Ecological revolution. The energy industry is on the verge of a new era – Financial Times

    27 Jul 2021

    Looking back over the past decade, we can conclude that the pace of progress in the fight against climate change has been too slow. Carbon emissions continued to rise, and although they decreased in 2020 due to coronavirus lockdowns, in 2021, carbon emissions will return to their “consistently high levels,” Financial Times reports.

    According to the International Energy Agency, all solar and wind energy investments accounted for only about 2%. Meanwhile, coal-fired power plants are still being built in large numbers, especially in Asia.

    But the critical elements of the climate revolution are already approaching; the world is on the verge of a new era in the energy sector.

    First, the fight against climate change is strengthened by an active political impetus. US President Joe Biden considers the climate crisis a severe problem, while the generation of climate activist Greta Thunberg will soon show her voice in the polls. Almost 70 percent of global emissions fall under the “zero climate targets” of countries.

    Second, the market helps to promote climate policy by encouraging companies to invest in the “green revolution.”

    Third, much of the “green technology” has already consolidated its position. Climate targets focus on the growing popularity of solar and wind energy over the past few years.

    The fact that Western countries can now generate renewable electricity at a low cost changes the situation. It will allow renewables to replace fossil fuels in electricity generation, and clean energy will reach new sectors of the economy. Along with energy efficiency, this will be a crucial basis for carbon offsets.

    However, this will not be enough to bring the world to climate neutrality.

    Transporting electricity over long distances can be complex and costly. Storing energy in batteries can also be expensive.

    In addition, some uses of fossil fuels, such as heavy transport and industry, cannot be easily switched to electricity.

    But the answer to these questions is hydrogen. It can be produced from cheap green electricity, transported through existing gas infrastructure, and used instead of oil and gas in some sectors. It also opens the door to a global system of trade in renewable energy.

    Australia plans to supply hydrogen to Japan. Europe is going to import solar energy from North Africa in the form of hydrogen.

    With countries setting hydrogen energy targets, companies announcing hydrogen projects, and investors willing to finance them, the industry will soon gain momentum, becoming genuinely competitive in some areas by the end of the decade.

    Initiatives to reduce the cost of hydrogen production are announced, including the UN hydrogen project. The project, launched by energy companies, aims to halve the price of hydrogen by 2026. The Biden administration announced a similar initiative last month.

    The next ten years will be acceleration for the development of environmental technologies. Cheaper energy from renewable sources will increase demand, which will help decarbonize the global economy, the publication concludes.

    A new poll shows that Europeans see climate change as the single most serious problem facing the world, despite the COVID-19 pandemic.

    Climate change was the most mentioned global problem mentioned by respondents in Sweden, Denmark, the Netherlands, Ireland, Germany, Belgium, and Finland. However, less than a third of respondents in Romania, Bulgaria, and Latvia mentioned the climate crisis.

    Energy is on the cusp of a new era. The critical elements of a climate revolution have been slotting into place behind the scenes

    Things have a habit of happening in two ways: gradually and then all of a sudden. Humanity’s fight against climate change will be no exception.

    If you look back over the past decade or so, you might be forgiven for thinking that the rate of progress has been glacial. CO2 emissions have continued to increase, and while they did dip in 2020 owing to COVID-led lockdowns, they are rebounding in 2021.

    According to the International Energy Agency, for all the investment poured into solar and wind power, they still only accounted for roughly 2% of the primary energy supply. Meanwhile, coal-fired power stations are still being built in large numbers, especially in Asia.

    But, behind the scenes, the vital elements of a climate revolution have been quietly slotting into place. It may not look like it, but we are on the cusp of a new era in the energy world.

    First, there is unstoppable political momentum behind action to counter climate change. US president Joe Biden thinks doing it yesterday isn’t soon enough, while the generation of Greta Thunberg, the teenage Swedish climate activist, will quickly make their voices heard at the polls. Almost 70 % of global emissions are covered by national net-zero commitments.

    Second, the market is helping to push policy along, with trillions of dollars in environmental social and governance (ESG) funds encouraging companies to invest in the green revolution.

    Third, we already have much of the technology in place. These net-zero hopes are based on the fall in solar and wind power costs over the past few years. A Saudi Arabian solar auction in April was won for $10.40 per MWh – making electricity generated this way cheaper than that produced by coal and natural gas.

    The fact that renewable electricity is now so cheap to produce, at least in the world’s sunniest and windiest areas, is a game-changer because it will allow renewables to substitute fossil fuels in power generation and enable clean power to reach new sectors of our economies – such as short-haul transport. Alongside energy efficiency, that will be a crucial pillar of our efforts to eliminate CO2 emissions.

    However, it will not be enough to get us to net zero.

    Transporting electricity over long distances can be difficult and costly, and about 8% gets lost along the way – which makes it harder to tap the best renewables in the world, from the deserts and oceans. Storing it in batteries can be prohibitively expensive if you do not charge and discharge them every day, making it challenging to electrify winter heating.

    Furthermore, some uses of fossil fuels – for instance, to power heavy or long-distance transport and to provide high heat in the industry – cannot be switched easily to electricity.

    But the answer to these issues is hydrogen. It can be produced from cheap green electricity, transported through existing gas infrastructure, and used instead of oil and gas in some “hard to abate” sectors. I believe that it could account for roughly a quarter of the future decarbonized energy mix.

    It also opens the door to a global trading system in renewable energy.

    Australia is set to supply hydrogen to Japan. Europe is looking to import North African solar and North Sea wind energy in the form of hydrogen. Chile has an agreement to send hydrogen to the Port of Rotterdam.

    Although it is yet to be widely adopted, I am excited about the prospects for hydrogen. With countries setting targets for hydrogen adoption, companies announcing hydrogen projects, and investors seeking to finance them, it will soon gain scale, becoming competitive in some applications well before the end of the decade.

    Initiatives are under way to lower the cost of hydrogen production, including the UN’s Green Hydrogen Catapult. This project, which was launched by energy companies including Snam, aims roughly to halve the price of hydrogen to $2 per kilogram (equivalent to $50 per megawatt-hour) by 2026. Last month, the Biden administration announced a similar initiative that aims to lower the price of clean hydrogen to $1/kg by 2030.

    The following ten years will be a time of accelerating impact for climate technologies, and the growth of hydrogen and renewables will go hand-in-hand.

    Even cheaper renewable power will drive down the cost of hydrogen, increasing demand, further cutting the cost of renewables, in a virtuous cycle that will help us decarbonize every corner of our economy.

    The writer, Marco Alverà, is chief executive of Snam, an Italian energy infrastructure company.

    Leave a Reply

    Your email address will not be published.