The FT and the energy transition
On 20th September 2022, the FT ran a special 4 page insert, titled “Energy Transition”.
In its discussion of various aspects of transition, eg “rush into gas” and “crisis spurs clean energy’s big push to secure supply”, it says some things that seem somewhat contradictory.
On the one hand, it says:
“… the energy crisis has presented an opportunity to change perceptions: clean energy is not only about reducing pollution or hitting net zero emissions targets; it is also about making countries more secure.”
And it highlights the issue of stranded assets:
“Nord Stream has become a stranded asset … shareholders … have announced impairments of more than EU1.2 billion”
It also says “At least some of [the US LNG export units already planned, requiring up to USD 81 billion of investment] may therefore be stranded should Europe and the other large consumer of LNG – Asia – move from fossil fuel use in future decades.”
On the other hand, it says:
“Other sustainable energy sources [other than the LNG Floating Storage and Regassification Units (“FSRU”) that it talks about immediately prior to this statement?] to replace gas – like wind and solar renewables, hydrogen and battery storage – need many more years of development”.
It does not say much, if anything, in the 4 pages of the special insert, about why it believes renewables need many more years of development, and does not mention that many of those alternatives are already feasible at scale for primary energy generation to replace fossil energies.
There is mention of slow growth in wind energy markets and solar, citing “waiting on permissions” as the biggest hold-up. So, regulatory hurdles rather than technical ones. It does not mention that regulatory hurdles can be swept aside by governments with the passing of legislation, which needn’t take decades. It also mentions supply chain issues for renewables, increasing costs, and concerns about a high degree of reliance currently on China, which are all real issues, but not insurmountable ones in timescales of years rather than decades. It does not mention that fossil energies are also suffering cost increases, so the differential between them is still similar. It does not mention that renewable energies are cheaper than fossil energies in most parts of the world.
There is a general claim, almost in passing, that transition to renewables in Europe with sufficient pace to achieve mid-century net zero targets would be likely to be so large in financial terms that it might fall foul of European state aid regulations that protect freedom of competition.
However, it doesn’t give any details about why it holds that view, nor any comment about how the future habitability of the planet is more important than competition rules, and so European state aid rules might not be the barrier they think it is, when push comes to shove.
So, although the special insert discusses some of the opportunities and challenges of the energy transition (which is important to do), it provides quite a superficial treatment of the most important aspects of the subject, and it errs on the side of inertia and pessimism regarding both the urgency and the feasibility of achieving energy transition as part of global net zero by mid-century.
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