Mischa Keijser | Image source Getty Images Discussions about the energy transition, what it means and whether it is indeed ongoing, have become important points of discussion in recent years.
How the transition will be completed – which can be seen as a shift from fossil fuels to a system dominated by renewable energy sources – remains to be seen. It depends on many factors, from technology and funding to international cooperation. Although vital, everyone is puzzled by the uncertainty and risk. The issues were discussed in detail during a panel moderated by CNBC’s Dan Murphy at the Atlantic Council World Energy Forum in Dubai on Tuesday. “Digitization is at the heart of the energy transition,” said Leo Simonovich, vice president and global head of cybersecurity and digital security at Siemens Energy. “In the energy sector, 2 billion devices are going to be added in the next two years,” he said. “Each of these devices could be a potential source of vulnerabilities that could exploit bad guys.”

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Extending his view, Simonovich explained the possible consequences of the above happening. “In an increasingly connected and digitized system that includes old-fashioned assets that need digital data, this could have successive effects,” he said. “And what we are talking about is not just data loss, what we are really talking about is a security issue, an issue that could destroy important parts of the network or, as we saw with the Colonial Pipeline attack in the United States, parts of it. [the] gas network “. Cybersecurity, Simonovich argued, was important not only as “an opportunity to accelerate the energy transition, if we can do it right, because it builds trust, but also as a major source of risk that we need to address quite urgently.”

Geopolitics

Along with cybersecurity, geopolitics will also play a role if the planet wants to switch to a low-carbon energy system, a point made by Abdurrahman Khalidi, head of technology at GE Gas Power, EMEA. “It took decades for the world, until 2015, to reach a near-consensus in Paris that global warming is happening due to greenhouse gases and commitments have begun to flow,” Khalidi said. “It took us a lot of discussion.” Khalidi’s report on Paris refers to the Paris Agreement, which aims to reduce global warming to “well below 2, preferably 1.5 degrees Celsius compared to pre-industrial levels” and was approved in December. of 2015. “For carbon offsets to happen – as we saw at COP26 – you need … cooperative and cooperative global governments,” he said. “It simply came to our notice then [is that] the world is strongly polarized and the world is divided between “with” and “against”. Khalidi’s comments come at a time when Russia’s invasion of Ukraine has highlighted how dependent some economies are on Russian oil and gas. While the war in Ukraine has created geopolitical tension and division, it has also led to a number of initiatives defined by cooperation and common goals.
Last week, for example, the US and the European Commission issued a statement on energy security announcing the creation of a joint task force. The parties said the United States would “try to secure” at least 15 billion cubic meters of additional liquefied natural gas for the EU this year. They added that this is expected to increase in the future. President Joe Biden said the US and the EU would “also work together to take concrete steps to reduce gas dependence – period – and maximize the availability and use of renewable energy sources”.

Investing wisely

Since fossil fuels play such an important role in modern life, any transition to an energy system and economy focused on renewable energy and low carbon technologies will require a huge amount of money. During Tuesday’s panel, the question of where to invest this cash was addressed by Kara Mangone, who heads Goldman Sachs’ global climate strategy. Among other things, he stressed the importance of integration and commercial viability. “Our research estimates that they will need from 100 to 150 trillion. [dollars] “Capital, about 3 to 5 trillion a year – just an astronomical amount, we are nowhere near that today – to achieve the goals set in the Paris Agreement,” he said. About half of that capital should be focused on renewable energy sources and technologies that were already on a commercial scale, Mangone explained. “But the other half, very importantly, will have to move on to carbon capture, hydrogen, direct air capture, sustainable aviation fuel, e-fuel – technologies that have not yet been commercially adopted because they have not hit a price point where this can happen to many companies. “ The multibillion-dollar figures Mangone cites are found in a report entitled “Climate Finance Markets and the Real Economy” published in late 2020. Goldman Sachs says it joined the Global Financial Markets Association Climate Finance Working Group to help update the report. Mangone went on to describe how the goals could be achieved in a commercially viable way. “We can not get funding from… the oil and gas sector, metals and mines, real estate, agriculture – these areas that are really critical to the transition, that really need capital, that need support to be able to execute it. “ This view is a continuation of the comments made on Monday by Anna Shpitsberg, Deputy Assistant Secretary for Energy Transformation at the US State Department. “We always went out and talked [the] “The oil and gas industry is critical to the transition,” said Shpitsberg, speaking during a panel moderated by CNBC’s Hadley Gamble.
“They are players in the energy system, they are key players,” he said. “They are the ones who will push for reduction options, they are the ones who will push for hydrogen.” “And to be very honest, there are some of them who are making significant investments in clean energy, including renewable energy.” If these “critical actors” were not committed, Shpitsberg argued that the methane reduction and efficiency targets would not be met. “The message was that oil and gas companies need to be part of the debate. But we also want them to be part of the transition debate.”

Work to be done

Ensuring a successful energy transition represents a huge task, especially when one considers the current state of the game. Fossil fuels are rooted in the global energy mix and companies continue to discover and develop oil and gas fields in locations around the world. Earlier this month, the International Energy Agency reported that in 2021 energy-related carbon dioxide emissions rose to their highest level in history. The IOC has found that global energy-related CO2 emissions increased by 6% in 2021, reaching a record high of 36.3 billion metric tons. In its analysis, the world’s leading energy authority pointed to the use of carbon as the main driver behind growth. He said coal was responsible for more than 40% of total global CO2 growth last year, reaching a record 15.3 billion metric tons. “CO2 emissions from natural gas have recovered well above their 2019 levels of 7.5 billion tonnes,” the IEA said, adding that CO2 emissions from oil had reached 10.7 billion metric tonnes.