A recent article in McKinsey Quarterly noted: “The 19th century’s naval wars accelerated a shift from wind- to coal-powered vessels. World War I brought about a shift from coal to oil. World War II introduced nuclear energy as a major power source. In each of these cases, wartime innovations flowed directly into the civilian economy and ushered in a new era. The war in Ukraine is different in that it is not promoting the energy innovation itself but making the need for it clearer. Still, the potential impact could be equally transformative.”
McKinsey Quarterly
The price of US crude oil crashed from $18 a barrel to -$38 in a matter of hours, as rising stockpiles of crude threatened to overwhelm storage facilities and forced oil producers to pay buyers to take the barrels they could not store.
Oil Price Magazine, April 2020
US crude Oil price per barrel June 2022 110US$
Oil Price Magazine, June 2022
As Julien Emile-Geay Associate Professor of Earth Sciences, USC Dornsife College of Letters, Arts and Sciences writes: “Today, rising carbon dioxide concentrations in the atmosphere are more than 50% higher than they were at the dawn of the industrial age, and they’re trapping more of that energy.
Those carbon dioxide emissions, together with other greenhouse gases such as methane, and offset by some aspects of aerosol air pollution, are trapping energy equivalent to the detonation of five Hiroshima-style atomic bombs per second”.
We all agree that the Earth’s Climate is in danger, Green Energy is the desirable solution and the Whole World should aim at that goal. As a rhetoric, it is very good.
The present article aims to examine how possible this is in our lifetime.
Disclosure: I am 76 years old.
The Holy Grail of full Green Energy will be found through a torturous route with many upheavals in the way.
The essence of the problem is that all Administrations think in terms of the next six months will Energy planning work in terms of the next six years.
An illuminating example is the following:
A few years ago, Israel, Cyprus, and Greece started talking about a gas pipeline to feed Europe from gas deposits found in the East Med. This was called the East Med pipeline.
Since gas prices at the time were low and the Nord Stream 2 was galloping to the post in spite of -withdrawn by Biden – American objections, this project went on the back burner.
A few months ago, to please Turkey, the State Department withdrew its support for the project.
Now, following Putin’s real threats of gas supply cuts to Europe, everybody, including the State Department, enthusiastically supports this project that will solve a significant part of the European needs for Natural gas.
All of this is very good except for one detail.
This project, if it starts tomorrow, which it cannot yet, will take seven (7) years to complete.
Merkel believed in Green power. In the name of Green power, she also denounced nuclear power and in the name of Economy based all its present Energy supplies to the Russian pipelines. In doing so she achieved to make the greatest European Economy a hostage to Moscow.
Now the German Government has opted for the fastest possible installation of wind turbines and photovoltaic parks to face the coming Energy paucity. At the same time, Germany plans to restart the coal-fired Stations, to ensure the sufficiency of Energy next Winter. Necessary but schizoid.
So, all the MME that present the many Governments’ PR exercises in Green Economy as the solution, fail to inform their audiences that this solution is at least seven (7) years away.
“The energy crisis exacerbated by the war in Ukraine has seen a perilous doubling down on fossil fuels by the major economies”, Antonio Guterres said.
The immediate always take priority over the important in Government think.
That is valid worldwide. There is no easy and/or fast path to Energy sources transformation.
The transitional period will be long, expensive, and full of crises mostly from Geostrategic decisions of the main Energy players, both producers and consumers.
Relapse to polluting methods of producing Energy and even rationing of its consumption are the new realities.
Further to Geostrategic decisions that always upset the present Energy balance and future Energy progress, to transform the present Energy mix, very considerable sums are necessary.
The 2021 World Energy Outlook report states, that to avoid the worst of climate change, clean energy and infrastructure will need $30.3 trillion by 2030.
For more than avoiding catastrophe, mobilizing finance will be the key, with IRENA’s roadmap estimates shown below:
If we manage to go to the middle case scenario, which is now likely, very considerable sums must be invested and the looming recession does not make things easier.
That of course is valid, provided that there are no exogenous interventions.
Green Energy production is not enough.
The present infrastructure cannot handle a continuously increasing Green Energy production.
For example, Europe currently invests €40BN/year in its power grids. However, annual investments need to double over the next thirty years to up to €80BN/year. Without these investments, we will miss our climate goals. Power grids are a vital part of Europe’s future energy system.
Similar grid improvement investments are needed Worldwide.
As a major part of hydrocarbons, particularly Oil, is used for Transport, the electrification of Transport that started offers significant advantages.
Automakers worldwide will spend more than half-trillion dollars to develop new electric cars and passenger trucks, and also on battery manufacturing, through 2030.
Due to the aleatory nature of Green Energy generation mainly from Wind turbines, storing of Energy is necessary.
While the percentage of Green Energy was low this was not given adequate attention, but storage of Energy is the cornerstone for a Green Energy future.
Now the Storage of electricity obtained from renewable sources is mandatory.
That’s a problem, the International Energy Agency says. Battery storage needs to reach 585 GW by 2030 to decarbonize the global power sector, a 35-fold increase from 2020.
“If you can’t get the batteries manufactured and reliably delivered at a price point that is coming down… you’re going to slow the ability of batteries to accelerate the transition”, said Jim Kapsis, founder of climate technology advisory firm the Ad Hoc Group.
At present, an electricity storage system through batteries costs about 1000$/Kw. To compare a Natural gas power plant construction of about 850$/Kw.
This requires hundreds of billion dollars in investment for Energy storage, even if Technology reduces cost.
Assuming that the money is available even with the recession/depression looming before us and the political will is there.
All the above covers the rational part of Energy Transition.
More difficult than the already difficult conditions to meet the rational requirements are the irrational geostrategic decisions of the various World and Regional Powers that each follows its own logic and/or folly.
One simple example: Russia is earning one billion dollars a day from Energy exports since the War with Ukraine started.
China and India benefit from this War by buying Oil from Russia at a 30% discount.
Yet Russia, weaponizing Energy, is restricting the gas flow to Europe at little cost to the Russian Economy since the increase in the price of Gas counterbalances the income lost from the decreased supply.
The complete cut of Gas supply from Russia to Europe will bring the European Economies into severe recession before Russia suffers the same.
The short-term solution for Europe is about to be implemented. Back to Coal to cover the Gas supply losses. Gas is about to be cut by Russia.
Coal, which is the worst fossil pollutant, is not used only in Europe now.
The first and second Coal users are China with 56% of its total generated Energy coming from Coal and India with 55% of its total generated Energy coming from Coal also.
China does not even justify its use of Coal. It invests a lot in renewables because China’s wind and solar potential are ‘nine times’ that needed for carbon neutrality, but Coal is its primary Energy source.
“How can anyone expect that developing countries can make promises about phasing out coal and fossil fuel subsidies?” India’s environment minister and lead climate negotiator Bhuphender Yadav said.
The needs and sensitivities of developing nations, and their calculations on social and political costs, will continue to be a major obstacle to the faster implementation of Green Energy solutions. To this Europe now must be added.
At present, the World relies on fossil fuels for three-quarters of its Energy needs. It will be many years and many Energy, and not only, but crises until the World is also free of fossil fuels. Any other expectation is wishful thinking.
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Copyright © 2020 Kassandros. All rights reserved.
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