asia-Pacific Group of Nations and the UNFCCC Secretariat for the trust they have placed in us.

COP28 is going to be a crucial COP. It will mark the first ever global stocktaking that will show us how we are tracking towards the Paris goals, whether it’s on mitigation, adaptation and, of course, on finance. Critically, it would also set the roadmap towards 2030 and beyond. The work towards a successful stocktaking starts now, and I can comfortably tell you that we have already started working very closely with our colleagues and friends in the UK and in Egypt to make sure that all countries continue the momentum of COP26, especially in aligning the international community around net zero by 2050.

But there is also another dimension that we want COP28 to be defined by, and that goes beyond policy objectives to practical outcomes. We want Abu Dhabi to be where countries turn pledges into concrete results. So, we want this to be the start point that will translate policies, strategies, and plans into real action that will deliver tangible results. Of course, we also want to help take commercially viable climate solutions to scale around the world, especially where they are really needed. This is why we want COP28 to build on the momentum and the excitement created at COP26. We want to build on the progress and the momentum that will be achieved and clearly demonstrated through COP27.

And we want COP28 to be as inclusive as possible, reflecting the views of developed nations alongside developing countries, and also reflecting public and private sectors, scientists and civil society. By inclusive, I mean the expertise that is required to help us prepare for this very important transition. In the energy space, the hydrocarbon industry will have to be included as part of the mix because if we want to successfully transition to the energy system of tomorrow, we can’t simply unplug from the energy system of today, and we can’t do this with a flip of a switch. So, we need to take time. We need to consult and engage all those relevant. We need to include the energy experts in the discussions early to make the current system work more efficiently with much less carbon. We should, of course, leverage expertise from across the energy sector to help find meaningful, practical climate solutions that we all need. We should always remember that our goal is to hold back emissions, not to hold back progress or economic development.

Fred Kempe: Dr. Sultan, what a wonderful comment on holding back emissions but not holding back progress. Mr. Sharma, how do you see the UK working with Egypt and the UAE to capitalize on the fact that the next two COPs are in the Middle East and North African region?

Rt. Hon. Alok Sharma: We are working very closely with our friends in Egypt and the UAE, and I think it’s been a very constructive dialogue with both countries leading up to COP26. My first international travel after COP26 this year of course is Egypt and the UAE, and I hope that demonstrates the fact that we want this partnership to work really well. I’ve been so encouraged by what Mr. Shoukry and Dr. Al Jaber have said about their ambitions for COP27 and COP28. And there’s no doubt that what they are looking to achieve is far more ambitious for COP27 and COP28. And honestly, that’s what we had going into Glasgow with the real ambition for COP26.

And if I may just reflect on one of the key elements that my colleagues and friends have talked about is the power of the private sector. If we want to be on the pathway to limit global temperature rises to well below two degrees—aiming for 1.5–we need to halve global emissions by 2030 relative to what they were in 2010, and to be able to do this we need to get the private sector on board.

And I have to tell you, over the past couple of years and at COP26, we saw the private sector stepping forward. We now have a hundred and thirty trillion dollars of assets from the private sector committed to getting to net zero by 2050. I think this is a really exciting part of what came out of COP26, and I’m sure this will be taken forward at COP27 and COP28 as well.

Dr. Al Jaber, as you talked about, the thing that we wanted to do is to get emissions down. And one of the really important achievements of COP26 was an agreement to have this ratchet, whereby every country’s ministries agree to look at the 2030 emission reduction targets and see whether those would be revised by the end of 2022 so they align with the Paris temperature goals. I think this is an area where we need to work closely together, and I’m really excited about this partnership that we have with two very close friends. And I have no doubt based on what I’ve heard from both of my friends, that they are absolutely committed to having real success at COP27 and COP28. And ultimately, the aim of that, of course, is to deliver a cleaner world, a more prosperous world, and a world that is focused on green growth.

Fred Kempe: Obviously, this is a very special dynamic that we’re going to have the next two COPs in the Middle East and in Africa. How do you feel the region can take advantage of this? And where do you feel most optimistic and where do you see the greatest areas in need of work?

H.E. Sameh Shoukry: Our region continues to be highly affected by the negative impacts of climate change, and Egypt belongs to two regions that are most affected: Africa and the Mediterranean. And as COP President on behalf of Africa, we believe it is our responsibility during COP27 to highlight the priorities of the continent, which has suffered the most and which has contributed the least to the problem that we are facing. In this context, we believe that hosting the COP in Africa hosting represents an opportunity to frame the impacts of climate change and to promote and support the exemplary efforts that African countries have taken to address climate change and to adapt to the impacts in accordance with the Paris Agreement, despite the strains that climate action put on their limited resources.

We can also see that there’s a silver lining in addressing climate change in the Middle East and Africa, expediting the green transformation to the benefit of our economies. We believe there’s a great potential to take advantage of the resources that are available to provide green jobs and to provide opportunities to generate the development ambitions of the African and the MENA regions. We hope that this process will continue to address the vulnerabilities that exist and the necessity to provide resources for the countries most affected.

H.E. Dr. Sultan Al Jaber: The focus on our region in the next three years is an important factor that we should capitalize on. This region has specific advantages that can help accelerate the energy transition.

Firstly, as long as the world continues to rely on oil and gas, we can play a very critical role in helping ensure reliable supplies of the least carbon-intensive oil and gas, and we can make sure that this is available to the market where it’s needed. We are, of course, leveraging this position to drive down carbon intensity through the expansion of many, many initiatives and projects such as carbon capture and storage. We’re also investing in our capabilities in hydrogen, green and blue.

Egypt has been very successful in developing a comprehensive holistic energy strategy, and they are one of the countries that have access to high solar irradiance as well as high wind speeds. And they have been harnessing both solar and wind and playing a very important role in helping advance the renewable energy agenda in an effort to help mitigate climate change and reduce carbon emissions.

In the UAE, we have been investing in solar and wind, and we’ve been investing in the clean technology space for more than fifteen years. We have invested in more than forty countries. We today already have access to twenty-three gigawatts of clean zero carbon emission sources of power in forty countries. That positions us uniquely on the global renewable energy map. And only recently, three of the UAE’s energy giants joined in a strategic partnership to turn Masdar into a clean energy powerhouse. Now, this new supercharged Masdar is going to double its capacity to reach at least fifty gigawatts by 2030. This represents a very unique opportunity for Masdar and for its partners, as well as the region.

So, the energy transition has been embraced by this region and, in particular, in Egypt and in the Kingdom of Saudi Arabia, and of course, in the United Arab Emirates. We’re very serious in advancing this agenda. We see a unique economic development opportunity that is sustainable for the future. If we were to capitalize on our deep expertise, as well as the financial resources we have and the technology access—as well as the partnerships that we’ve been able to create over the years—and again globally, there would be at least three trillion dollars that will be invested in the renewable energy space over the next ten years. We in the UAE see this as a unique opportunity for us to capitalize on and seize with our partners. In fact, this is the thinking behind our net-zero strategic initiative. We see it as a new economic development opportunity that will help us create new industries, new skills, new jobs, new partnerships, and new models of engagement with relevant parties around the world. For us, the business of tackling climate change is simply a good business opportunity and, as such, we are aggressively approaching it.

H.E. Dr. Sultan Ahmed Al Jaber is the Minister of Industry and Advanced Technology; UAE Special Envoy for Climate Change; Managing Director and Group CEO of the Abu Dhabi National Oil Company (ADNOC); and Chairman, Masdar, United Arab Emirates. The Rt. Hon. Alok Sharma MP is COP26 President, United Kingdom. H.E. Sameh Shoukry is the Minister of Foreign Affairs, President Designate COP27, Egypt. ADNOC is a sponsor of the 2022 Atlantic Council Global Energy Forum.

COP26 did not deliver everything we wanted, but here is where key progress was made

By Fatih Birol

Climate change is perhaps the greatest challenge that humankind has faced and it is natural—and healthy—that our citizens demand strong action. Therefore, I understand the disappointment and frustration that some people expressed after November’s COP26 Climate Change Conference in Glasgow.

At the IEA, we did not rush into hasty judgments. After taking time to make a considered assessment, I would now say that COP26 actually achieved a lot. Even if it fell short of what we might have ideally hoped for, Glasgow delivered much more than many people perhaps realize.

There are three main areas where COP26 generated important momentum towards helping the global energy sector to reach net-zero emissions by mid-century.

Stronger ambitions

First are the important commitments we saw at the summit and in the weeks leading up to it. Countries that account for about 90% of the global economy have now committed to reduce their emissions to net zero. Of course, pledging to do something and actually doing it are not the same thing, and effective implementation of clear policies to back up these commitments is critical. But governments across the world are now clearly signalling to investors and companies that net zero is where we need to go.

More broadly, IEA analysis shows that if all the energy and climate pledges made by governments ahead of and during COP26 are met on time and in full, it would keep the rise in global temperatures to 1.8°C, the first time this projection has been below 2°C.3 We still have to do everything we can to limit global warming to 1.5 °C, but we still saw a significant step forward in terms of ambition at COP26.

Greater cooperation

We will not successfully reduce global emissions to net zero without strong international collaboration, and that is the second encouraging sign we saw in Glasgow. Two particularly important examples stood out for me. The US-China Joint Declaration was a major statement about the intention of the world’s two largest emitters to work together to accelerate their climate actions, which sends a strong leadership message to the world. And the Just Energy Transition Partnership with South Africa saw a number of countries and institutions coming together to support South Africa’s move away from coal in a way that also focuses on the social aspects of the clean energy transition. On a multilateral basis, the signing of the Global Methane Pledge by over one hundred countries was a major achievement that can make a vital difference to near-term global warming.4

Agreeing on the rules

A third area where I would like to note progress is on rules. A major task in Glasgow was to agree on how to implement different aspects of the Paris Agreement,

and COP26 clearly moved things forward on the inter national rulebook for carbon markets and other key elements. We also saw new mechanisms put in place to encourage countries to keep ratcheting up their commitments at future COPs, which can help close the gap between current commitments and what’s needed to bring us in line with a 1.5°C pathway.

I would like to be able to mention a fourth area, finance, but sadly the progress we saw on that front was not satisfactory. There is still a lot of work to do both in terms of mobilizing the amount of financing that is needed and in channelling it where it can make a real difference, notably in developing economies.

What comes next

As we look beyond COP26, we need to focus on implementation. We need clear and credible policies, major investments, and more clean energy projects and products rolled out around the world to replace the old polluting and emitting infrastructure in use today.

In this vein, I would like to highlight four new initiatives that we at the IEA are undertaking to support rapid and orderly clean energy transitions. Coal accounts for more emissions globally than any other single source and a major new IEA report in June will analyze in detail practical steps between now and 2030 to bring down emissions and air pollution from coal in line with our net zero pathway, while ensuring the transition is fair and affordable, especially for developing economies.

As the IEA’s Roadmap to Net Zero by 2050 shows, we are going to need to generate a lot more electricity on a path to net zero, and it will need to come from a range of low-carbon sources to ensure that supplies are reliable and affordable.5 I was encouraged at COP26 to see nuclear power returning to the fore in this conversation, and our new special report on Nuclear Energy and Net Zero in May will analyse this issue in depth, with a particular focus on the potential role of small modular reactors.

As I mentioned above, the signing of the Global Methane Pledge was a major step forward at COP26. To support the implementation of this pledge, we will be launching an expanded version of our Methane Tracker in February to include estimated emissions from coal, agriculture, and waste.6 And on the subject of tracking, the United Kingdom’s COP26 Presidency asked the IEA to lead global efforts to monitor progress on the Glasgow Breakthroughs, which are aimed at driving down the costs of key clean energy technologies. For this, we will track global progress in critical areas—such as power, road transport, steel and hydrogen—to determine whether it is in line with international climate goals.

In short, COP26 produced valuable progress that can help move the world towards a cleaner and more secure energy future, which is critical to addressing the threat of climate change. The key is for governments not to leave COP26’s gains as mere words, but to put them into action.

3 Fatih Birol, “COP26 climate pledges could help limit global warming to 1.8°C, but implementing them will be the key,” IEA Commentaries, November 4, 2021, https://www.iea.org/commentaries/cop26-climate-pledges-could-help-limit-global-warming-to-1-8-c-but-implementing-them-will-be-the-key.

4 “Executive Director joins world leaders for launch of Global Methane Pledge,” IEA, November 2, 2021, https://www.iea.org/news/executive-director-joins-world-leaders-for-launch-of-global-methane-pledge.

5 International Energy Agency, Net Zero by 2050: A Roadmap for the Global Energy Sector, May 2021, https://www.iea.org/reports/net-zero-by-2050.

6 International Energy Agency, Methane Tracker Database, October 7, 2021, https://www.iea.org/articles/methane-tracker-database.

Fatih Birol is the Executive Director of the International Energy Agency.

COP26 and the Climate Action Solution Centre

By Rt. Hon. Charles Hendry

As the owners of the Blair Estate, a castle just outside Glasgow, my wife and I were honored and delighted to host the Climate Action Solution Centre (CASC), an exceptional array of events on the sidelines of COP26 organized by a consortium including the Atlantic Council, Liebreich Associates, National Grid, and Octopus Energy. As global leaders from the public sector, industry, and civil society met in Glasgow to negotiate the Glasgow Climate Pact and make public commitments to decarbonization, we hosted some of the most influential decisionmakers for a series of private conversations intended to identify solutions to the thorniest climate challenges.

In a way, Blair Estate is symbolic of the approach that was needed to make the COP discussions successful. The house has evolved over 900 years with countless generations making individual decisions, which have led in time to the creation of the magnificent mansion and surrounding estate you see today.

It is that same spirit that was needed at COP, but on a much bigger scale, with global leaders coming together to make decisions which would be seen many years in the future as providing a turning point in the fight against climate change.

The house has never been so alive, with more than 1600 people coming through the doors over the twelve days of COP26. CASC brought together people from across the world to talk about what we need to do; who needs to do it; and how the whole process can be accelerated to meet the challenge.

And it was that concept of “solutions” that was at the heart of every discussion. There was an extraordinary buzz of positivity, of people saying that they know what needs to be done and how it can be achieved. The feedback after every discussion was that people felt more positive about what could be done rather than overwhelmed by the scale of the challenge.

The discussions—from early morning to late at night—looked at the same issues being addressed by the global leaders at COP26 itself on how we decarbonize our societies and our activities, such as energy efficiency, finance, hydrogen, aviation, methane reduction, critical minerals, and the future of fossil fuels.

The conclusions recognized that past COPs have failed to assign energy efficiency its rightful importance. Governments and capital markets all need to deliver more on energy efficiency to make sure we optimize the resources we use. In this regard, regulation will be necessary, and we need to address the issue of how to do this in a way that delivers a just transition and environmental justice.

It was absolutely clear that the financial community is now moving ahead of governments, recognizing the huge opportunities in the green economy. That will mean we will need to have better ways of comparing the actions of companies so investors and advisers can make effective comparisons. No one suggested that adequate funding was a barrier to delivering net-zero emissions by 2050; on the contrary, with $130 trillion reputedly available, the question is how to use that finance most effectively.

There was genuine debate around the role for hydrogen—its viability and the scope for green hydrogen at an affordable cost to replace gas—especially for industrial purposes. That debate mirrors the discussions in government and industry, but even if the solutions are not yet clear, it is an issue which is being discussed with a seriousness and commitment that was simply not evident just a few years ago.

The continuing role of fossil fuels was at the heart of many discussions; we grappled with ways to balance the need to move at much greater speed towards low-carbon solutions whilst ensuring that such ambitions remain deliverable. If anything, we would have welcomed more participation by the industry in the discussions in and around COP, as it will play a central role in determining the speed of change and how traditional sectors can become green.

It was recognized that the supply of critical minerals will determine the pace of progress. An estimated three billion metric tons of critical minerals will be needed to achieve the Paris Agreement goals by 2050, but at present the broader ESG issues are unclear, with insufficient focus on the environmental and working practices of procuring and processing the requisite minerals at scale.

There was, rightly, discussion about tackling methane emissions and especially how the Global Methane Pledge can be extended to include current non-signatories. The immediate requirement is more accurate monitoring and verification, so that any carbon border tax or adjustment policies can be effective.

We looked, too, at how nature-based solutions can be encouraged, and how the accounting mechanisms might be made less challenging. Again, measurement will be key to success.

For aviation, the focus was on how the provision of Sustainable Aviation Fuel (SAF) can be massively developed and then combined with the need for the right policy signals from government to drive investment decisions.

For us, as the owners of Blair, it was exactly what we had wanted to achieve with the house. We wanted to show that one of Scotland’s most historic houses could be at the heart of finding solutions to the challenges of the 21st century. Judging by the level of enthusiasm and the desire of so many people to repeat the exercise and maintain the momentum, we hope that goal was shared by our guests as well.

The Rt. Hon. Charles Hendry CBE PC is a professor at the University of Edinburgh and is a former United Kingdom Minister of State for Energy at the Department for Energy and Climate Change. Charles and Sallie Hendry are the owners of the Blair Estate.

Resource efficiency is crucial for sustainable development

By Jonathan Maxwell

Efficiency first

Energy efficiency is one of the most important priorities for the global energy economy and policymakers in the coming decade. It should be at the very top of the agenda for all businesses and governments. The United Nations Climate Change Conference (COP26) in Glasgow called for energy efficiency improvements, alongside increases in clean power generation, as one of the last features included in the Glasgow Climate Pact and topics of the conference. This is most welcome, but in the future, it should be the first item on the agenda.
Everyone and everything depends on energy; modern society simply does not function or communicate without it. Energy sources are worth trillions of dollars and are one of the most valuable commodities in the world. It is at the heart of both the problems with and the solutions to climate change, involving at least half of global greenhouse gas emissions. Yet we waste most of it.
We must now re-focus urgently on energy efficiency for three key reasons. The first is security. The second is cost. The third, and potentially most universal in the long term, is carbon.

Security

Grids fail. Superstorm Sandy hit New York in 2012 with such a devastating effect, both economically and in terms of loss of life, partly because New York lost power. Fast forward to February of 2021, when the grid failed in Texas as a result of three severe storms, stranding communities and businesses and bankrupting energy companies. The problem hit Louisiana in the summer, and volatile supply is hurting California now. These failures were often related to climate, weather, or natural disasters. But geopolitical risks are just as serious, with scant natural gas supplies disrupting markets in Europe at the time of writing. Grid decentralization and energy efficiency can help address these problems. Conservation and on-site energy generation using local and renewable resources can deliver more reliable solutions that depend less, if at all, on the grid. Policymakers in Europe and the United States have now started to budget and legislate accordingly. China already uses energy efficiency policy to decouple energy demand from economic growth.

Cost

Utility energy prices are a function of the cost of generation, but also of the cost of maintaining centralized transmission and distribution through the grid, as well as tax and market incentives. These costs are too high because we waste two-thirds to three-quarters of energy before it gets to the point of use, through generation, transmission, and distribution losses associated with a centralized grid. These losses occur because energy is often sourced far from where it is used and where there is no use for heat that is produced along with the power, resulting in waste. Indeed, according to the World Economic Forum, some 70 percent of original energy is wasted in the United States, while more than two-thirds of original energy is wasted in Europe. Meanwhile, 70 percent of all energy is used in buildings, industry, and transport, not all of which are efficient. At least 20-30 percent is wasted through sub-optimal equipment such as lighting, motors, controls, heating ventilation, and air conditioning. Decentralization through on-site generation can slash losses on the supply side, while better and more efficient equipment can reduce waste on the demand side. Cutting energy waste reduces costs and improves productivity and profitability.

Carbon

The clock is ticking, and the science is clear. We have a very limited global carbon budget that we will have spent by the end of this decade, and we have no more than this next generation—i.e., the next twenty to thirty years—to decarbonize while transforming the way that we generate and use energy and other resources. The International Energy Agency states that energy efficiency represents at least 40 percent of the decarbonization needed in the energy sector by 2040.

Most companies and governments are committed to limiting global temperature rise to 1.5°C and to net-zero carbon by 2050. But there is simply no such thing as zero-carbon energy generation. Creating new renewable energy generation infrastructure emits carbon, and there are limits to its penetration over time. Today, 80 percent of the world’s energy system is still based on oil, natural gas, and coal, with massive associated investment in infrastructure and supply chains that will take time as well as money to decarbonize. Global energy demand is projected to rise nearly 50 percent by 2050. During this time, there is expected to be more growth in emissions from demand for cooling, which is set to triple, than there is from the entire energy demand from China and India combined today. Decarbonization is going to be a massive long-term investment and we should use energy efficiency to deliver and fund as much of it as possible.

We have to focus on reducing demand for energy and promoting the most efficient ways of generating, transmitting, distributing, and using energy with the best available technology. On-site generation and more efficient equipment in buildings in industry is a large part of the solution. So too is electrification of transport. ‘Well-to-wheel’ efficiency based on oil is some 15-30 percent compared to 75 percent plus from ‘wind-to-wheel’ electricity, and that is before we consider the pollution prevention benefits. Indeed, more people die from premature lung disease in cities than from road traffic accidents, and from war, terrorism, and murder combined. Energy efficiency does not rely on technologies that are yet to be invented, and it can be delivered now, often at lower cost and more reliably than business as usual. The cheapest and cleanest energy is the energy that we don’t use or waste. It is what the International Energy Agency calls the “First Fuel.” Energy efficiency provides the biggest ‘bang for the buck’ from a greenhouse gas emission reduction perspective and it should come first.

From energy transition to energy transformation

In the last decade we saw the market for energy efficient lighting grow from less than 2 percent penetration to over 60 percent globally. Today, electric vehicles are a mere 2 percent of US auto sales. There is a vacuum to fill. There will be a billion new air conditioners in the next five to ten years, and the fluorinated refrigerant gases associated with the old ones are thousands of times more potent than CO2. Methane, unless captured from oil and gas production and landfill sites, is eighty times more potent than CO2 over twenty years. The market for more energy efficient solutions is worth trillions of dollars, potentially two to three times the size of the renewable power market that is rightly attracting US$1-2 trillion per annum in new capital investment. The time to transform the way that we supply and use our energy has come, and we must do so urgently. This revolution involves doing more with less. It is highly profitable. The rewards could not be larger.

Resource efficiency is synonymous with sustainable development. It must come first.

Jonathan Maxwell is the CEO and Founder of Sustainable Development Capital LLP, which was a co-sponsor of the Climate Action Solution Centre.

Nuclear energy is essential to achieving a clean, affordable, and equitable energy system for the future

By Sama Bilbao y León

Nuclear energy offers a golden opportunity to build a cleaner, more equitable world, in which everyone has access to low-carbon, affordable, abundant energy and a high quality of life.

This opportunity comes at a time of need for urgent and realistic action on climate change. Throughout 2021—and at the COP26 conference in Glasgow—there was a clear recognition of the severity of impacts from climate change and a greater commitment from the international community to implement pragmatic approaches to achieving net-zero carbon emissions.

While achieving net-zero emissions by the middle of this century is critical to limiting climate change to 1.5 degrees Celsius, this alone is simply not enough. We must also ensure that the clean energy systems of the future are equally available to everyone in the world and that everyone has access to the around-the-clock reliable energy that powers quality of life in high-income countries.

Meeting this urgent and massive challenge requires an ambitious, pragmatic, and multi-pronged approach. No single energy technology can achieve this on its own.

Nuclear energy is currently the world’s second largest source of low-carbon electricity, meeting more than 10 percent of global electricity demand and accounting for more than 30 percent of global low-carbon electricity.7 Nuclear generation has provided reliable, clean electricity for decades, avoiding the emissions of more than 70 billion metric tons of carbon dioxide over the last fifty years.

We must use, as efficiently as possible, the low-carbon energy that we currently have, and put in place an aggressive action plan to deploy as much new clean generation as fast as is feasible at a global level. Maximizing the contribution of existing nuclear power plants is, according to the IEA, the most cost-effective low-carbon energy investment available today.8 Not only we can ill afford to lose such a significant source of emissions-free electricity, but existing nuclear power plants will be instrumental to help bridge the gap as we accelerate the deployment of new low carbon generation. With more than 75 percent of the global nuclear fleet under 40 years old, and the first approvals for 80 years of operation having been passed in the United States, there is every opportunity for these reactors to continue to produce low-carbon electricity well beyond 2050.

But if we are going to keep the 1.5-degree target within reach in a cost-effective and socially equitable manner, we will need much more energy, and we will need it urgently. The great news is that nuclear energy is one of the only technologies that can produce low-carbon electricity and heat, which could be a game-changer to decarbonize other hard-to-abate sectors beyond electricity, such as industrial processes, heating and cooling of buildings, and hydrogen generation.

According to the World Nuclear Association’s Harmony vision, to meet global decarbonization and sustainable development needs, nuclear energy will need to play a significant role, with more than 25 percent of global electricity generated by nuclear energy by 2050, along with a significant proportion of non-electric applications.9 This means adding about 30 GWe of nuclear power generation every year, which is ambitious but on par with the nuclear construction rates of 31 GWe per year achieved in the mid-1980s.

World Nuclear Association data show that there are currently over one hundred reactor units planned and a further 325 units proposed by governments around the world.10 Since COP26, we have seen a number of new proposals and policy announcements, indicating a growing recognition of the crucial role nuclear energy must play in the future. France announced that it would build new nuclear power reactors to maintain its energy security and to meet its climate change goals. US and Romanian companies announced a partnership to build a first-of-a-kind small modular reactor in Romania. The UK announced regulations to introduce a new funding model to attract a wider range of private investment for new nuclear power projects, as well as funding support for the development of domestic small modular reactor technology. The Netherlands announced plans to build two nuclear power stations in a bid to hit more ambitious climate goals. Poland continues aggressive plans to replace existing coal generation with nuclear plants, large and small. China reiterated plans to build 150 new nuclear units by 2050, while India announced a goal of more than 22 GW of nuclear capacity by 2031. Russia has a number of active nuclear projects both inside the country and abroad, such as in Bangladesh, Egypt, and Turkey.

In the year leading up to COP26, much has been achieved: in 2021, over 5 GWe of new nuclear capacity was connected to grids across the world, in China, India, Pakistan, and the UAE. Construction also began on an additional 6 GWe. Unfortunately, this is not close to the 30 GWe needed, making it crucial for governments to implement clear policy actions to accelerate the deployment of new nuclear.

We must establish human, physical, commercial, and institutional infrastructure that will allow the global nuclear sector to scale up fast to meet the need for urgent and massive decarbonization. A lot of the work should take place within the nuclear industry itself, making the most of lessons learned from recent first-of-a-kind projects and capitalizing on rebuilt capabilities and expertise. But government support will be indispensable: policies and market frameworks that establish a level playing field for all low-carbon technologies—and that instill confidence and a long-term vision for energy strategies—will be instrumental to incentivize investment in nuclear energy projects and associated supply chains, as well as to streamline licensing and regulatory systems.

Nuclear energy brings a unique combination of features essential to the energy systems of the future, and these features need to be recognized and adequately valued by policies and markets alike. Nuclear units can provide the flexible clean generation and spinning reserves needed to ensure the stability and reliability of electricity grids, particularly those with increased penetration of intermittent renewables, thus supporting the transition to a low-carbon energy system. Nuclear power plants produce 24/7 low-carbon energy, locally and independent of geopolitical pressures, the weather, or the season. They have an incredibly small footprint, in terms of land, fuel, and raw materials use, as well as the lowest lifecycle impacts of all electricity generation options.11 Nuclear power plants are cost-competitive, particularly when the costs and the stability of the system as a whole are considered, and bring long-term, well-paid, local jobs and significant socioeconomic development.12

Once the value of nuclear power is recognized by policies and markets, nuclear technologies will be able to play a major role in making a net-zero world with abundant, universal energy access possible.

7 International Atomic Energy Agency, Transitions to low carbon electricity systems: Key economic and investment trends, October 2019, https://www.iaea.org/sites/default/files/19/10/transitions-to-low-carbon-electricity-systems-key-economic-and-investment-trends.pdf.

8 International Energy Agency and OECD Nuclear Energy Agency, Projected Costs of Generating Electricity, December 2020, https://www.iea.org/reports/projected-costs-of-generating-electricity-2020.

9 For scenarios and forecasts of the role of nuclear energy to meet global electricity needs, see World Nuclear Association, “World Energy Needs and Nuclear Power,” updated in November 2021, https://world-nuclear.org/information-library/current-and-future-generation/world-energy-needs-and-nuclear-power.aspx.

10 World Nuclear Association, “Plans for New Reactors Worldwide,” updated in January 2022, https://world-nuclear.org/information-library/current-and-future-generation/plans-for-new-reactors-worldwide.aspx.

11 United Nations Economic Commission for Europe, Life Cycle Assessment of Electricity Generation Options, October 2021, https://unece.org/sed/documents/2021/10/reports/life-cycle-assessment-electricity-generation-options.

12 OECD Nuclear Energy Agency, The Costs of Decarbonisation: System Costs with High Shares of Nuclear and Renewables, 2019, https://www.oecd-nea.org/jcms/pl_15000/the-costs-of-decarbonisation-system-costs-with-high-shares-of-nuclear-and-renewables?details=true; World Nuclear Association, Employment in the Nuclear and Wind Electricity Generating Sectors, 2020, https://www.world-nuclear.org/getmedia/690859bf-ebe6-43a2-bedd-57ddf47ee3ac/Employment-in-Nuclear-Report-Final.pdf.aspx.

Sama Bilbao y León is Director General of the World Nuclear Association.

The role of nuclear power in Japan’s future energy system

By Tatsuya Terazawa

It was on March 11, 2011 that the Great East Japan Earthquake triggered an unprecedented tsunami, which reached fifteen meters high and hit the Tokyo Electric Power Fukushima Daiichi Nuclear Power Plant. The tsunami caused one of the most serious nuclear accidents in history. As more than ten years have passed since then, let me review the status of the nuclear power sector in Japan and the prospects for the future.

There were sixty nuclear reactors prior to March 11, 2011, all of which were taken offline after the accident. Since then, twenty-four nuclear reactors have been shut down permanently. Out of the remaining thirty-six nuclear reactors, ten units have been restarted, and seven units have obtained the authorization to restart. The applications for authorization for ten units are currently under review by the Nuclear Regulatory Authority (NRA), and the applications for the last remaining nine units have not yet been filed, waiting for the others to be processed by the NRA.

For those living outside Japan, the fact that ten units have already restarted may come as a surprise. Considering the public opposition against nuclear power that ensued from the magnitude of the accident, there are some people who believe that all nuclear reactors should still be stopped. However, the additional safety measures that have been put in place and their stringent review by Japan’s Nuclear Regulation Authority (NRA)—a newly established independent safety regulator—have persuaded the public to accept the authorization by the NRA on safety grounds.

Among the seven units with authorization to restart, four units are in the process of completing the necessary safety measures and three units have yet to obtain the go ahead from local governments. In some local regions, the public acceptance for nuclear power is still a challenge.

The review process for the ten units in operation took far much longer than originally expected, including more than seven years for seven of those units. For several locations, the “proof of non-existence” of active faulting has been difficult to establish, since experts cannot demonstrate the complete absence of seismic activities for the last 120,000 years. For many parts of Japan facing the ocean, which have had a history of rising and sinking, it is not easy to find layers of earth that are completely uninterrupted for longer than 120,000 years.

These barriers to nuclear restarts, however, do not change the fact that from a policy perspective, we need to restart the existing nuclear power plants for three reasons.

First, to achieve Japan’s very ambitious Nationally Determined Contribution (NDC) of 46 percent greenhouse gas (GHG) reduction, we are counting on nuclear power to provide 20-22 percent of our power supply by 2030. With ten units having already been restarted, achieving this share will require the restarting of all seventeen units currently authorized or under review. If we fail to restart any one of them, achieving our NDC will become even more difficult.

Second, to cushion the impact of price hikes in the oil and LNG markets and to help contain the increase in the cost of electricity, the expansion of nuclear power generation will be extremely helpful.

The third reason would be to avoid future situations like what is expected for this coming winter in Japan. Depending on various weather and economic conditions, the difference between supply and demand for electricity this winter will be the tightest in ten years. The retirement of a number of thermal power plants, mostly oil fueled, caused by severe competition resulting from the liberalization of the power market and the expansion of renewable power generation, is the immediate reason of this winter’s energy crunch. Without the restarting of the nuclear power plants,

such tension between supply and demand could be even worse in the coming years.

In addition to restarting, there is room for more power generation by nuclear power plants. The current capacity factor for nuclear power plants in Japan is about 80 percent, considerably lower than the 90 percent seen as standard performance in other countries, like the US. The main reason for this lower rate is due to the relatively short intervals between periodic inspections and the relatively long shutdown period for inspections. In Japan, after thirteen months of operation, nuclear units are stopped for three months for periodic inspections. In the US, nuclear units can be in operation for twenty-four consecutive months and can be inspected while in operation, reducing the period of stoppage for inspection to one month.

However, restarting the nuclear power plants and placing longer intervals between inspections are not enough. The current lifetime rule for the length of operation is forty years. Several nuclear power plants will face the forty-year limit before 2030 and many more will reach the limit after 2030. The current regulation allows the NRA to authorize a one-time-only extension of twenty years. A few plants have already received this extension, but many more plants still need to obtain it.

Unfortunately, this extension will only buy some extra time, as we will face an increasing number of candidates for retirement after 2040. Under the current rule, after sixty years (with a one-time extension), nuclear power units in Japan must be retired without exception. In the US, some nuclear power units are authorized to operate for eighty years. Many nuclear power plants in Japan have not been in operation for most of the ten years since the Fukushima accident. However, Japanese law counts the years when the plants were offline against the allowed period of operation. There is a legitimate argument for not counting the years during suspension, as the reactors were not exposed to neutrons. But this will require a legislative action to change the existing law. There must be strong political will at the highest level of government to realize this change.

Because of constraints on the expansion of renewable energies in Japan, the Institute of Energy Economics, Japan believes that nuclear power will have a significant role to play in realizing carbon neutrality by 2050. There is hope that fusion technology will be available in the future, but—as there is considerable uncertainty in the timing for the actual introduction of the technology—we must consider building new nuclear power plants and replacing existing ones. However, in the process leading to the decision for the Basic Energy Plan, which was approved by the Japanese Cabinet in October 2021, consensus on this point could not be reached within the Government and the ruling parties.

We understand that President Macron of France announced his decision in November 2021 to restart the building of new nuclear power plants in France. This marks a major shift from the previous policy to reduce the amount of nuclear power in France from 75 percent to 50 percent in its power mix by 2035. He also announced his decision to develop small modular reactors (SMRs). European Commission President Ursula von der Leyen that “we need a stable source, nuclear” in her press conference on October 22, 2021.The EU will include nuclear as a part of green taxonomy.

In Taiwan, taking lessons from a major blackout, a national referendum on whether or not to restart the construction of two nuclear power units was held on December 18, 2021. The referendum was defeated, but the vote was rather close. While 52.3 percent of the votes cast were against the restart, 46.7 percent were in favor. Had it been supported, the referendum could have transformed Taiwan’s policy from retiring all its existing nuclear power plants by 2025 to restarting construction of new nuclear power plants. It is noteworthy that the people of Taiwan are engaged in serious discussion about the future role of nuclear power.

We need to learn from the dramatic change in France, signs of change in the EU, and the serious debate that took place in Taiwan. I believe that Japan will soon have to seriously consider the option of building new nuclear power plants and replacing existing nuclear power plants if we are serious about reducing our carbon emissions while maintaining the competitiveness of our industries and protecting the daily lives of our citizens. I sincerely hope that 2022 will be the year when we can deepen our discussion on this issue.

Tatsuya Terazawa is the Chairman and CEO of The Institute of Energy Economics, Japan.

Chapter 2: Hydrocarbons and the energy transition

Hydrocarbons and the energy transition

Essays

Oil will continue to play a role in a low-carbon world

By H.E. Mohammad Sanusi Barkindo

Perspective on energy transition

By Mele Kolo Kyari

Partner perspective
This year proved that the world needs a smarter carbon transition strategy

By Majid Jafar

Partner perspective
From commitment to action: Driving the energy transition

By Tim Holt

Survey results

For those who might have thought otherwise, 2021 laid bare the critical role that hydrocarbons continue to play in the global energy system. After years of generally low hydrocarbon prices—and a historic drop in 2020 caused by COVID-19 lockdowns—prices spiked as demand came roaring back from 2020 lows. Even as clean energy deployment continues to grow at a record pace, oil demand is likely to surpass pre-pandemic levels in 2022, and coal demand might breach its previous 2014 peak. Natural gas demand likely exceeded pre-pandemic levels in 2021.

Experts disagree about the causes of the price spike, and there are surely several drivers. Some that have been proffered include: underinvestment during the recent low-price environment; climate policy and renewable energy; Russian market manipulation (which will be discussed in more detail in Chapter 3); OPEC+; and a production lag as producers struggled to keep up with rapidly-changing demand.

Across the energy sector, our survey respondents thought market fundamentals were the most common explanation for the current price spike in energy costs. About one in five respondents point to underinvestment in the sector due to pressure arising from environmental concerns. A similar number say that use of energy as a geopolitical tool is the key driver, while about a tenth blame profit-seekers.

We also asked respondents about their predictions for drivers of energy price volatility over the next decade. Market fundamentals remain the most commonly expected reason for volatility, but a larger number foresee both underinvestment and geopolitics having a dominant impact on the market (up to 29 percent and 28 percent, respectively).

These aggregate figures mask sometimes wide variations in views among survey respondents. These begin with differences related to geography.

Although respondents in all three regions most commonly see market fundamentals behind current price issues, far more respondents in Europe (30 percent) than elsewhere point to the use of energy as geopolitical leverage. Similarly, the region has a higher proportion who see this issue as the driver of destabilized prices in the coming decade, although the difference is less pronounced. The most likely explanation is that Russia’s capacity to hold back natural gas supplies— with consequent price increases—as a way to secure foreign policy aims, including those related to the Nord Stream 2 pipeline, have focused European minds.

The other notable regional difference is a higher percentage of Middle Eastern respondents pointing to lack of investment in traditional sources of energy. This almost certainly arises from the large proportion of that region’s survey pool in the oil and gas industries (56 percent, compared to an overall figure of 24 percent).

A comparison of the answers to these questions of the renewables and the oil and gas sectors throws the differences visible in the Middle East responses into sharper relief.

Again, while market fundamentals are currently the most common explanation for surging prices, each of these two groups differs profoundly on other factors that might be at play. For oil and gas respondents, underinvestment is already a widespread worry. In the coming decade, it is the most commonly expected driver of price volatility (43 percent), surpassing market fundamentals as a driver (33 percent). This implies that, while the oil and gas sector as a whole thinks that it has enough product to meet global demand comfortably, it expects to be impeded in doing so.

Those working in renewables understandably differ. Lower investment in fossil fuels is, for many of them, a feature of what the future should look like, not a bug. Accordingly, a majority (55 percent) already believe that price fluctuations reflect profit-seeking and governments playing politics. Most also expect that one of these drivers will be behind future volatility, with only a very small proportion seeing underinvestment as the leading issue.

A similar—and equally pronounced disagreement — exists between respondents who think that oil’s day is passing and those who believe it has decades to run.

Among the transition bulls group, 47 percent already believe that profit-seeking or a search for geopolitical leverage are behind the current price spike, and 62 percent say that one of these will be the predominant cause of volatility in future. For those who see fossil fuels as having a much longer-term future—the economic/technological pessimists—underinvestment is already driving up costs. Over half of these also believe that it will be behind future price instability. What these groups have in common is that they think market distortions, rather than fundamentals, will be at play. Bulls fear market manipulation that could take focus away from climate action; for those who believe that the world will need more oil, the problem will be poorly thought-out restrictions.

While there is a robust debate on the cause of the current price spike, looking to the future, the growing movement to divest from fossil fuels could cause price volatility if clean energy technologies are not able to meet demand, as suggested by the answers to the longer-term survey question. The specter of the Yellow Vests of 2018 casts a large shadow over energy transition policies that cut energy supply without changing the type of energy demanded.

This sobering year for the energy transition is the likely cause of a marked change between this year’s survey results and those from 2020 in expectations about the timing of peak oil demand. As the chart shows, there has been some convergence around the two answers in the center (2026-2030 and 2031- 2040). More striking, though, is the decline in those who see an early drop in long-term demand and the more than doubling in those who see it growing until after 2040 at the earliest (22 percent).

The overall averages of these responses indicate the clear shift in expectation that peak oil demand will now occur several years later than earlier estimates said. Last year, the mean forecast was that demand would reach a maximum in 10.5 years. This time the figure is 12.8, even though a year has passed since the earlier projection. The median answer suggests an earlier date for peak oil in both cases, but a similar shift in sentiment: from early 2027 for maximum demand according to last year’s respondents to early 2030 this time around.

This shift in average forecast numbers is not the result of changes in the demographic base of respondents. Key sub-groups also now believe peak oil demand will occur later. In 2020, for example, those working in renewables believed that demand would begin to decline in 7.2 years. Now they put it out 12.2 years. Those in oil and gas saw less change, but still an increase from the already high estimate of 14.5 years last year to 14.8 today.

Similarly, the age-related gap in perceptions also shrank with most of the change occurring among those expecting peak oil to occur soonest. Respondents under 35, who last year projected that watershed in 6.0 years, now see it coming in 8.7; for those aged 36 to 54, the equivalent figures are 8.4 to 12.7; and for those over 55, they are 12.9 and 13.7.

The most striking divergence in opinion, however, is between respondents from different regions, which last year had similar results. This time, those surveyed from Europe, on average, forecast peak oil to occur in 9.7 years; in the United States, 13.2; and in the Middle East, 16.9. This is one of several questions on which Europeans appear more pessimistic about fossil fuels and positive about green developments. The high-profile pursuit of early carbon cuts by policy makers across the European Union and in the United Kingdom may be shaping how respondents from the region see the future playing out.

In his essay, Mohammad Sanusi Barkindo, the Secretary General of OPEC, does not see this overall shift in sentiment as a sign that climate action is failing. Instead, he argues that it is more realistic to include oil within net-zero plans.

Mele Kyari, Group Managing Director of the Nigerian National Petroleum Company (and the country’s national representative to OPEC) brings the perspective of an oil producing, developing country that relies on oil revenue and also wants to play a productive role in meeting sustainability goals.

Oil will continue to play a role in a low-carbon world

By H.E. Mohammad Sanusi Barkindo

Looking back at the COP26 meeting in Glasgow, Scotland, while negotiations were tense at times, there were also positive outcomes: for example, the US is back at the head of the multilateral table, all Parties reiterated their commitment to the implementation and full operationalization of the Paris Agreement, and the Glasgow Climate Pact was announced.

This was all encouraging, given the pressing need to reduce global emissions, alleviate energy poverty, counter the impacts of the COVID-19 pandemic, and find a sustainable way forward that leaves no country, industry, or peoples behind.

However, the event also underlined that the discourse around energy, climate, and sustainable development continues to be extremely emotive with some voices all but excluded, including many from the oil industry. At times, it can feel like rational discussions based on facts, hard data, and science have taken a back seat.

The parameters of the public discourse around the energy transition seem reduced to the question: are you for or against fossil fuels? It is perhaps the ultimate false dichotomy.

It erroneously constrains what options are available. It should not be a question about one or the other. The complexity of the challenge calls for an inclusive approach, not the pursuit of a single ‘one size fits all’ panacea.

We appreciate and fully understand the move of many developed nations to set net-zero emissions targets. In fact, some developing nations have too. Some OPEC Member Countries—Nigeria, Saudi Arabia and the United Arab Emirates—have made political pledges on net zero.

However, it is important to appreciate the massive challenges for developing countries to reach net zero emissions, many of which are acutely focused on priorities such as energy access, living wages, and supplying basic necessities.

The challenges before us are enormous and complex. We have been delivered a stark reminder of this with the recent strains and conflicts related to energy affordability, energy security, and the need to reduce emissions playing out in regions across the world at the end of 2021.

Focusing on only one of these issues, while ignoring the others, can lead to unintended consequences, such as market distortions, heightened price volatility, and energy shortfalls.

It requires a delicate balancing act, comprehensive and sustainable solutions, and all voices at the table. It is an energy sustainability trilemma, with each piece of the jigsaw having to fit together.

We need to ensure energy is affordable for all; we need to transition to a more inclusive, fair, and equitable world in which every person has access to energy as referenced in UN Sustainable Development Goal 7; and we need to reduce emissions. Oil has a role to play in each part.

It will be required to meet the expected huge increase in energy demand. In OPEC’s World Oil Outlook (WOO) 2021, global energy demand is set to expand by 28 percent by 2045. This will require the use of all forms of energy to support the post-pandemic recovery, drive the energy transition, and address long-term energy needs.

We see oil still making up 28 percent of the world’s energy needs by 2045. This will require huge investments in the global oil upstream, midstream and downstream sectors, with the WOO showing that investments of $11.8 trillion will be required between now and 2045. OPEC Member Countries remain committed to investments to ensure supply meets the demand of their customers.

From the perspective of the developing world, if billions of people who suffer from a lack of energy access feel they are excluded from tapping into energies that have helped fuel the developed world, then this could sow further divisions and expand the divide between the haves and have nots, the Global North and South. Nobody should be left behind in the energy transition.

In terms of tackling climate change and reducing emissions, we fully believe that the oil industry can be part of the solution. The history of the oil industry from its very early beginnings has been one of innovation, of providing solutions to the most intractable of challenges.

We have no doubt that the resources and expertise of the oil industry can be harnessed again to help develop cleaner and more efficient technological solutions, contributing to a reduction of emissions as part of unlocking a low-emissions future. For example, carbon capture utilization and storage, including direct air capture, blue hydrogen, and other technologies, can be leveraged—along with the promotion of the Circular Carbon Economy—to improve overall environmental performance.

OPEC is ready, willing, and able to play a key role. As we have seen through the prism of recent events, any talk of the oil industry being consigned to the past—as well as talk of halting new investments in oil and gas—is misguided.

We need to follow all the right transition paths and appreciate there is not just one path for all. We need to connect all aspects of the energy sustainability trilemma.

Our energy future is not about ‘Them’ or ‘Us.’ It has to be about ‘We.’ This needs to be the focus as we approach the coming years and talks lead us to COP27 in Egypt in November 2022, and then to COP28 in OPEC Member Country UAE, in 2023.

H.E. Mohammad Sanusi Barkindo is the Secretary General of OPEC.

Perspective on energy transition

By Mele Kolo Kyari

Climate change has increasingly become a major concern for everyone. From Abuja to Algiers and Alaska to Antarctica, the impact of climate change on the environment is seen every day. Outdoor temperatures and sea levels are rising, water bodies are drying up, and the frequency of major weather events is increasing.

This worrisome impact of global warming has, over the years, triggered the best of human innovation, especially in the fields of energy and sustainability.

World leaders, leading institutions, scientific communities, businesses, and organizations are leading global solidarity in action against climate change and its impact on life on earth. The call to end the use of fossil fuels in order to reduce global CO2 emissions and achieve carbon neutrality by 2050 is becoming louder, and the coalition is big, but greater synergy is required to achieve sustainable outcomes.

This requires the global oil industry to play more than one important role; to lower the global carbon footprint, sustain global energy security, and drive prosperity especially in developing countries where population growth remains well above global average.

In most known instances, the oil industry has remained one of the major contributors to global economic growth, by guaranteeing energy flow to industrialized regions and revenue and taxes to oil-producing countries like Nigeria.

These dual roles cannot be simply ignored in our quest to address the impact of carbon emissions on the environment. Policies and views on the energy transition should therefore reflect global energy and economic realities surrounding both oil-producing and consuming nations.

As a national oil company, we believe inclusive policy actions that guarantee access to finance and low-carbon technology are key to sustaining global energy security and equitable growth as the world transits to a carbon-neutral economy.

Our strategy for achieving carbon neutrality is centered around three principles: adoption of low-carbon technology across our operations, deepening natural gas utilization to reduce energy poverty, and investment in clean energy technology and products.

We believe these principles are most likely to support a smoother transition to a carbon-neutral economy without compromising access to the cheap and readily available energy resources that will be required to address energy poverty and support country-specific development priorities.

Slowing down investment in hydrocarbon ventures may provide the right incentive for the energy transition, but it cannot guarantee global energy security in the near future, especially as energy demands grow faster than renewable energy maturation.

The world therefore needs to adopt a more inclusive consensus, one that considers complementarities and trade-offs between and within policies and policy objectives.

As a commercially driven entity, we are leveraging the current industry dynamics to diversify and grow our portfolio in order to maintain relevance in the global energy market. Additionally, we are reassessing the brown and green assets for our Carbon Budget and environmental credentials as part of our transition to an energy company of global excellence.

Mele Kolo Kyari is the Group Managing Director and CEO of the Nigerian National Petroleum Corporation.

How our respondents think about the future of natural gas is more complicated than their predictions about oil. Like last year, we asked our respondents about the future of natural gas during the energy transition. These responses, in aggregate, have changed little in a year, with percentages that each differ by no more than three points from those in last year’s survey. Very few respondents (3 percent) think that gas will take on a minimal role. At the other extreme, one in five respondents believe that it will be a destination fuel. The rest are almost evenly split between those who think that gas will be a bridge to the future but then be unnecessary (38 percent) and those who believe it will be a long-term enabler of low-carbon technologies.

Looking more closely, however, reveals a wider variance between groups even though the average figures remain stable. Last year, results differed little by geography. This time around, Europe again stands out. In particular, respondents there are less likely to see natural gas as a destination fuel than are those from other regions—especially the Middle East—and more often expect it to be, at most, a bridge.

Meanwhile, a surprise in our previous survey was the similarity in answers to the natural gas question between the transition bulls and moderates. More predictably, over half of 2020 transition bears called gas a destination fuel. Now the differences between these groups are much starker.

Underlying attitudes about the energy transition in general are consistent predictors of specific views on the future of natural gas. For the bulls, with peak oil demand more or less upon us, gas becomes the next target for carbon reduction. For the transition bears, all fossil fuels seem to have longer futures. Moreover, given the lack of confidence in renewable technologies among the economic/technological bears, it makes sense that gas—a relatively low-carbon energy source—will be necessary as a destination fuel.

On the surface, then, attitudes toward the future of gas seem stable across the energy sector, but differences between groups within it are widening.

Majid Jafar, the CEO of Crescent Petroleum, sees the need for an “evolution over revolution” to address the risks of a price volatility while transitioning to a lower-carbon economy and argues for the important role natural gas can play in that revolution.

Tim Holt, Member of the Executive Board and Labor Director at Siemens Energy, comes to a similar conclusion about natural gas and, in the context of a global decarbonization effort, notes that gas can play a role in immediately reducing emissions while also creating a pathway to a hydrogen economy.

Partner perspective
This year proved that the world needs a smarter carbon transition strategy

By Majid Jafar

Activists and policymakers are enamoured with complex and expensive solutions to reduce CO2 emissions. But the results of the COP26 Summit—and the energy crises that coincided with it—highlight the need for a transition strategy that emphasises evolution over revolution.

When delegates descended on Glasgow for the COP26 summit this past November, their arrival coincided with one of the worst energy crises in recent decades. As many called for a total end to coal-fired power, the UK itself began firing up old coal-fired power plants for the first time in years amid a region-wide natural gas and renewable energy crunch.

Power companies were caught on the back foot, infrastructure creaked, and natural gas came to the rescue to plug many of the holes, at a decidedly steeper price. Gas, oil, and coal prices have risen dramatically, and many people braced for brownouts and power cuts in Europe even as factories in China literally went dark.

What can policymakers learn from this man-made crisis? The most important lesson is that the path to the carbon transition is just as important as the destination itself. Move too quickly to cut off traditional sources of power, and the supply shortfalls will have immediate and negative impacts.

This decade’s first major energy supply crisis highlighted the hidden problems in current carbon-transition policy and put to test many of the assumptions of green energy. Well-intentioned policymakers, encouraged by activists, have sought to strangle investment in hydrocarbons and embrace renewables wholeheartedly. That embrace is politically convenient when the wind is blowing and the sun is shining, but when winds died down and droughts hampered hydropower, the effects proved how ill-suited some of the current strategies are.

In this case, the energy crises were the result of three simultaneous but predictable problems. Most significant is the collapse in investment in oil and gas over the past decade further dampened by low energy prices last year as well as growing investor reluctance to invest in long-term projects, leaving shortfalls in oil and gas supplies just as demand spiked due to the global economic recovery.

As activists continue to push banks and institutions to halt oil and gas investment altogether, investors are growing wary of holding potentially stranded assets in a future low-carbon world. The limitations on capital investment can be felt today, years before renewables can catch up.

Oil and gas producers continue to find themselves unfairly framed as malevolent actors in the climate change discussion, when in fact they will inevitably be an important part of the transition. Even in the most aggressive scenario for carbon emissions cuts, hydrocarbons will continue to supply a majority of energy for decades to come. JP Morgan estimates that a $600 billion shortfall in upstream oil and gas investment will hamper future supply, leading to sustained pricing volatility and supply disruptions.

Secondly, investment in renewables has not made up for the lost energy supply, making matters worse. Renewables grew 3 percent in 2020, accounting for nearly 29 percent of power demand. But two-thirds of that total actually came from hydropower. As droughts impacted hydropower in 2021, the impact of the water shortfall was magnified, presenting a harbinger of future supply volatility.

The third major challenge has been the shutdown of nuclear power plants in Europe and the commensurate reliance on coal in some countries, which has proven self-defeating just as energy demand has risen during the post-COVID recovery. When nuclear has been phased out in Germany, elsewhere in Europe, the US, and Japan, important sources of baseload power that made for a more reliable grid have been lost.

The answer to the crisis is smarter transition policy, in which tailored solutions are applied in each region. There is a proven formula for cutting GHG emissions quickly that is easily applied today: reduce energy consumption by boosting efficiency, encourage reforestation, and switch from high-carbon-emitting fuels to lower-emitting ones. These steps would bring rapid reductions in emissions and complement renewables in the transition to a more sustainable energy future.

The remarkable success of the auto industry and other sectors in boosting efficiency can easily be leveraged around the world to use energy supplies more wisely. Mass transit and other efficiency measures can further reinforce the gains.

By reforesting land in developing countries the world could create a sink for 750 billion tons of CO₂, which is the equivalent of 100 years of current global carbon emissions from transportation. COP26 commitments by Brazil and other rainforest nations to curtail deforestation are welcome developments that must be reinforced with reforestation efforts supported by carbon taxes. Subsidies now spent on renewables, supported by a global carbon tax, could fund the reinvigoration of the world’s forests and bring greater balance.

Switching to gas from coal-fired generation, particularly in India and China, where coal use is growing fastest, would yield considerable savings in CO2 emissions to help meet targets. Subsidies now spent spurring renewables adoption would be better spent on helping accelerate that switch.

Countries that have embraced a combination of these policies, like the United States and the UK, which have each seen gas substituting for coal in a major way—notwithstanding the recent coal forays—have enjoyed rapidly falling carbon emissions and energy costs. At the same time, Germany, which sought to exclude oil and gas from its energy mix while subsidising renewables, has instead increased its use of coal, resulting in higher emissions.

The oil and gas industry also has an important part to play by tackling methane leaks. The comparative investment is small compared to the immediate impact it would have: methane has more than eighty times the global warming impact as CO2 over its first twenty years in the atmosphere. Eliminating methane leaks would advance the world’s efforts to limit emissions considerably and in short order. The commitment at COP26 to tackle methane leaks was important in this regard.

Ultimately these challenges require sound technical and economic solutions rather than politically expedient ones. They require policymakers to acknowledge the intermittency inherent in renewables and to take steps to dampen such volatility as the transition continues. For example, while battery storage is still not able to fill in the supply shortages from renewables, increased gas storage certainly would do so, with limited emissions.

Reasonable people now accept that climate change is a global challenge that needs to be tackled. But those calling for overnight change are neglecting to account for the very real risk that such energy shocks may undermine political support for green policies, as citizens see their standards of living impacted and the shine of renewables and other low-carbon sources of energy is tarnished. That would be a bad outcome for everyone.

Majid Jafar is the CEO of Crescent Petroleum and a member of the Atlantic Council’s International Advisory Board. Crescent Petroleum is a sponsor of the 2022 Atlantic Council Global Energy Forum.

Partner perspective
From commitment to action: Driving the energy transition

By Tim Holt

Our planet is at a crossroads. The impact of man-made climate change is enormous and is already bringing numerous regions to the brink of disaster. Extreme weather events—such as droughts, savage storms, and floods—are threatening to become the norm. The Intergovernmental Panel on Climate Change has already warned that the average global temperature could rise by more than 1.5 degrees Celsius by 2030, with huge geopolitical consequences. The 2015 Paris climate goal, intended to save the world from a catastrophe, would thus be history in less than eight years.

But there is good news, too: we can still change a lot if we act now. As Alok Sharma, President of the 26th UN Climate Change Conference (COP26), put it, it’s time for the world to move from a decade of thinking about climate change to a “decade of delivery.”8 However, it is not just about introducing new technologies or saving energy. It is about fundamentally changing our approach to dealing with energy in an environmentally responsible and climate-friendly way. And it is something that affects everyone, including governments, businesses, and individuals.

One clear priority is the coal phase-out. Together with the decommissioning of related power plants, this must be accelerated swiftly and consistently. This is crucially important since coal-fired power plants account for roughly 70 percent of the global carbon dioxide (CO2) emissions from electricity generation. Worldwide, the number of planned coal-fired power plants has fallen by two-thirds since the UN climate summit in Paris in 2015. Yet numerous countries around the world still rely on coal. Richer countries have no choice but to support poorer ones in making the energy transition. In the end, of course, all the costs of this change are a key investment in our future.

Given the enormous amount of CO2 to be reduced, every ton counts. That is why we should consider using all currently available technologies along the entire energy value chain. One example: a fossil fuel like natural gas can build a bridge to a sustainable energy system. Hydrogen-capable gas turbines can be operated with gas today and with hydrogen once enough is available. While renewable energies are preferable, existing capacities are nowhere nearly sufficient to meet the world’s electricity needs. Switching to natural gas would immediately reduce CO2 emissions by around two-thirds compared to coal-fired generation, while guaranteeing security of supply.

Transmission grids are another—and often-underestimated—aspect of the transition. Their capacity and stability are bedrocks of the energy transition’s success, since renewable energy not only has to be produced, but must also be transported to where it is needed. For offshore wind farms, this requires the installation of underwater cables and an electrical substation at sea, sometimes hundreds of kilometers offshore. Once on land, the journey often continues over long distances, making it especially important to ensure low losses. Currently, more than eight percent of all electricity produced is lost in transmission and distribution. Here lies massive potential for improving efficiency, such as by expanding high-voltage direct-current (HVDC) connections.

Grids also need to cope with the fluctuations resulting from the growing share of renewable energy. Digital solutions can significantly support the detection and management of these intermittencies. And another important point: grids have to contribute to decarbonization. Harmful sulfur hexafluoride (SF6) is still widely used as a cooling and insulating medium for gas-insulated switchgear. Since this greenhouse gas is around 23,500 times more warming than CO2, it must be eliminated by replacing it, for instance, with “clean air.” In short: the grid of the future has to be resilient, digitalized, and decarbonized.

At the same time, we have to systematically expand renewable energies and innovate along the supply, distribution, and demand sides of a sustainable energy system. With power-to-X, for example, power can be decoupled from the electricity sector and made available to other sectors such as transport and chemicals.9 Also, the energy consumption of heat generation and industrial processes can be decarbonized through the integration of renewables. Here, it is of utmost importance to support the expansion of renewables and bring future technologies to market maturity quickly. Politicians are also called upon here to act: approval procedures for new power lines have dragged on for more than ten years in some countries.

While we all sometimes get caught up in the thicket of good intentions, what we need now is the courage and motivation to act. Public stimulus programs, along with the establishment of binding quotas and CO2 prices, are important for promoting sustainable technologies. However, they cannot replace private investment over the long run. The energy transition will cost money, and it will not happen overnight. But this should not prevent us from doing everything possible today. Every politician, every company, and every individual consumer has responsibility here, and the chance to change something for the better.

8 Rt Hon Alok Sharma MP, “International action and collaboration for a decade of delivery on climate change,” Government of the United Kingdom, March 31, 2021, https://www.gov.uk/government/speeches/international-action-and-collaboration-for-a-decade-of-delivery-on-climate-change

9 Power-to-X is an umbrella term for a number of electricity conversion, energy storage, and reconversion pathways that use surplus electric power from renewable energy, typically solar and wind. “X” refers to the type of energy into which the electricity surplus is being converted. These are usually gases, liquids, or heat.

Tim Holt is a member of the Executive Board of Siemens Energy AG and Labor Director of Siemens Energy Management GmbH.

Chapter 3: Geopolitical and economic risk

Geopolitical and economic risk

Essays

The Ukraine crisis could have global energy implications

By Daniel Fried & Richard L. Morningstar

Cyberattacks on our energy infrastructure: The need for a national response to a national security threat

By Sec. Jeh Charles Johnson

The future geopolitics of hydrogen

By The International Renewable Agency

Partner perspective
The energy transition is necessary but not easy

By Helima Croft

Survey results

As discussed in the previous chapter, our respondents see geopolitical risk becoming a much more significant driver of energy price volatility over the next decade. Indeed, at the time of publication, Russia seemed poised to invade Ukraine; North Korea had conducted three missile tests over the previous three weeks; Iran was increasing its uranium enrichment capacity; and US-China tensions over Taiwan were at their highest in recent memory. From a geopolitical perspective, the world looks far more dangerous at the beginning of 2022 than it did at the beginning of 2021.

Like last year, we asked our respondents what the biggest risk in energy geopolitics would be in 2022. Last year, COVID-19’s potential impact on supply and production was, by a large margin, respondents’ most common choice as the biggest danger in energy geopolitics for 2021. With viable vaccines against COVID- 19 being announced only during the collection of last year’s survey responses, the pandemic’s effect on energy supply and production was understandably the most frequently named geopolitical concern of the upcoming year. It was the choice of 39 percent of respondents, more than double the figure for any other risk. Similarly, a sense seemed to exist that such a big event had to be a harbinger of wider change: 61 percent said that the pandemic would accelerate the energy the transition; just 20 percent believed it would impede this development.

A year later, the figures are quite different. Only 11 percent now see COVID-19 as the leading geopolitical risk of the coming year, putting it in fourth place overall. This number differs little across regions and sectors.

Meanwhile, greater uncertainty has arisen in the kind of change the pandemic might bring, if any. Respondents are almost evenly split between those who see it leading to an acceleration of the energy transition and those expecting COVID-19 to slow this transformation. Just as striking, the most common choices are either muted change in speed one way or the other, or none at all (30 percent for each). The only differences by sector or geography tend to involve fewer people expecting no change at all: the numbers predicting acceleration, either rapid or slow, and those foreseeing some level of deceleration are typically close.

Even our groups with different visions of energy’s future appear to have grown more equivocal in their views. Last year, we noted that the response to this same question was, for them, a kind of Rorschach test. Among our transition bulls, 74 percent thought that the pandemic would accelerate the energy transition and just 13 percent said it would slow things down. This year, the equivalent figures are 44 percent and 32 percent. The change among our transition bears has been less discernable. Last year, 33 percent of this group said that COVID-19 and its societal effects would speed up the transition, and 15 percent said the pandemic would impede it. This year, the former figure has declined to 19 percent and the latter has dropped to 42 percent; those seeing no likely change of pace has climbed from 22 percent to 39 percent.

This year, the threat of a cyberattack has become the single largest geopolitical concern, followed by interstate conflict, trade disputes, and—again—COVID-19. Most of our survey sub-populations of interest paint a similar picture with their particular risk concerns. The specific numbers vary, but in oil and gas, renewables, Europe, the United States, and among our transition bulls, moderates, and transition bears, a major cyberattack is the most commonly noted threat, usually by a significant margin. Interstate war is typically second, although among both kinds of transition bears, the aggregate number of “other” risks instead comes next. When asked to explain further, these respondents often worried either about Russian unpredictability or US policy weakness.

An alternate way of grouping these answers, however, gives a different insight. Several describe the risk of being caught in the crossfire during conflict, which is not necessarily directly related to energy. This risk includes interstate violence, fighting in the South or East China Seas, and intrastate conflict. Similarly, two answers—cyberattack and major kinetic attack— involve attacks specifically against infrastructure and potentially separate from broader conflicts.

When these groups are treated as single categories of answers, across the survey as a whole, both are chosen by 31 percent of respondents. In other words, equal numbers focus on the risks of collateral damage from where their respective sector operates as are more concerned about attacks on the industry itself. As the specific conflicts that might hurt the sector are numerous, and as cyberattack is the obvious vector to use against the industry, this equality is harder to see in the overall answers.

Looking through this risk category-based prism, the regional differences become clear. Across the Middle East, violent conflict has broken out repeatedly in recent decades. It is no surprise that, while 30 percent of respondents from that region listed one of the types of attack against infrastructure as the leading geopolitical risk next year, 48 percent pointed to the danger of broader conflicts. In fact, the Middle East was the only region where cyberattack came second (22 percent), behind interstate conflict (30 percent).

In Europe, collateral risk from conflict (32 percent) was also ahead of direct attack (28 percent), albeit with a much smaller difference. There, completion of Nord Stream 2 (cited by 15 percent) was the issue where geographic proximity focused many answers, although it was mentioned by only 4 percent outside the region. In the United States, a country with interests in areas affected by violent conflict but with the physical buffer of oceans between itself and most hotspots, respondents were slightly more likely to see direct attacks on energy infrastructure (33 percent) as the biggest danger rather than general conflict (30 percent).

However, at least regarding Russia and Ukraine, these two categories may be a distinction without a difference. Recent reporting suggests Russia, if it were to invade Ukraine, would also use its cyber capabilities on infrastructure in the country, and has the potential to do so in many parts of the world.

Two of our essays address this concern head on. A piece by Ambassador Richard L. Morningstar and Ambassador Daniel Fried analyzes the geopolitical threat posed by Russia and Ukraine’s need for energy security. And Former US Secretary of Homeland Security Jeh Johnson discusses the importance of cybersecurity for energy infrastructure, and why it is particularly important for the energy transition.

The Ukraine crisis could have global energy implications

By Daniel Fried & Richard L. Morningstar

Diplomacy has failed to resolve the precarious situation in Ukraine. Despite a series of talks between Russia and NATO counterparts from January 10-13 in Geneva, Brussels, and Vienna, the threat of Russian aggression at the time of publication remains dangerously high; Moscow maintains 100,000 troops at Ukraine’s border and continues to escalate its bellicose rhetoric. As winter progresses, the standoff leaves European and global energy security at a tipping point.

In Washington, legislators remain divided on the appropriate measures to deter Russia. Nord Stream 2, an undersea pipeline that would allow Russian gas to bypass Ukraine en route to Germany, remains top of the agenda. On January 13, the Senate rejected Republican-backed legislation that would require immediate US sanctions on the pipeline, on the basis that unilateral action could undermine transatlantic unity.

Indeed, notwithstanding the perniciousness of the pipeline, the need to maintain cohesion among the United States and its European allies in the face of Russian aggression is of paramount importance. In any case, it is clear from statements on both sides of the Atlantic that it is highly unlikely that Nord Stream 2 could move forward if Russia were to invade Ukraine or take other provocative actions; German Vice-Chancellor Robert Habeck warned that “severe consequences”—including the government blocking the pipeline from becoming operational—could ensue should Russia escalate its assault.

If Russia were to intensify its attacks against Ukraine, even in the unlikely event Europe nevertheless allowed the pipeline to proceed, the Biden administration has indicated that it would not continue its waivers of sanctions against Nord Stream 2. While the Biden Administration has argued that threats to block the pipeline offers the West leverage against Russia, Moscow’s reaction to sanctions could put Europe on the horns of a dilemma.

Regardless of the need to deter Moscow, the fact remains that Europe is dependent on Russian gas. A new outright Russian attack on Ukraine would disrupt supply to Europe, which receives 40 percent of its Russian gas through Ukrainian pipelines. Even barring an attack, Russia may seek to cow the West into submission by further cutting gas transit through Ukraine and refusing to resume supplies until Nord Stream 2 is given final regulatory approval.

There are few arguments as risible as claiming the Kremlin does not use energy as a weapon. Russia has already reduced supply through Ukraine by a quarter over 2021, and the Yamal pipeline has flowed in reverse since December 21, as of the time of this publication. On January 11, International Energy Agency Executive Director Fatih Birol made this clear, blaming Russia for exacerbating Europe’s gas crisis by withholding supplies and drawing down its reserves in Europe.

Given the present energy crisis, in part due to contracting Russian supply, even a short term cutoff of gas in the winter months could be disastrous, much more so than when gas was temporarily cut through Ukraine in 2009, resulting in rationing and shortages for industry across Central and Eastern Europe.

Gas is not the only tool in Russia’s energy arsenal. Russia could also cut off or limit oil exports, causing significant turmoil for markets in Europe, the United States, and across the world. Inflation in the United States hit a nearly forty-year high of 7 percent in 2021 and shows no signs of abating, as labor and supply chain disruptions persist. Oil prices factor heavily, reaching a seven-year high on January 17 as OPEC+ continues to miss production targets. If tensions were to increase, oil would likely breach the $100 threshold.

The United States imports significantly from Russia, which became the United States’ second largest source of foreign oil after Canada in August 2021, due to refiners replacing Venezuelan heavy crude for similar products from Russia. Were Russia to further destabilize the market through an embargo—or if supply were disrupted through war or Western sanctions—prices would rise substantially and create increased large inflationary pressure as manufacturers and operators scramble to secure alternatives.

It is imperative that the United States and its European allies develop a common strategy to address this contingency and are visible in doing so. Some steps are already in progress. The US government has engaged the international energy industry on providing emergency gas supplies to Europe should Russia invade. Increased LNG shipments from the United States and other locations are part of the answer—and have already begun—but ramping them up will be difficult.

Markets determine where LNG is shipped. Europe has had to compete with Asia for LNG, where demand remains persistently high. Even if significant LNG were to be made available, it would have to be at competitive prices, which could require subsidies from European governments, who have already resorted to rebates and tax cuts to aid consumers with high bills. There are no obvious answers to Europe’s energy supply issues, but they must be immediately addressed if geopolitical necessities are to supersede economic needs.

Economic leverage, though, does not rest entirely with Moscow. Western financial and other sanctions, if strong enough, would inflict even greater pain on Russia than Russia can inflict on the West by

weaponizing oil and gas. Even energy leverage has drawbacks for the Kremlin. Russia could calculate that the short-term harm of sanctions (and other US, NATO, and EU responses) could be worth its greater political objectives, but the country still depends on oil and gas for a fifth of its economy and most of its exports. It needs to sell oil and gas somehow, and halting supply could accelerate Europe’s long-term efforts to diversify away from Russian energy. The threat of heavy sanctions on the Russian economy—in combination with creative diplomacy—can therefore deter Russia from crossing a red line in Ukraine. Otherwise, geopolitical necessities will require the United States and its European allies to take strong action, which makes it imperative to plan now for the potential ramifications of those actions.

To forestall Russian aggression, energy options—especially the threat to kill the Nord Stream 2 pipeline—will need to be employed by the West. At the same time, contingencies must made to ensure the alliance remains resilient in the face of Russian energy gamesmanship. By doing so, the United States and its allies can hopefully utilize energy politics to prevent war, rather than allowing energy to become a weapon of war.

Daniel Fried is the Weiser Family Distinguished Fellow at the Atlantic Council, and he served as the US Ambassador to Poland. Richard L. Morningstar is the Founding Chairman of the Atlantic Council Global Energy Center, and he served as the US Ambassador to the Republic of Azerbaijan, as US Ambassador to the European Union, and as the Secretary of State’s Special Envoy for Eurasian Energy.

Cyberattacks on our energy infrastructure: The need for a national response to a national security threat

By Sec. Jeh Charles Johnson

On May 6 of last year,

Colonial Pipeline was hit with a ransomware attack by the Russian-based group DarkSide. Reportedly, DarkSide attacked Colonial Pipeline’s billing system, not its operational technology. But as a precaution, for the first time in history, Colonial shut down its entire pipeline, which supplies 45 percent of all the gasoline and jet fuel consumed on the East Coast of the United States.

This shutdown had an immediate, direct, and far-reaching impact on the day-to-day lives of the American people. Shortages at gas stations popped up across Alabama, Florida, Georgia, North and South Carolina, and Virginia. On May 11, 71 percent of gas stations in Charlotte, North Carolina ran out of fuel. On May 14, 87 percent of gas stations in Washington, DC went dry. Gas prices shot up. Panic buying and hoarding occurred. Airports and airlines were affected. Colonial Pipeline paid the 5 million dollar ransom. The pipeline was turned back on. But one ransomware attack, directed at one company, had far-reaching consequences to our nation, its people, and its national security.

It was as if one water main break in downtown Houston, Texas caused kitchen faucets to run dry in Arlington, Virginia. Or as if a single pothole in a runway at the Atlanta airport had delayed every commercial flight in the southeastern United States.

This wasn’t the first cyberattack on energy infrastructure, and it won’t be the last.

In 2015, Russian hackers attacked the power grid in Ukraine, leaving 225,000 people in the dark.10

In 2012, Saudi Aramco was hit with a cyberattack, likely by the government of Iran, which forced the then-world’s largest oil company to shut down 35,000 computers and go back to operating with typewriters and fax machines.11

In February 2021, a hacker infiltrated a water treatment plant in Florida and attempted to increase the water supply’s sodium hydroxide to alarmingly dangerous levels.12

In August 2021, a nation-state attempted a cyberattack on the Port of Houston, the largest container port on the Gulf Coast.13

The cyber threat to our energy infrastructure is real and growing. Indeed, it’s not just a threat, it is our current reality.

Cyberspace is the new 21st century war zone. As reported by the New York Times in November 2021, the governments of Iran and Israel are actively engaged in covert cyberwarfare right now.14 Cyberattacks are replacing kinetic attacks. Covert actors are replacing conventional state actors. US Cyber Command now exists alongside the combatant commands of our nation’s military.

A cyberattack on our nation’s energy sector, or any other sector of critical infrastructure, must be viewed as an attack on the nation itself, warranting a national response.

In the energy sector in particular, assets of critical infrastructure are becoming increasingly interconnected and increasingly vulnerable to a cyberattack of widespread consequences. And just as every organ of the human body depends on a healthy heart, all of the other sectors of critical infrastructure depend on the energy sector.

To be sure, there are compelling reasons for the increasing interconnectivity of our energy sector. With climate change comes the need for renewable energy. With renewable energy, wind and solar power, efficient uses of fossil fuels, and smarter uses of electric grids come the need for digitization and interconnectivity. As a result, the US electricity grid is now referred to as “the largest interconnected machine in the world.”15

All this leads to cleaner uses of energy. But it need not mean trade-offs for our cybersecurity.

With the recent passage of the new bipartisan infrastructure law, nearly $2 billion will be devoted to making our infrastructure more resilient against the impact of cyberattacks.16 But there are other things we must do to strengthen the cybersecurity of the energy sector and the other sectors of critical infrastructure in this country.

First, and perhaps the easiest, least expensive and most obtainable solution: continue to raise awareness about the threat of spear-phishing. Spear-phishing occurs when a system user is lured into responding to an email from a bad cyber-actor posing as a benign and familiar caller. And, once the user answers the knock and lets the bad actor into the secure zone, that bad actor can pose as almost anyone for any purpose. To this day, many of the most devastating cyberattacks on our nation began by a simple act of spear-phishing. Simply raising awareness about weak passwords or the value of two-factor authentication can prevent a large number of attacks that originate due to lack of what we refer to as “cyber hygiene.”

Second, achieve and ensure redundancy. Whether it is the ability to count ballots or control a pipeline, redundancy is key. Like the retention of paper ballots after an election, some call for back-up manual control of power grids and pipelines. This may not be doable in all circumstances, but the point is to have redundant systems that exist off the internet in the event the primary system is corrupted. Or at the least, it is important to have a contingency plan for how services are to be delivered if redundancy is not possible.

Third, Congress should not give up on efforts to legislate certain minimum standards for cybersecurity in critical infrastructure. Most of our nation’s critical infrastructure is in the hands of the private sector. Working with the private sector, the government ought to be able to develop basic, practical, and implementable standards. The good news is that many large and sophisticated companies within critical infrastructure are far along in the cybersecurity of their own assets. Others are not, including many new entrants to sectors of critical infrastructure.

Successive administrations, including the current one, have moved to regulate cybersecurity by executive action. This is no substitute for laws passed by Congress. By federal law, we regulate aviation security, road safety, maritime security, and nuclear and chemical facilities. Why not cybersecurity? The need is no less compelling.

Fourth, we must bolster mandatory reporting to the federal government of certain categories of cyber incidents within critical infrastructure. I am disappointed that bipartisan efforts to insert such a requirement in last year’s National Defense Authorization Act failed.17

Fifth, we must recognize that a cyberattack on a pipeline or a power grid could now cause as much physical damage and suffering as a natural disaster. The good news here is that the bipartisan Infrastructure Investment and Jobs Act signed into law by President Biden in November creates a Cyber Response and Recovery Fund to be administered by the Department of Homeland Security for this purpose.18

Sixth, I join the many calls for the education, recruitment, and retention of a cyber workforce to meet the urgency of the current threats in cybersecurity. Exchange programs between the public and private sectors should be encouraged. Given the current threats we face, why not a National Cybersecurity College or University for both civilians and military, funded by the Departments of Defense and Homeland Security, to exist alongside our military academies, the National Defense University and the National War College?

Seventh, and finally, we must make it clear to the world that, in the eyes of the United States, a cyberattack from overseas on our nation’s critical infrastructure may rise to the level of an armed attack on the nation itself, warranting a military response, as the term “military” is now understood in the 21st century.

In reaction to the terrorist attacks on 9/11, our government reshaped itself to go to war against terrorist organizations. We reshaped how we think of war. We recognized that warfare can be conducted against unconventional, non-state actors, and that conflict

against non-state actors may not be limited to the boundaries of a particular nation.

Cyberspace is the new 21st century war zone. Covert state and non-state actors launch cyberattacks from overseas on our critical infrastructure that have the potential to cause death and destruction to the same extent and in the same manner as an air strike or a terrorist attack.

In testimony before the House Armed Services Committee in 2018, I said that a cyberattack which causes large-scale death or physical destruction can be considered an armed attack on the United States, warranting a military response.19 The President has the constitutional authority to take military action to defend the nation, so long as the action does not rise to the level of a war in scope and duration, which only Congress can declare.20 Under international law, the United States is authorized to act in self-defense if the host nation is unwilling or unable to address the threat itself within its boundaries. 21 And under established principles of the international laws of war, a military response to an attack should be proportionate, but it need not be in kind.22

The United States has offensive cyber capabilities that are second to none. They should serve as both a defense and as a deterrent.

I am a recipient of the Ronald Reagan Peace Through Strength Award. Like President Reagan, I believe that peace and security is achieved though strength. In 2018, when I accepted the Reagan Award, I said this: “Peace is not the default; you have to work for it. Peace is the goal toward which the human race must continually strive, but it is not the natural state of affairs across the globe. Peace must be guarded and protected against the belligerent impulses of far too many on this planet. Strength forges peace, and perceived weakness tempts aggression.”

10 Pavel Polityuk et al., “Ukraine’s Power Outage Was a Cyber Attack,” Reuters, January 18, 2017, https://www.reuters.com/article/us-ukraine-cyber-attack-energy/ukraines-power-outage-was-a-cyber-attack-ukrenergo-idUSKBN1521BA.

11 Jose Pagliery, “The Inside Story of the Biggest Hack in History,” CNN Business, August 5, 2015, https://money.cnn.com/2015/08/05/technology/ aramco-hack/

12 Tasha Jhangiani & Madison Lockett, “How the Energy Department Can Improve Cybersecurity in the Energy Industry,” Nextgov, August 4, 2021, https://www.nextgov.com/ideas/2021/08/how-energy-department-can-improve-cybersecurity-energy-industry/184282/; Andy Greenberg, “A Hacker Tried to Poison a Florida City’s Water Supply, Officials Say,” Wired, February 8, 2021, https://www.wired.com/story/oldsmar-florida-water-utility-hack/.

13 Alan Suderman, “Port of Houston Target of Suspected Nation-State Hack,” AP, September 24, 2021, https://apnews.com/article/business-technology-rob-portman-1e9ff8dac8dbb500d15661c816c22084; “Statistics,” Port Houston, https://porthouston.com/about-us/statistics/.

14 Farnaz Fassihi & Ronen Bergman, “Israel and Iran Broaden Cyberwar to Attack Civilian Targets,” The New York Times, November 27, 2021, https:// www.nytimes.com/2021/11/27/world/middleeast/iran-israel-cyber-hack.html.

15 Don C. Smith, “Enhancing Cybersecurity in the Energy Sector: A Critical Priority,” 36 J. Energy & Nat. Res. L. 373, 373 (2018).

16 Infrastructure Investment and Jobs Act of 2021, Pub. L. No. 117-58, §§ 40124, 70602, 70612, 135 Stat. 429 (2021).

17 Joseph Marks, “Congress can’t even pass the easy cyber stuff,” The Washington Post, December 8, 2021, https://www.washingtonpost.com/ politics/2021/12/08/congress-cant-even-pass-easy-cyber-stuff/

18 Infrastructure Investment and Jobs Act of 2021 § 70602

19 “Cyber Operations Today: Preparing for 21st Century Challenges in an Information-Enabled Society: Hearing Before the H. Armed Servs. Comm.,” 115th Cong. 69 & n.5 (2017), statement of Jeh C. Johnson citing Jack Goldsmith, “How Cyber Changes the Laws of War,” 24 Eur. J. Int’l L. 129 (2013); Oona Hathaway, et al., “The Law of Cyber Attack,” 100 Cal. L. Rev. 817 (2012); Charlie Dunlap, “Are Cyber Norms as to What Constitutes an “Act of War” Developing as We Would Want?,” Lawfire, September 15, 2017, https://sites.duke.edu/lawfire/2017/09/15/are-cyber-norms-as-to-what-constitutes-an-act-of-war-developing-as-we-would-want/).

20 “April 2018 Airstrikes Against Syrian Chemical-Weapons Facilities,” 42 Op. O.L.C. May 31, 2018; “Targeted Airstrikes Against the Islamic State of Iraq and the Levant,” 38 Op. O.L.C. 82 (2014); “Authority to Use Military force in Libya,” 35 Op. O.L.C. 20 (2011).

21 U.N. Charter art. 51; US Department of Def., Law of War Manual ¶¶ 5.10, 5.11 (2016); Daniel Bethlehem, “Self-Defense Against an Imminent or Actual Armed Attack by Nonstate Actors,” 106 Am. J. Int’l L. 770, 773–77 (2012) (offering principles “that apply, or ought to apply, to the use of force in self-defense against an imminent or actual armed attack by nonstate actors”); Ashley Deeks, “‘Unwilling or Unable’: Toward a Normative Framework for Extraterritorial Self-Defense,” 52 Va. J. Int’l L. 483, 486 (2012) (“More than a century of state practice suggests it is lawful for State X, which has suffered an armed attack by an insurgent or terrorist group, to use force in State Y against that group if State Y is unwilling or unable to suppress the threat.”)

22 International Strategy for Cyberspace, May 2011, https://obamawhitehouse.archives.gov/sites/default/files/rss_viewer/international_strategy_for_ cyberspace.pdf (“When warranted the United States will respond to hostile acts in cyberspace as we would to any other threat to our country. All states possess an inherent right to self-defense, and we recognize that certain hostile acts conducted through cyberspace could compel actions under the commitments we have with our military treaty partners. We reserve the right to use all necessary means—diplomatic, informational, military, and economic—as appropriate and consistent with applicable international law, in order to defend our Nation, our allies, our partners, and our interests.”)

Sec. Jeh Charles Johnson is a partner at Paul, Weiss, Rifkind, Wharton & Garrison, LLP; he served as US Secretary of Homeland Security from 2013 – 2017; as General Counsel of the US Department of Defense (2009 – 2012); as General Counsel of the Department of the Air Force (1998 – 2001); and as Assistant US Attorney in the Southern District of New York (1989 – 1991).

As the energy system transforms over the coming decades, geopolitical relationships currently defined by resource concentration and dependence could shift as new technologies displace current energy sources. Last year, this volume addressed the growing understanding of the role hydrogen will play in a decarbonized energy system. Hydrogen could displace oil in certain transportation use cases and displace gas as a fuel to balance renewables in the power system, among other applications.

The International Renewable Energy Agency (IRENA) has assessed how these changes could impact energy geopolitics in their recent report Geopolitics of the Energy Transformation: The Hydrogen Factor, which is adapted here.23

23 IRENA (2022), Geopolitics of the Energy Transformation: The Hydrogen Factor, International Renewable Energy Agency, Abu Dhabi, https://www.irena.org/publications/2022/Jan/Geopolitics-of-the-Energy-Transformation-Hydrogen

The future geopolitics of hydrogen

By The International Renewable Agency

In recent years, hydrogen has ascended as a potential missing piece of the clean energy puzzle. The climate change imperative firmly in mind, a growing number of countries now have a national hydrogen roadmap or strategy, and a considerable portion of COVID-19 stimulus and recovery funds have been dedicated to the acceleration of hydrogen. At the climate conference in Glasgow, thirty-two countries and the European Union agreed to work together to accelerate the development and deployment of clean hydrogen—constituting up to 12 percent of final energy consumption by 2050 in IRENA’s 1.5°C scenario—and to ensure that “affordable renewable and low-carbon hydrogen is globally available by 2030.”a

With hydrogen taking up such a sizable portion of the future energy mix, the impact of green hydrogen would cause a geopolitical shift, even though blue hydrogen would only replicate the current gas market patterns. The energy transition—unprecedented in its scale and its profound influence on the established macro trends around the world—represents so much more than a fuel replacement; it is a shift to a different system entirely, with commensurate political, technical, environmental, and economic disruptions. Hydrogen uptake will be no exception, for several reasons.

First, hydrogen production, and its status as a uniquely capable low-carbon fuel in harder-to-abate sectors, will play a part in forging new links in the energy trade. With the costs of renewable energy falling but those of transporting hydrogen high, the emerging geopolitical map is likely to show a large degree of regionalization in energy relations. But new bilateral relationships for cross-border hydrogen trade that extend well beyond either party’s immediate region have the potential to restructure political dynamics, as countries that have not traditionally traded energy create economic ties based on hydrogen-related technologies and molecules. (IRENA envisages that two-thirds of green hydrogen production in 2050 will be used locally, and one-third traded across borders.) Nations that expect to be hydrogen importers, like Germany and Japan, are already proactively seeking out such agreements, with other countries not far behind.

Second, green hydrogen could alleviate many countries’ energy security worries. While blue hydrogen will continue to be subject to the vagaries of the fossil fuel market, green hydrogen brings all of renewables’ energy security benefits—namely, reduction of import dependence, diversification of supply option, mitigation of price volatility, and boosting of the energy system’s flexibility and resilience through diversification—with it. And hydrogen trade is much less likely to be weaponized or cartelized, as the fuel can be produced from many primary energy sources and in a wide variety of places worldwide.

Third, countries with an abundance of low-cost renewable power could become the winners in the green hydrogen market, with commensurate geoeconomic and geopolitical consequences. Green hydrogen could be most economical in locations that have the optimal combination of abundant renewable resources, space for solar or wind farms, and access to water, along with the capability to export to large demand centers. Africa, the Americas, the Middle East, and Oceania have the technical potential to exploit their advantages in these categories to become centers of hydrogen production and use as markets mature. And traditional fossil fuel exporters— though more often thought of as a natural fit for blue hydrogen production—are exploring the possibility of leveraging their expertise, existing infrastructure and energy ties, and native renewable capacity to power the growth of their green hydrogen sectors as well, in a bid to diversify their economies.

Fourth, hydrogen will prove a more competitive market than oil and gas but will still provide lucrative opportunities across value chains. Hydrogen is a conversion, not an extraction business, and therefore has the potential to be produced competitively in many places. And as the cost of green hydrogen falls—it is projected to start competing with blue on cost by the end of this decade—new and diverse participants will enter the market, raising competition even higher. Though clean hydrogen will not generate returns comparable to those of oil and gas today, the hydrogen value chain is extensive; according to major investment banks, by 2050, global hydrogen sales could be worth $600 billion,1 and green hydrogen value chains could become a $1.7 trillion investment opportunity in the next thirty years,2 covering everything from dedicated renewable capacity and electrolyzers to transport infrastructure.3 Countries that come out on top of the battle for market share will be attractive locations for energy-intensive industries and, as a result, the race to find champions and establish technology leadership has likely already begun.

The potential impact of hydrogen trade on future energy geopolitics necessitates action now. Mineral security will become a bigger concern as hydrogen markets grow, and it will behoove countries to secure varied and redundant supply options quickly so that they avoid simply trading one set of supply chain issues for another. Fixed infrastructure development is more fraught than ever; the risk of stranded assets must be considered, with renewable hydrogen production likely to take place in different locations than today’s oil and gas extraction infrastructure (though some degree of repurposing is possible). And the international community has substantial work to do on standards and governance, emissions measurement methodologies, pricing mechanisms, fair distribution and support for developing countries, and prioritization of the most immediately promising applications.

If countries can get out ahead of these concerns, however, hydrogen might join the ranks of steam power, electricity, and the internal combustion engine: technologies that transformed the machines and fuels on which much of our modern civilization runs and altered the global balance of power in the process. Behind the simple chemical formula of hydrogen gas (H₂)—a molecule composed of two hydrogen atoms— lies an entire ecosystem of infrastructure to produce, transport, convert, and use it. Such an ecosystem could foster partnerships that transcend traditional industry and national boundaries. Eventually, it might even lead to an entirely new economic geography of industrial activity.

a “World leaders join UK’s Glasgow Breakthroughs to speed up affordable clean tech worldwide,” UNFCCC, November 2, 2021, https://racetozero.unfccc.int/world-leaders-join-uks-glasgow-breakthroughs-to-speed-up-affordable-clean-tech-worldwide/.

1 Natalie Thomas, David Sheppard, and Neil Hume, “The race to scale up green hydrogen,” Financial Times, March 8, 2021, https://www.ft.com/ content/7eac54ee-f1d1-4ebc-9573-b52f87d00240.

2 includes renewable power, hydrogen power plants, electrolysers and gas pipeline reconfiguration.

3 “Green Hydrogen: The Next Transformational Driver of the Utilities Industry,” Goldman Sachs, September 22, 2020, https://www.goldmansachs.com/ insights/pages/green-hydrogen.html.

As Secretary Johnson noted above, cyber risk is not just an issue for energy security; it is also a risk for the energy transition. As the energy price spike has shown, geopolitics broadly can be a risk to the energy transition.

But risks to the transition go beyond geopolitics and include economic issues.

We asked survey respondents which current economic risk is most likely to slow down the energy transition. While two macroeconomic choices are commonly cited—economic slowdown (20 percent) and inflation leading to monetary tightening (16 percent)—the most widespread listed worry is insufficient government spending. Although the numbers vary, these top three choices come in the same rank order in all the analyzed geographies.

This suggests that public funding is an essential—if not the dominant—driver of the transition. It turns out, though, that those working in energy’s private sector differ, especially those involved in renewables.

The chart below compares three groups. The first consists of public and third sector individuals—all survey respondents associated with government, academia, think tanks, and non-governmental organizations (NGOs)—as well as members of the media. The other two are the remaining respondents from the oil and gas and the renewables sectors after everyone in the first group is removed. This is smaller than the renewables and oil and gas groups used elsewhere in the study, which typically include relevant academia, think tank, and NGO respondents. As a result, these trimmed groups now consist largely of people working within businesses either within or servicing renewables or oil and gas companies.

The differences are marked. The public sector and third sectors put far more emphasis on the risk of low government spending and, by extension, the importance of such funds in moving the energy transition forward. The respondents from each of the private fields instead point to macroeconomic and industry-specific considerations. Among those from renewables—who will have to deliver the technology that will undergird the shift away from fossil fuels— only a remarkably small number have government outlay as their leading concern. Instead, they point to inflation and money tightening as well as that traditional headache of renewables companies, supply chain issues.

Two possible interpretations arise. One is that public and third sector respondents should consider whether robust economic fundamentals may make a bigger contribution to a low-carbon future than funding change directly. The other is that those in the renewables business are confident that their product is economically competitive and can stand on its own two feet compared to other sources of power. That should be heartening for those who were concerned about the lack of progress made at COP26.

In our final essay, Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, discusses how the energy transition and net-zero goals will reshape the energy production map and the new risks that might bring.

Partner perspective
The energy transition is necessary but not easy

By Helima Croft

Combatting climate change is one of the most important priorities for the Biden administration, a clear policy break with the previous one. Yet faced with a potential consumer revolt over rising gasoline prices, this White House has found itself forced to follow the long presidential tradition of making direct appeals to Riyadh for more OPEC barrels, a move which does not easily align with its ambitious net-zero pledges. Recently, President Biden’s energy team has signaled a desire for more US production; however, a full-fledged revival of President Trump’s American energy dominance agenda remains a nonstarter due to the Democratic party’s green base. Hence, we expect the Biden administration to continue to pressure OPEC and signal a willingness to release more oil from the Strategic Petroleum Reserve in conjunction with consuming countries, to try to keep prices in check in advance of the mid-term elections.

Low-cost producers in the Middle East will likely gain greater market share as their international oil company (IOC) and shale rivals face pressure from government regulation, shareholder activism, and ESG mandates. The Gulf states maintain that they are well-placed to navigate the energy transition, with their barrels on the low end of the cost and emissions curve and optimal economics for key transition fuels such as hydrogen. November’s Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) was one of the first major global gatherings of energy leaders in the immediate aftermath of the COP26 climate talks, and the issue of energy scarcity loomed large in the conversations. H.E. Dr. Sultan Al Jaber, the CEO of Abu Dhabi National Oil Company (ADNOC) outlined his country’s parallel policy approach; the plan seeks to reach a net zero by 2050 climate target (through measures such as having 100 percent of ADNOC’s grid powered by nuclear and solar and the company making its first move into the renewables space), while at the same time increasing investment in the upstream sector and raising spare capacity to 5 million barrels per day by 2030.24 Representatives of other national oil companies in the region also touted similar plans to bolster investment in conventional hydrocarbons. If an energy version of musical chairs does unfold, these regional NOCs seem intent on being the last ones standing. We remain most concerned about how some of our OPEC Watch List “fragile five” members—Libya, Venezuela, Nigeria, Iraq, and Algeria—will fare in an accelerated energy transition scenario, as it looks like it will be far more jarring for the petrostates that have not commenced serious economic reform efforts and/or have higher cost and higher emissions per barrel.

The issue of energy access will also likely take on greater prominence as the global climate gathering moves to the African continent this year when Egypt hosts COP27. Leaders of developing nations have frequently criticized climate campaigners in the industrialized world for failing to address their deep concerns about energy access and poverty alleviation. Countries like India insist that a balance must be struck between accelerating the transition to a greener, cleaner future while ensuring that the millions of people using biomass to heat their homes have access to reliable and affordable sources of energy. Energy poverty is particularly pronounced in Sub-Saharan Africa. The continent accounts for 75 percent of the world’s population without access to electricity, and the region’s access deficit increased from 556 million people in 2010 to 570 million people in 2019.25 Electrification is lagging behind population growth in many places on the continent, including the Democratic Republic of Congo, Nigeria, and Malawi.

Finally, securing a supply chain of critical minerals required to build out the clean electricity infrastructure will likely become an increasingly important concern for the White House and other Western leaders. According to the World Bank, the production of critical minerals, such as graphite, lithium, and cobalt, would need to grow by over 500 percent by 2050 to meet the demand for clean energy technologies.26 And yet, much of the current critical mineral production that will be needed to scale up electric vehicle use globally is concentrated in a small number of nations, more than a few of which have profound governance and security problems. In our view, this poses serious questions about whether the energy transition will really eliminate concentration risk or just swap out reliance on one set of commodities and commodity producers for another. Senior Biden administration officials have indicated that building a domestic supply chain of critical minerals is an urgent priority, particularly given China’s entrenched position in this arena. President Biden has found that the energy transition does not necessarily mean low energy prices, and he will continue to face the twin challenges of implementing his ambitious climate agenda and preventing pain at the pump for US consumers in 2022.

24 “Khaled bin Mohamed bin Zayed launches landmark clean energy partnership between ADNOC and EWEC,” ADNOC Press Release, October 26, 2021, https://www.adnoc.ae/en/news-and-media/press-releases/2021/khaled-bin-mohamed-bin-zayed-launches-landmark-clean-energy-partnership-between-adnoc-and-ewec.

25 Mary Blankenship and Christina Golubski, “Figure of the week: Increasing access to electricity in sub-Saharan Africa,” June 18, 2021, https://www. brookings.edu/blog/africa-in-focus/2021/06/18/figure-of-the-week-increasing-access-to-electricity-in-sub-saharan-africa/.

26 World Bank Group, Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition, 2020, https://www.worldbank.org/en/topic/ extractiveindustries/brief/climate-smart-mining-minerals-for-climate-action.

Helima Croft is the Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, LLC. RBC Capital Markets, LLC is a sponsor of the Atlantic Council Global Energy Forum.

This content is based on information available at the time it was written, and is for informational purposes only. It is not an offer to buy or sell, or a solicitation, and no recommendations are implied. It is outside the scope of this communication, to consider whether it is suitable for you, and your financial objectives. For Disclosures and Disclaimers, see: https://www.rbccm.com/en/policies-disclaimers.page

Conclusion

Entering 2022, The Global Energy Agenda survey respondents were far more ambivalent about the future—perhaps even pessimistic—than they were entering 2021. Last year, we concluded they thought “2021 could be an inflection point in the fight against climate change.” With the predictions about reaching net zero and the timing of peak oil demand sliding back by several years, they clearly no longer thought that 2021 had been the inflection point they had anticipated.

But the actual picture is not as clear as the dour mood might suggest. As Alok Sharma noted, COP26 “kept 1.5 alive.” Negotiators completed the Paris rulebook, which our respondents had thought would be nearly impossible. And while countries did not agree on a coal “phase out,” they did agree on a “phase down,” the first time that fossil fuels were specifically mentioned in a COP communiqué.

And momentum continues on clean energy. 2021 was a record year for deployment of renewable capacity, as well as for investment in cleantech startups. That our renewables respondents think they will be successful regardless of government spending suggests that their business model is sound and the private sector is moving in the right direction.

The work needed to reach climate goals while managing short-term energy needs is immense, and leaders are not going to get it right all the time. The direction of travel is correct, but leaders must double down on their efforts on pragmatic, actionable solutions that bring everyone along.

And who knows what 2022 will really bring? Respondents were clearly wrong about 2021. To put a finer point on this, we asked last year’s respondents what the price of Brent crude would be on December 31, 2021. The mean response: $51.22. The actual price: $77.24.

This year’s respondents predicted that, on December 31, 2022, the price will be $78.00, about $5 more than when this year’s survey was finalized, but about $8 less than at the time of publication in mid-January 2022.

As analysts predict oil will jump to over $100 if tensions continue to ratchet up in Ukraine, it is clear that the global community has its work cut out for it. The global energy agenda has perhaps never been as challenging, and never been as important, for ensuring global economic stability and the fate of our planet.

Appendix

The survey samples comes from across the globe, with respondents based in 41 countries. Nearly two-thirds (65 percent) live in the United States; 18 percent live in Europe; and 7 percent live in the Middle East and North Africa, with the remainder in Asia, Africa, Canada, Mexico, and Australia.

Those surveyed also include all age groups from 18 to over 75, although more senior individuals are also more heavily represented. The mean age of survey respondents is 56.

Respondents also come from across the energy sector broadly defined. For example, 31 percent are consultants, and 26 percent work in think tanks. As for areas within the energy sector, 26 percent report that they are connected to oil and gas (including pipelines, exploration, production, refining, and oilfield services), 20 percent are in renewables in some way, and 19 percent are in a predominantly electricity-related field (nuclear power, transmission, or distribution).

Rather than distinct groups, these sectors are heavily intertwined: on average, those surveyed say that they fall into more than two different categories. Sometimes this overlap points to ongoing debates about the role of any given activity in the energy future. For example, 38 percent of those in nuclear power also say that they are in renewables. More generally, though, these multiple categories point to the nature of the sector. For example, presumably because so many renewables generate electricity, this year we are not able to tease out those two sectors to look at them separately.

That said, after removing the oil and gas respondent pool, those who are also in renewables and government, a sufficient number (14 percent of the survey total) remain to provide a viable sample for analysis. Like last year, our analysis—when discussing “oil and gas” or “renewables” as a group—uses the figures after the respondents who say that they are in both have been removed. Otherwise, the large overlap between groups would blur distinctions. When the text refers to those associated with renewables—or to those associated with oil and gas—we use the unadjusted figures.

THE 2021 GLOBAL ENERGY AGENDA

Global Energy Agenda

Jan 18, 2021

The 2021 Global Energy Agenda

By Randolph Bell, Jennifer T. Gordon, Paul Kielstra, and Andrew Marshall (Editors)

The inaugural edition of the Global Energy Agenda provides context for the unprecedented 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 2021.

Energy & Environment Geopolitics & Energy Security

EDITORS

Randolph Bell is a Distinguished Fellow of the Atlantic Council Global Energy Center; Jennifer T. Gordon is the Director of the Nuclear Energy Policy Initiative; Ameya Hadap is a Program Assistant for the Atlantic Council Global Energy Center; and Paul Kielstra is a freelance editor, analyst, and writer based outside of London.

Fellow

Randolph Bell

Director, Nuclear Energy Policy Initiative

Geopolitics & Energy Security Energy Markets & Governance

Staff

Jennifer T. Gordon

Nuclear Energy Renewables & Advanced Energy

Former staff

Ameya Hadap

Energy & Environment Energy Transitions

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