Governments and corporations throughout the world are seeking to address and resolve huge crises, many of which are interconnected on several fronts, from the COVID-19 outbreak and supply chain disruptions to increasing prices and Russia’s assault on Ukraine. The war in Ukraine has made things even worse for the energy markets. Oil and gas prices have gone up, and worries about supply security have grown because Russia is a major source of hydrocarbons.
All of this is happening at a time when developed economies and corporations are developing strategies to transition away from fossil fuels and toward low-and zero-emission alternatives. The instability of this projected energy transition has been highlighted by events in Europe in recent months. The executive director of the International Energy Agency, Fatih Birol, declared recently at the World Economic Forum in Davos that people are in the midst of the first depletion of fossil fuels.
In a different Davos session led by CNBC’s Steve Sedgwick, a panel of scholars and business executives examined how the world may best find a path out of the difficult scenario it now confronts. We have all arrived at a fork in the road, said EO of the We Mean Business Coalition, Mara Mendiluce, C. One could think that investing in fossil fuels makes perfect sense due to the obvious energy problem, but the opposite is the case, she said.
Mendiluce contended that gasoline was now more costly than solar or wind power. She claimed the Paris Agreement’s target of lowering warming to 1.5 °C above pre-industrial levels was very well dead unless people sped up the transition. Clean energy offered energy security, employment, a healthy environment, and was economically competitive, according to Mendiluce. She added that if people are going to invest, they would rather invest in renewables than in assets that might become stuck relatively soon.
Patrick Allman-Ward is the CEO of Dana Gas, an Abu Dhabi-based natural gas company. On CNBC’s panel with Mara Mendiluce, Allman-Ward, perhaps unsurprisingly voicing his opinion, argued for the ongoing use of gas in the future. As one might expect, he is a strong believer in gas as a transitional fuel and the coupling of gas and renewable energy, especially gas and renewable energy, to address the intermittency problem, he stated.Because, absolutely, they need to switch to renewables as soon as possible in order to meet the net-zero goals. But the breeze often does not blow, and the sun does not always shine. As a result, one must address the issue of intermittency.
The idea of utilising gas as a “transition” fuel to fill the gap between a world ruled by fossil fuels and one dominated by renewables is not new, and it has long been the subject of passionate debate. Organizations like the Climate Action Network, which is based in Germany and comprises over 1,500 civil society organisations from over 130 countries, are among those who oppose the proposal.
CAN stated its opinion on the issue in May 2021. The significance of fossil gas in the shift to 100% renewable electricity is limited and does not justify increased fossil gas production or usage, or additional fossil gas infrastructure investment.
Mendiluce pondered on the arguments for the use of gas when she returned to Davos. She responded that the market may suddenly require more gas. However, when she meets up with businesses that are now reliant on gas and have a significant risk, they are searching for methods to diversify. They may not be able to achieve it in the near term, but they are certain that they will be able to do it in the medium term.
She went on to say that renewables were a competitive source of energy and that deployment pace was now crucial. So, if she were to make an investment, she would be wary of spending on infrastructure that may become obsolete.