The importance of energy in everyone’s life is clear since long time. But recent events like the global pandemic and the Russia aggression to Ukraine are offering important elements of reflections on the use of energy and its future.

Alessandro

<p>The importance of energy in everyone’s life is clear since a long time. But recent events like the global pandemic and the Russian aggression on Ukraine are offering important elements of reflections on the use of energy and its future.</p>
<p>Energy ideally needs to address key characteristics: availability; security, affordability and sustainability. Satisfying all those parts (and doing so simultaneously) is the challenge of our time.</p>
<p>The <strong>availability</strong> of energy is something given for granted, particularly in the developed world. It should not be the case. Behind the refilling of a car’s tank or switching the light on there is a massive and complex industry that needs a myriad of components to work perfectly. Policy, regulation, the private sector, and technology are all instruments of an orchestra that has to play harmoniously to deliver the energy supply required.</p>
<p>But for energy, being available is not enough. It needs also to be <strong>secure</strong>. There is no social and economic system able to work properly and efficiently under the threat of energy shortages. Industry, transportation, hospitals and many other components of our lives need access to uninterrupted sources of energy to deliver the services at the level we consider modern and reliable. Many nowadays appreciate the risk of energy shortages and insecurity as potential consequences of Russian aggression. During the lockdown, the possibility to keep communicating, working and even having deliveries of food services has been ensured by the timely and responsible attitude of energy workers.</p>
<p>The <strong>affordability</strong> of energy is another interesting element to consider. And probably an area full of paradoxes. The most striking example is how a price of gasoline approaching 2 euro/liter in Europe (and much lower level in the US) is a reason good enough to trigger mass-scale strikes and protests, while paying the same a 33 cc of bottled water is considered normal and widely accepted. The reality is that energy supply is in most cases the result of an extraordinary industrial and technological process, often a very costly one. When it comes to oil and gas, it is a matter of bringing something buried below hundreds or thousands of meters to the surface, transporting, refining and distributing it before being utilised. But also clean technologies and renewables, too often described as free and a gratuity, requires a very complex infrastructure to be able to provide their contribution.</p>
<p><strong>Sustainability</strong> is probably the most complex aspect of the energy sector. The environmental dimension has completely changed the energy equation. If having energy available, secure and affordable (at least for a part of the world) was mission accomplished, to make it also sustainable moves the challenge to a new height and dimension. The world&#x27;s energy system still relies for about 80% of its total needs on fossil fuels, a similar share to over 30 years ago, when the total energy demand was less than half of today’s one. In other words, the inertia of the energy sector is simply astonishing.</p>
<p>So the natural question is if we are facing a sort of mission impossible? The answer is no, but – if there is something to learn from the pandemic first and ongoing war now – is that energy is a serious thing where 140-characters slogans and shortcuts bring nowhere.</p>
<p>Covid-19 offered clear evidence of the resilience of a sector that has been shaped throughout multi-decades. Many were expecting the pandemic to mark a turning point in the use of energy. Some forecasted the peak of oil demand; others celebrated the decline of emissions. The reality showed all its harshness already in 2021 with consumption of all fossil fuels rebounding with record growths and emissions resuming a worrying and steep upward trend.</p>
<h1>Fossils are hard to die; but even harder are social habits and comfort zones</h1>
<p>The Russian aggression on Ukraine and the brutality of its military operations are fuelling a live debate across Europe and beyond about the possibility of sanctioning all Russian energy exports. The point here is not if Europe should ban such energy imports or not; the problem is that the debate has shifted immediately to an oversimplified territory. All the attention has focused on just searching for options to replace the supply coming from Russia without looking in detail if alternative sources are timely available. Even more importantly – most of the debate has forgotten to look at the real part of the problem: the demand and massive levels of energy that we consume every day.</p>
<p>But even before such massive global shocks, the energy debate was discounting massive generalisation and myths. The list is long and I listed some of them <a href="https://illuminem.com/energyvoices/3411f1fb-3c74-45c0-b4fe-ab74ece47d62">here</a>.</p>
<p>In a nutshell, too often and too easily we surrender to the temptation of finding shortcuts or easy solutions to the challenges of the energy system. Making energy available, secure, affordable AND sustainable is a super difficult job.</p>
<p>Yet, there are elements for optimism: many renewables in the power sector, such as wind and solar, have made progress unimaginable just a decade ago and today are mainstream and competitive; electric vehicles have become a solid and concrete hope for a revolution in the private mobility; companies are stepping up their sustainability targets under a growing pressure from consumers; batteries are deployed more and more to make a renewables-based system possible; hydrogen is experiencing a second renaissance after the great attention of a few decades ago, and hopefully this time with a better outcome. Government, consumers, investors are aligning towards a stronger sustainability awareness. Last but not least, technological progress and innovation keep delivering new solutions and applications.</p>
<p>All these areas offer a degree of confidence in the ability of humankind to finally shape a sustainable trajectory. But the number of areas to address remain ample: from creating a reliable and sustainable supply chain for all minerals that are the backbone of clean technologies, to the massive challenge of transforming our petrochemical industry that produces goods that are pervasive in our society; up to the realisation in an environmental-friendly way of all commodities like steel, cement and others that are the skeleton of any modern economy.</p>
<p>Putting everything on track will not be easy and will not be quick. And it needs to be treated properly. <strong>Getting (more) serious about energy is definitely the right thing to start with</strong>.</p>
<p></p>
<p><em>Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.</em></p>


It is time to get (more) serious about energy!

Russia’s attack on Ukraine has sent shock waves through global energy markets. While all the eyes are rightly on the humanitarian crisis emerging from the conflict, the scale and potential impact on the global economy should not be overlooked. There are multiple reasons why the current situation needs to be taken into high account but also something good could come out from this tragedy in terms of sustainability and cleaner future. To be clear - that would be just a very very small partial compensation to today’s horror

<p>Russia&rsquo;s attack on Ukraine has sent shock waves through global energy markets. While all the eyes are rightly on the humanitarian crisis emerging from the conflict, the scale and potential impact on the global economy should not be overlooked. There are multiple reasons why the current situation needs to be taken into high account but also something good could come out from this tragedy in terms of sustainability and cleaner future. To be clear - that would be just a very very small partial compensation to today&rsquo;s horror</p>
<p>The starting point is to what extent this crisis compares with the past. While we are not experiencing rationalisation of energy supplies and line ups in the street as it has been the case in the 70s, the magnitude of current shock risks to not be second to anything else. The massive push to inflation that comes from skyrocketing energy prices is already well known. On top of that, we need to add four elements that are quite relevant:</p>
<ol>
<li>The first one is that this crisis erupts with <strong>inflation</strong> levels already at 40-years record high in many economies. In early 2022, before the start of conflict the inflation in US reached 7.9%, the highest value since 1982,&nbsp;while in euro zone exceeded 5%, the highest level since record-keeping started in 1997.</li>
<li>The second is an unprecedented level of <strong>global debt</strong> &ndash; both in absolute values and as a share of GDP &ndash; as countries around the world have implemented huge stimulus plan for recovery from Covid. This could drain important financial resources from capacity of investment and spending both in the public and private domain</li>
<li>The third is that today&rsquo;s <strong>world is much more interconnected</strong> compared to the time of previous oil embargos. Global trade is a much bigger component of world&rsquo;s economy.</li>
<li>Last, but not least, the epicentre of the conflict involves regions that are giants also for <strong>food production and exports, as well as fertilizers</strong>, anticipating a very important impact on food prices.</li>
</ol>
<p>The combination of those different elements suggests that the world might be facing its <strong>real 1st global energy crisis</strong>. We are also seeing a serious tightness across all key energy markets, including oil, gas and coal supplies, and serious bottlenecks in supply chains for other commodities, raw materials and critical minerals that are the basis of clean technologies.</p>
<p>While governments' first priority is to find policies and mechanisms to ease the strain of consumers and economic activities, the current context can also foster that wave of innovation and solutions that is absolutely critical to embark on a different pathway. As often it is the case, looking at the past and consider the lessons learnt might be a wise approach.</p>
<p>The oil embargos in the 1970s had strong impact on global economy and consumers behaviour &ndash; causing deep recessions and skyrocketing inflation -&nbsp;but were also very instrumental in triggering an unprecedented wave of innovation and technology progress.&nbsp;A large part of nuclear power capacity operating today was deployed in that period, while the performance of car engines made a gigantic increase: again, efficiency took the centre of stage in many societies. Consumers reacted with practical measures such as reducing driving mileage, prioritising insulation at home, etc.</p>
<p>At the same time, it is also fair to recognize that the crisis triggered an enhanced confidence in the role of natural gas, something that was then seen as second-level by product. This contributed to the development of those infrastructures that for many countries in Europe makes the dependence on this source and Russia supplies so relevant today</p>
<p>However the &ldquo;benefits&rdquo; of that painful season cannot be ruled out: the use of oil for electricity generation needs has almost disappeared in most countries; new technologies were developed and society became more aware of the value of energy supply and security.</p>
<p>One important thing that was missing at that time was the concept of <strong>climate change or sustainability</strong>, that nowadays has moved at the centre of the debates. From there is where we might or should start to re-emerge from this crisis.</p>
<p>Even before the Russia-Ukraine&nbsp;conflict, the world was trying to approach a tipping point for clean energy transition. More than 80% of the global economy has commitments to move towards a carbon neutrality and several new clean energy technologies were at a decisive crossroads: becoming finally mainstream or disappoint expectations.</p>
<p>Actually, <strong>2021 has been a record year for all the most promising clean technologies</strong> including:</p>
<ul>
<li>record sales for <strong>electric vehicles</strong> and <strong>heat pumps</strong>;</li>
</ul>
<ul>
<li><strong>battery storage</strong> deployed at levels never seen before;</li>
</ul>
<ul>
<li>enthusiasm and interest on <strong>hydrogen</strong> and <strong>CCUS</strong> reached new highs;</li>
</ul>
<ul>
<li><strong>renewables</strong> kept dominating new electricity capacity and mark record after record.</li>
</ul>
<p>Those should be the key incentives for taking a different direction. Similar hope took centre stage also during the early stages of the pandemic eruption. Data today shows that the confidence in a sustainable recovery has been largely missed, as rebound has been largely driven by traditional sources.</p>
<p>The mistakes cannot be repeated and calls for a truly change of direction now that no excuses are left and it is clear universally that climate change and energy security strictly belongs to the same domain.</p>
<p>But such change cannot be given for granted and it is better this time make it loud and clear: <strong>it</strong> <strong>will not be easy and smooth; it will not be like eating a piece of cake</strong>.</p>
<p>The 1970s crisis triggered a turbulent period for global economy, employment and purchasing power but it also marked the emergence of a new era for new energy technologies. Likewise, today the risks of a prolonged period of stagflation cannot be ruled out, at global level and in particular in the Europe zone.</p>
<p>Both the Euro zone and the US are discussing the possibility of important stimulus packages. The adoption of policies and lending strategies that target investments in strategic sectors, and particularly energy, are key tools to offset such important risks and could conjugate the evident needs of enhanced energy security and urgent goals of climate change.</p>
<p>&nbsp;</p>
<p><em>Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.</em></p>

An energy crisis like never before? A turning point for the global energy system...

In this straight-to-the point article, Alessandro Blasi debunks 10 common myths about energy and climate.

<h2>Myth n°1</h2>
<p>Renewables are the n.1 source of electricity production globally: This is false. Coal is the king and by a (long) distance </p>
<h2>Myth n°2</h2>
<p>Electricity is equal to energy: This is wrong! Electricity accounts for less than 25% of the total energy consumed </p>
<h2>Myth n°3</h2>
<p>Coal demand is declining: this is false – electricity from coal is at new record highs and total coal demand might see a new record in 2022! </p>
<h2>Myth n°4</h2>
<p>Oil consumption is driven by cars: Again, this is false. Petrochemicals, trucks and panes (pending Covid-19) are key drivers of oil demand globally</p>
<h2>Myth n°5</h2>
<p> Covid-19 is equal to peak oil demand. Actually, oil demand in 2022 is expected to be already higher than pre-Covid-19 </p>
<h2>M️yth n°6</h2>
<p> Power is the number 1 source of emissions: This is false, as more than 60% comes from the industry, transport, etc </p>
<h2>Myth n°7</h2>
<p>The Majors dominate the oil and gas industry: this is false. Those companies account ‘only’ for 12% of total global oil and gas reserves and 15% of total global production​ </p>
<h2>Myth n°8</h2>
<p>We are at the start of the end of the fossil fuels era: This is (dramatically) wrong. Those still account for almost 80% of the total, exactly as 30 years ago</p>
<h2>Myth n°9</h2>
<p>Wind and solar dominate low carbon power generation: This is also (still) false. In fact, hydropower leads, followed by nuclear! </p>
<h2>Myth n°10</h2>
<p>Global greenhouse gases emissions have finally peaked: unfortunately everything points towards a new all-time records in 2022…</p>
<p><em>Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.</em></p>


10 Myths in the Energy and Climate World

Whatever metric is applied, the year just concluded has been ‘extraordinary’ for the energy and climate sector. Here is Alessandro Blasi's own selection of 10 energy and climate keywords for 2021

<p>Whatever metric is applied, the year just concluded has been ‘extraordinary’ for the energy and climate sector. Here is my own selection of 10 energy and climate keywords for 2021.</p>
<h1><strong>Records</strong></h1>
<p>2021 will probably be remembered as an year of records : global economy and oil demand rising at a pace not seen since more than half a century ; coal use in power generation jumping by an amazingly worrying 9%; natural gas prices in Europe having reached levels of more than 7 times higher than pre-pandemic; CO2 allowances skyrocketing and China breaking the wall of 1.000 GW of renewables installed (a level exceeding those in US, Japan and Europe combined together)… the latter being probably the only record we have been pleased to see in the year.</p>
<h1><strong>Prices</strong></h1>
<p>Energy prices made headlines of international media throughout the year and returned as a major preoccupation for family budgets, industry and general economy. Everything with a link to energy skyrocketed: from basic commodities to traditional fuels, from electricity to CO2 allowances in Europe, marking record after record. The implications of such trend are already quite visible with levels of inflation not seen from multi-decades. This will be a key factor for 2022 and beyond as risks of out of control inflation brings severe risks to an already fragile system. Obviously energy is not the only cause, but the persistence of such high prices might create serious difficulties in re-emerging from the pandemic – provided Omicron will not be followed by further relatives… - and for the much-needed transformation of the energy system.</p>
<h1><strong>Demand</strong></h1>
<p>It is very much linked to prices, but demand trends in 2021 have been astonishing. The world tried to emerge from the pandemic incredibly starved of energy resources. This shows clearly how the traditional link between economy growth and energy demand is far from being broken. A rebound from the ‘annus horribilis’ 2020 was expected but the growth went beyond expectations and data reminded how energy efficiency is still too much an aspirational objective rather than a concrete fact. The current season of very high prices is a stark reminder of keeping efficiency use in strict sight… always.</p>
<h1><strong>Resilience</strong></h1>
<p>Despite upswings in energy and economic conditions, the global energy system proved to work properly with no major disruptions that could have harmed further the fragile international context. Power renewables have kept growing at spectacular pace, achieving a new all-time record for new capacity installed in the year, with about 290 GW, showing their resilience to bottlenecks in the supply chain and inflationary signal led by higher costs for materials and shipping around the world. And shale sector is enjoying the most profitable year of its entire era, as capital discipline, reduced investment and higher prices fill pockets of shale pioneers. But probably the throne of most resilient component of the energy source goes to coal. Despite almost unanimous agreement on the need to move beyond coal, including from some countries that rely extensively on it, coal is incredibly ‘hard to die’. Recent IEA data shows that coal demand is ‘flirting’ again with its all-time historic high leaving a bitter taste to hopes for climate goals.</p>
<h1><strong>Surprises</strong></h1>
<p>There are two main themes I think that would be properly placed in this category. The first one is Electric Vehicle: 2021 has been a quite special year for this industry, and for multiple reasons. First of all, it marked a massive acceleration among car manufacturers in terms of investment in electric mobility. Beside Tesla – that also broke the iconic and stellar threshold of $1 trillion market capitalisation – all the major car manufacturers are (very heavily) in the game. And new emerging pretenders jumped in the arena with the quotation on Wall Street of EV manufacturers such as Lucid or Rivian. Ev sales have reached in 2021 a 10% share in global markets, a level simply unimaginable two years ago. In the most dynamic markets - China and Europe – such share jumped to 20%.</p>
<p>The second ‘surprise’ is definitely “critical minerals”: never heard by many before 2021, throughout the year they have scaled up government and companies priority agendas. Lithium, cobalt, manganese, rare earth and more has become mainstream, and for sure, we will hear a lot about those in the coming years.. to me this has been the “hottest topic” of 2021.</p>
<h1><strong>Hope</strong></h1>
<p>The ‘<span style="text-decoration:underline">good</span>’ part of the story has been for me …COP26. It might sound as a surprise – but it should not. Firstly because, differently from what might have said, the much-awaited global gathering was able to deliver on multiple fronts, although of course it did not finish the job. Pledges on methane, net zero targets of big emerging countries, cooperation initiatives among key countries are all a positive part of the story. In my view, the best of COP26 has been to see beside negotiators, officials and climate activists, a massive presence of investors, technology providers and industrial operators. This shows that there is a climate economy that is able to intercept the interest of those putting on the table the concrete resources to transform our society. It is definitely a very good news.</p>
<h1><strong>Recovery plans</strong></h1>
<p>This is the ‘<span style="text-decoration:underline">bad</span>’ of 2021, or at least the disappointing one. Governments have deployed unprecedented level of measures to boost the global economy recovery. More than $17.000 trillion have been committed worldwide. But if announcements and slogans emphasized the need to link such recovery with a new sustainable model, the reality tells another story. Only 3% of the total deployed is for clean energy spending underpinning an uneven and unsustainable economic recovery, as data for energy consumption tend to suggests as well.</p>
<h1><strong>Poverty</strong></h1>
<p>The ‘<span style="text-decoration:underline">ugly</span>’ of 2021 is - once again - energy access… covid crisis is reversing progress on energy access of the last several years. Africa maintains the very sad leadership in this special ranking with about 600 million people remaining without electricity access. Sustainable recovery plans are an extraordinary opportunity to make energy poverty history and finally go back on track for the universal access target by 2030. Prioritising this remains an essential requirement – and a moral imperative - for expanding healthcare solutions, modernising agriculture and other parts of the economy, as well as protecting the poorest populations.</p>
<h1><strong>Comeback</strong></h1>
<p>We have seen in 2021 several comebacks, especially of those that suffered mostly during 2020. But probably the strongest comeback of energy world in 2021 goes to nuclear. Despite the end of the year marked the closure of some plants in countries that had decided so, electricity prices on vertical rise and the widening gap between climate ambition and real data is giving new momentum to nuckear. Some countries have definitely raised their interest on such technology; others that decided differently in the past are having second thoughts; many are looking to potential technology advancements. As always, nuclear remains a controversial option, and safety concerns are not set to disappear overnight, but those that believed nuclear would have moved definitely outside of the energy scene might remain disappointed</p>
<h1><strong>Geopolitics</strong></h1>
<p>To be honest, geopolitics never went away from the energy scene, but in 2021 it definitely regained the centre of stage…. The immediate thinking goes to gas markets in Europe and associated tensions connected to Russia, Ukraine, North Stream II and much more. In reality the topic is significantly bigger: with clean energy transitions getting centre of stage, many governments around the world have started to realise the level of implications and ramifications that such transition might have in terms of multiple economic sectors, social stability and levels of employment. It is definitely true and straightforward for the producing countries that so much depends on hydrocarbon revenues, but applies well to car industry, to technology manufacturers and so on. And here the level of attention has skyrocketed towards supply chain bottlenecks and critical minerals supply with all the major economies taking position to ensure a proper domestic (if possible) development.</p>
<p><em>Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.</em></p>


Alessandro Blasi

Alessandro Blasi

It is time to get (more) serious about energy!

Recent publications

Readers also like

Want to know more about illuminem Voices?