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A More Realistic Approach To The Energy Transition

·4 min read

Much of the rhetoric following the Paris Agreement and, more recently, the COP26 climate summit has been centered around how the world must transition entirely away from fossil fuels to renewable alternatives. But in the face of global energy shortages, it has become apparent just how much the world continues to rely on oil and gas to meet its energy needs. As companies and governments increase their investments in renewable energy operations, it is not a choice of either/or but rather of balancing the two - boosting green developments while reducing emissions in fossil fuel projects to ensure energy security while also building a resilient renewable energy industry.

The Russian invasion of Ukraine rapidly shifted the political and public opinion regarding energy following a period of optimism around the development of renewables after last year’s COP26 summit. As consumers continue to face rising gas prices and the cost of oil is soaring, people are shifting their attitudes as they become more concerned about their energy security than climate policy. Governments around the world that announced net-zero carbon targets for 2050 just last year are now looking to boost oil and gas output as they fear severe energy shortages going into the winter months.

There have even been delays in coal plant closures in countries that were expected to end coal operations long before 2030, such as the U.K. In addition, there has been renewed interest in nuclear projects that were shelved long ago. And the U.S. and other countries are now asking OPEC+ to boost oil production in response to the rising global energy demand and to ease price pressures. This sharp movement away from the green push gives the impression of an either/or approach to energy.

However, John Doerr, chairman of venture capital firm Kleiner Perkins, was reported saying this month that when it comes to fossil fuels versus renewable energy, it is not a case of one or the other. He stated, “Now is the time to double down on renewable, free abundant energy sources that are not controlled by petro-dictators,” adding “We are funding both sides of this war now.”

Doerr believes that despite the clear need for fossil fuels to meet the present demand for energy worldwide, investment in renewables should not be compromised, explaining “It’s a false choice. We’ve got to do both.” He is quick to dispute the idea that new green projects take too long to establish, pointing out that solar farms can be set up within around a year and a half, faster than the time it takes to establish a new natural gas liquefaction plant.

The Renewables 2022 Global Status Report from REN21, released last month, pointed out that there has been stagnation in the development of green energy projects. While the quantity of electricity produced from renewables rose significantly in 2021, only 4 percent of transport is powered by green energy sources and, overall, the share of wind and solar in the global energy mix has increased marginally over the last ten years.

Related: OPEC’s Oil Production Drops As Cartel Undershoots Target Again

The report shows that despite optimism around an energy transition, coal, oil, and gas still dominate the world’s energy consumption. Executive director of REN21 Rana Adib explains, “The share of renewable energy has moved in the last decade from 10.6% to 11.7%, but fossil fuels, all coal and gas have moved from 80.1% to 79.6%. So, it's stagnating.” Rana Adib then added, “And since the energy demand is rising, this actually means that we are consuming more fossil fuels than ever.” This suggests that despite big promises, many countries are continuing to stick to what they know best and not boosting renewable energy production enough alongside ongoing fossil fuel projects.

This is hindered by an either/or approach, with media and experts around the world highlighting the world’s reliance on fossil fuels rather than pushing for a dual approach to energy security. Significant criticism was seen earlier this year over the ongoing use of natural gas in several countries, as it was classified as a sustainable investment in the E.U.’s climate strategy. But little consideration was given to the reason behind this.

The E.U. included natural gas and nuclear energy in the renewable transition plan to ensure that the region’s mid-term energy security was addressed in parallel to green energy projects being developed, all too aware that an all-or-nothing approach is too narrow and simply not realistic. While a movement away from all fossil fuels is the long-term goal for many countries, a mid-term transition will be most successful through a shift to less carbon-intensive fossil fuels – such as natural gas – alongside the introduction of carbon capture technologies in oil and gas operations.

By Felicity Bradstock for Oilpric.com

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