A successful energy transition will require the destruction of oil demand

There is a dark secret about the energy transition that politicians and energy regulators all too often avoid. Unfortunately, if this issue is not addressed, the energy transition may never take place.

The world consumes ever-increasing amounts of energy as its total population grows, driven by emerging markets which, in addition to strong population growth, are seeing an increase in the average wealth of their citizens. Any increase in wealth leads to greater consumption of everything, including energy. And if countries are distracted by discussions about climate change and rush to meet emissions targets and renewable capacities, a shortage of energy supplies ensues.

This is what we are currently seeing in Europe and Asia. Strict regulations on carbon dioxide emissions and a campaign to discourage investment in fossil fuel development in Europe have increased the continent’s heavy dependence on imported energy despite ambitions to increase energy. energy self-sufficiency by building massive wind and solar energy capacity.

Meanwhile, in Asia, economies were recovering from the closures and energy consumption caused by the pandemic. Suddenly, there was too much demand and too little gas, coal and even oil. And while the supply of oil could be increased relatively quickly because OPEC + has curbed the supply, gas and coal have proven to be more delicate due to factors such as underinvestment and plant closures. .

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Despite the underinvestment, the cold shoulder of asset managers, the environmental protests and the denunciation of natural gas as a bridge fuel between the era of fossil fuels and the post-fossil era, the demand for these – demand for energy of any kind as long as it is reliable – has been on the rise. And that is what must change if the Paris Agreement agenda is to be met.

A group of British researchers say it frankly Last year. In a report calling not for net zero but for absolute zero, they suggested that “we must shift to the use of electricity as the only form of energy and if we continue the impressive growth rates of today in non-emitting production, we will only reduce our energy consumption to 60% from current levels.

A reduction of “only” 40% in energy consumption would be quite an achievement. The authors of the above report have proposed things like switching to heat pumps and small cars among the things people can do to affect this particular change, as well as making more use of public transport and purchasing more efficient equipment. .

Let’s forget for a moment the notion of planned obsolescence, which makes some of the proposals impossible to implement, and focus on the whole idea of ​​reducing energy consumption. There’s a reason this idea isn’t among the most popular energy transition topics among decision makers. No politician has ever won an election by telling voters to consume less of anything. The reason no politician has done this is that telling people that they should eat less of anything causes anxiety and fear, and ends up losing the election.

Yet, as the current state of energy availability in Europe and Asia shows, unless we somehow kill the demand for energy, the chances of a successful energy transition are slim. Human history is a clear example that, without state intervention, the trend is always for consumption growth – except during recessions, when we tighten our belts, only to loosen them again as soon as the economy starts. begins to recover.

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In addition, there are already hundreds of millions of people without access to electricity. Much talk of the transition has focused on providing clean, affordable electricity to these hundreds of millions of people, and yet little has been done because it is simply unprofitable. And more millions are coming.

There has been a concerted effort on the part of politicians and institutions to present the energy transition as obvious. We just replace dirty oil, coal and gas power plants with solar and wind farms, and voila, we get clean, affordable energy. As British Prime Minister Boris Johnson said, it’s easy to be green. Only this is not the case.

Being truly green would require, in addition to massive investments in large-scale renewable energy installations and storage, a substantial reduction in energy demand. It’s not yet clear whether that would mean ditching cars and dryers in favor of bikes and natural sun and wind drying – and if that would be enough.

For now, the idea is to switch to electric cars rather than avoiding personal transport altogether. And there is already opposition to the mandatory phase-out of ICE vehicles in parts of Europe. Do you remember the demonstrations of yellow vests in France? They were triggered by a proposal to increase fuel taxes for environmental purposes. Perhaps this was meant to undermine demand for fuel, but instead led to some pretty violent protests.

Destroying energy demand is the only way for the energy transition to work. And yet, this is the one thing no one wants to do, not directly, at least, because it could be dangerous.

By Irina Slav for Oil Octobers

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Felix J. Dixon