From the COVID-19 pandemic and supply chain shocks to rising inflation and Russia’s invasion of Ukraine, governments and businesses around the world are trying to tackle and solve major crises – many of them intertwined – many. on the fronts.
Against this challenging backdrop, energy markets are in turmoil gas And Oil Fears over rising prices and the security of supplies – Russia is a major exporter of hydrocarbons – grew after the war in Ukraine.
All of the above is happening at a time when major economies and large companies are planning to move away from fossil fuels to low and zero-emissions alternatives.
Events in Europe over the past few months have turned the fragility of this planned energy transition into sharp relief. Addressing the World Economic Forum in Davos Last week International Energy Agency executive director Fatih Birol said he thought we were “in the middle of the first global energy crisis.”
During a separate discussion at Davos, moderated by CNBC’s Steve Sedgwick, a panel of experts and business leaders addressed how the world can navigate the kind of turmoil it now faces.
“We are at a crossroads,” said Maria Mendilus, CEO of the We Mean Business Coalition. “One might think that, because of the energy crisis, it makes sense to invest in fossil fuels, but it’s the opposite,” she said.
Gas was now more expensive than solar or wind, Mendelus argued. Target to keep global warming at 1.5 degrees above pre-industrial levels an important part The Paris Agreement – was, he said, “very dead unless we accelerate the transition.”
Clean energy provides energy security, jobs, a healthier environment and was cost competitive, Mendilus said. “So it is now or never…
Patrick Allman-Ward is the CEO of Dana Gas, a natural gas firm listed in Abu Dhabi. Appearing with Maria Mendilus on CNBC’s panel, Allman-Ward, perhaps unsurprisingly given his position, made the case for continued use of the gas for years to come.
“As you can imagine, I am a firm believer in gas as a transition fuel and the combination, especially the combination of gas with renewable energy, to solve the intermittent problem,” he said.
“Because yes, we need to move to renewable energy as soon as possible to achieve our net zero objectives. But … the wind doesn’t blow all the time, and the sun doesn’t shine all the time. That’s why we have that intermittent to solve the problem.”
The idea of using gas as a “transition” fuel that would bridge the gap between a world dominated by fossil fuels, where renewable energy is the majority, is nothing new. It has been a source of heated debate for some time now.
Critics of the idea include organizations such as the Climate Action Network, which is headquartered in Germany and includes more than 1,500 civil society organizations from more than 130 countries.
In May 2021, CAN presented its side on the matter. “The role of fossil gas in the transition to 100% renewable energy is limited,” it said, “and neither the increase in fossil gas production nor consumption justifies investment in new fossil gas infrastructure.”
Back in Davos, Mendilus considered the arguments given for the use of gas. “I get your point, you know, that maybe the market will demand more gas now,” she said.
“But when I talk to companies that are now dependent and have high risk in gas, they are looking at ways to move that. Maybe they can’t do it in the short term, but they know that They’re going to do it in the medium term.”
As renewables, he said, were a “competitive source of energy”, adding speed to deployment was now important. “So if I had to invest … I would be very careful not to invest in infrastructure that would get bogged down.”