From the Covid-19 pandemic and supply chain shocks to rising inflation and Russia’s invasion of Ukraine, governments and companies around the world are trying to tackle and resolve major crises – many of them interconnected – on multiple fronts.
Against this challenging background, energy markets have been turbulent Gas And the oil Rising prices and concerns about the security of supplies – Russia is a major exporter of hydrocarbons – escalated in the wake of the war in Ukraine.
All of the above is happening at a time when major economies and major corporations are crafting plans to transition from fossil fuels to low- and zero-emissions alternatives.
Events in Europe over the past few months have sharply cast the fragility of this planned energy transition. Speaking at the World Economic Forum in Davos Last week, Fatih Birol, executive director of the International Energy Agency, said he believed we were “in the midst of the first global energy crisis”.
During a separate discussion in Davos moderated by CNBC’s Steve Sedgwick, a panel of experts and business leaders addressed how the world can best find a way out of the turbulent situation it now faces.
“We are at a crossroads,” said Maria Mendelus, CEO of We Mean Business Alliance. “One would think that because of the energy crisis, it makes sense to invest in fossil fuels, but the opposite is true,” she said.
Mandelus argued that gas was now more expensive than solar or wind power. The goal of keeping global warming at 1.5 degrees above pre-industrial levels – main part From the Paris Agreement — she said, “She’s pretty much dead unless we speed up the transition.”
Mendelos said clean energy provided energy security, jobs, a healthy environment and cost competitiveness. “So it’s now or never…if you’re going to invest, you’d rather invest in renewables than…in an asset that is soon stranded.”
Patrick Allman-Ward is the CEO of Dana Gas, a natural gas company listed in Abu Dhabi. Alman Ward, along with Maria Mendelus, appeared on the CNBC panel and, perhaps unsurprising given his position, made the case for continued gas use in the coming years.
“As you can imagine, I am a big believer in gas as a transitional fuel and in combination, especially gas with renewable energy, to solve the intermittent problem,” he said.
“Because yes, we have to deal with renewables as fast as we can in order to achieve our net zero goals. But… the wind doesn’t blow all the time, the sun doesn’t shine all the time. So we have to solve the intermittent problem.”
The idea of using gas as a “transition” fuel that would bridge the gap between a world dominated by fossil fuels to one in which renewables are in the majority is not a new idea and It’s been a hotly debated source for a while now.
Critics of the idea include organizations such as the Climate Action Network, which is based in Germany and is made up of more than 1,500 civil society organizations from more than 130 countries.
In May 2021, CAN presented its position on the matter. She added, “The role of fossil gas in converting to 100% renewable energy is limited, and does not justify increasing fossil gas production or consumption, nor investing in new fossil gas infrastructure.”
Returning to Davos, Mendelus pondered the arguments put forward regarding the use of gas. “I get your point, you know, that the market is probably now going to demand more gas,” she said.
“But when I talk to companies that are now adopting and have a high risk for gas, they are looking for ways to change it. They probably can’t do it in the short term, but they know they are going to do it in the mid-term.”
Renewables have been a “competitive source of energy,” she continued, adding that the speed of deployment is now key. “So if I were to invest… I would be very careful not to invest in infrastructure that would get stuck.”