As 2024 draws to a close, ANGEA Senior Advisor Neil Theobald reviews the highs and lows of the energy industry for the latest edition of The Energy Diary. Progress, Neil writes, has been a mixed, with some areas making significant strides forward but difficulties emerging in others.
World energy demand has continued to rise in 2024, driven by economic growth especially in regions such as Asia, Latin America and Africa. Energy markets have stabilised after the disruptions of COVID-19 and the invasion of Ukraine. Even war in the Middle East did not significantly disrupt them in the way these first two events did. But the impacts of COVID and Ukraine have not gone and the lessons learned are clear. The global energy system, while remarkably flexible, is vulnerable to short to medium-term disruption of its supply chains and developing countries are least able to absorb the impact.
For some time, national governments have been focused on the three elements of the energy system that must be balanced – security, cost and environmental impact. Before the recent disruptions, many saw energy security as assured and the focus was on cost and the environment, but these events led to a reassessment of priorities and an increased focus on security.
Fossil fuels continue to supply more than 70% of global energy. Buildout of renewables, especially solar, is proceeding apace and outstripping growth estimates every year. But logistical challenges and the issue of solar and wind intermittency will continue to be difficult to manage. Indeed, the main issue is no longer installing solar panels, rather it is the development of cost-effective energy storage to firm the power grid and the buildout of network infrastructure. Many commentators miss that the easiest megawatt of non-firm renewable energy to add to an electricity grid is the first and the most difficult is the last, so the transition to very high percentages of renewables just becomes increasingly challenging.
COP29 in Azerbaijan yielded mixed results. The “Finance COP” did reach agreement on up to $US300 million per year by 2035 to support developing countries, but this amount was fiercely criticised as being far too little and over $1 trillion per year had been asked for. This outcome demonstrates the fundamental difficulty with the energy transition, and why announced targets are going to be extremely difficult. The global fight to reduce emissions will be won or lost in the developing world, but those countries do not have the resources to decarbonise in the timeframes required. The only route to even partial success is for financial support of unprecedented magnitude to come from richer countries. But these more developed nations are all going through financial difficulties of their own and have multiple competing priorities on spending. The public there do not feel rich and the political will for the level of wealth transfer required is not there. This unresolvable conflict will come to dominate the climate debate over the course of this decade.
The debate on nuclear ramped up in many countries during 2024. Objections to nuclear power are generally around safety, waste, cost and schedule. There are often ideological objections as well, with their roots in the campaign for nuclear disarmament in the 1960s, which are dressed up as one of the first four objections. Ideological objections will never be overcome no matter how safe, environmentally benign and cost-effective nuclear power becomes. The technology of nuclear power has made significant progress and new generation reactors have greatly advanced safety systems. Techniques to manage waste are also improving, however implementing an integrated nuclear waste management system has been a challenge everywhere. Cost and schedule are often cited as the principal concern, usually referencing projects where a single nuclear reactor has been built in a new jurisdiction. Experience of complex projects tells us that design one/build many is the only way to ensure costs are managed and nuclear is one of the best examples of this. The only way to success in any jurisdiction is for a bipartisan commitment to nuclear and the long-term political will to execute multiple projects.
This year has been a challenging one for the new energy carriers such as hydrogen and ammonia. The rapid reduction in cost of solar panels has not been mirrored for the electrolysers that produce green hydrogen feedstock. This, along with other technical challenges such as transportation, have led to multiple green hydrogen projects being cancelled or deferred during the year and optimistic targets for green hydrogen production are nowhere near being met.
Investment in fossil fuels has continued, especially natural gas and LNG, but it remains to be seen whether levels of investment will be sufficient to underpin increasingly intermittent power grids with gas-fired generation. The election of President Trump does mean that the pause in US LNG export permits to non-FTA countries is likely to be lifted early next year and provide more certainty for customers and governments around natural gas availability next decade.
In summary, 2024 saw great progress in some areas of the energy transition such as the rollout of solar generation, but in others the warning signs are ominous and make it unlikely that announced emissions targets can be achieved in the timeframes specified.
Neil Theobald has more than 40 years’ experience in the oil and gas industry, including 17 years at Chevron, where he was Vice President, Global LNG, Gas Supply & Trading. He has been a Senior Advisor to the Asia Natural Gas & Energy Association [ANGEA] since 2021.
ANGEA is an industry association representing LNG and natural gas producers, energy buyers, suppliers and companies in APAC. Based in Singapore, it works in partnership with governments and societies across the region to deliver reliable and secure energy solutions that achieve national economic, energy security, social and environmental objectives and meet global climate goals.
