Caution, energy transition: the risks of the transition to the low-carbon era

The traditional energy sources are going to make up the foundation of the energy balance for some time to come, but their use has to become more environmentally friendly. “

These comments by Russian Deputy Prime Minister Alexander Novak formed the basis of the session “The future of energy. The energy transition” at the recent St. Petersburg International Economic Forum.

An inevitable transition

The energy transition is essentially competition between different energy sources of energy and it gets more intense under the influence of both scientific-technical progress and a growing clamour in society for a reduction in emissions in the fight against climate change,” Alexander Novak noted at the beginning of the session. He then went into detail on the factors which in the years to come will determine the shape of that competition.

  • The energy transition is inevitable. Already, 30 countries have declared their intention to achieve carbon neutrality by 2045-2050 and 21 countries have announced their intention to abandon coal-fired generation.
  • According to the International Energy Agency (IEA), by 2040, the global share of fossil fuels in the primary use of energy will decline from 80 % now to 72 % (according to the base scenario) or even 56 % (according to the scenario of sustainable development). But the real dynamics of change will depend to a great extend on the success of new technological solutions (including energy storage).
  • There are costs associated with renewable energy. As an example – disposing of the 50-metre wind blades made out of non-degradable plastics – this can become a serious problem in plans to bring wind installations out of service
  • There remains an open question of providing energy for two billion people who have no access to traditional sources of energy. Will they go directly to the use of renewable energy sources, or will they pass along the path taken by the majority of developed and developing nations that began the move to green energy only after a long period of using fossil fuels
  • Lastly, it is not yet fully clear how costs associated with the energy transition ($150 trillion to $200 trillion) will be distributed between users and producers.

     This, Novak says, is the essence of the difference in determining the speed of the energy transition for countries and regions as well as the importance of “deploying maximum effort in order to uphold the environmental side of traditional sources”.

New niches for traditional sources

In 2050, according to all the scenarios, traditional sources will remain dominant in the world energy balance,” said Yuri Sentyurin, General Secretary of the Gas Exporting Countries Forum.

That conviction was shared by Oleg Asksyutin, Deputy Chairman of Gazprom’s Management Committee and head of department 623. Aksyutin believes that for decades to come, 30 % of the increase in demand for energy will be met by natural gas. 

Natural gas presents all the strong advantages of other energy sources — the environmental advantages of renewable sources, reliability and flexibility of supply, along with universality, as is the case with oil, the accessibility inherent in coal – although coal will now take something of a back seat,” said Aksyutin, setting down all the factors which in the years to come will contribute to a rise in demand for gas.

And gas is the least costly raw material for producing hydrogen,” he added, saying that gas will help complete the transition to a low-carbon production while remaining its foundation.

New niches in the energy transition will be found for the oldest forms of low-carbon energy – nuclear power and hydro power – said Viktor Khmarin, General Director and Chairman of the Board of RusHydro. He pointed to the example of a pumped-storage hydro power station.

“Only a pumped-storage station is able on an industrial scale to both store and distribute energy,” he said.

 Sama Bilbao y Leon, Director General of the World Nuclear Association, said: “Perhaps it is more than just electricity. As you know, nuclear energy can also produce zero-carbon heat, which is going to be incredibly important to help to decarbonise other hard to abate sectors.”

 And Deputy Prime Minister Novak agreed: “While nuclear power stations, in producing a kilowatt hour of electricity generate 6 grams of CO2, solar installations produce 80 grams and wind installations 14 grams. The future therefore includes nuclear power.”

It’s not just about energy sources 

“We must change not only energy sources, but also the way in which it is used,” said Angel Wilkinson, General Secretary of the World Energy Council.

”What we really need is an energy transition for people and planet. What is really changing is not that we should keep thinking of the supply side, but about the demand-driven solutions that are going to be needed to humanise energy.”

That was a theme picked up by Rae Kwon Chung, winner of the 2007 Nobel Peace Prize

Great Britain achieved very good results. Emissions were reduced by 40 % over the last three decades based on the production side,” he said. “But when you calculate on the consumption side, the per capita consumption never changed. So this is another dimension we have to take into account when we look at the energy transition.

The use of new technologies in industrial sectors has also had an effect on the extent of the carbon footprint.

     “The use of composite materials in electricity generation has had a beneficial effect on the environment as fewer emissions occur in their production,” said Andrei Ryumin, Acting Director General and Chairman of the Management Board of Rosseti,

This scenario (of reducing emissions) sounds appealing and looks appealing. But ‘the devil is in the details.’” Saudi Energy Minister Prince Abdulaziz bin Salman al Saud told the gathering, referring to different approaches to the transition.

And one of these approaches was the issue of a carbon tax. If developed countries want to introduce a carbon tax, the prince said, how will the money raised by these taxes be spent?

The Qatari Energy Minister, Saad Sherida Al-Kaabi, called for a carefully considered approach to the transition, particularly in terms of calls to curtail investment in the gas and oil sector.

“We need to be careful in depriving investments to the oil and gas sector – that’s really going to harm humanity and the more than 1 billion people that actually don’t have electricity today,” he said, referring to the risk of energy shortages for a considerable part of the developing world.

    Another risk, Alexander Novak said in his address, was the notion of a shortfall in investment in the oil and gas sector. 

    “I cannot imagine that tomorrow investment in new projects will cease. What will there be then? Will oil prices hit $200? Will gas prices soar, along with volatility?” Novak said, referring to the call by the International Energy Agency to halt investment in oil and gas projects.

    “The world, of course, will proceed along the path of energy transition. But we should not write off hydrocarbons.”


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June 2021