The Energy Diary: the net zero discussion is changing and so must our thinking

Each month, ANGEA Senior Advisor Neil Theobald provides his viewpoint on key issues in energy transition. In this first edition, Neil assesses the global objective of net zero, where – after the optimism of CoP26 in Glasgow and its ambitious emissions reductions commitments –  focus is now turning to realities and real world consequences of delivery.

The global road to net zero is so challenging that it is hard to see a credible pathway to success and it is not clear which of many strategies will be the most effective in moving towards mid-century targets.  We do know that the development of technology will be the primary way to make significant progress, but it is not clear which technologies will bear fruit and which will be dead ends.

Despite this uncertainty, many have firm and seemingly immovable views on which technologies are appropriate and which aren’t.  Technologies that could make significant contributions are being ruled out based on ideology rather than logic.

An example is nuclear power, which has one of the lowest carbon footprints of any of the power generation alternatives.  Opposition to nuclear power is now usually couched in economic terms – that it is too expensive or too slow, but the reality is that the opposition is often ideologically based.

Contributing to the poor cost and schedule outcomes of recent nuclear projects has been the on-again, off-again policy support for nuclear power in many countries.  With a long-term commitment to investment, costs could be driven down through a “design one, build many” approach and nuclear could provide a lower-emissions, reliable baseload energy source in many countries.

Safety and waste management concerns must also be addressed, and community concerns listened to, but nuclear is a technology that is understood and has a realistic pathway to making a significant contribution to our emissions targets while supporting power grid stability and reliability.

Another example is carbon capture and storage (CCS), which will be vital if we are to have any chance of reaching our targets as it allows the continued use of available fossil fuels while storing emissions.  This technology has been around for decades and there is a clear pathway to scaling up capacity.  Opposition is again often couched in economic terms, but is rooted in ideology – that using CCS is somehow cheating by allowing the continued use of fossil fuels.

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Given the challenges of the alternatives, ruling out nuclear and CCS based on ideology makes no sense.  Seeking perfect rather than pragmatic solutions will only lead to higher rather than lower emissions and overall costs.

Completely rewiring the global economy over a few decades is an immense task.  History tells us that strong incentives must be in place and that the new arrangements must be cheaper or better than the old.  Government incentives can go part of the way to kickstarting a transition, but if the fundamentals still do not support it, it is like swimming upstream.

A cursory analysis of global emissions data makes it clear that the developing world, including emerging economies in Asia, will determine whether the energy transition is successful.

The challenges in the developing world are different.  It’s not just about energy security, it can be about providing affordable and reliable energy in the first place.  Asserting that developing countries should forego the economic development that the developed world has already enjoyed is unlikely to be persuasive and is often resented.  Developed nations have not committed to supporting the transition in the developing world in anything like the required way and the reality is that it’s probably politically impossible for them to do so.

Several conclusions can be drawn.

Firstly, technology is critical.  Investment in technology must be increased across the board, from both public and private sources.  Picking technology winners too early is usually unsuccessful so a broad approach is essential.

Secondly, we must not rule out potential solutions based on ideology rather than a dispassionate evaluation of risks and benefits.

Thirdly, we must be realistic about the situation in the developing world.  Enforced energy abstinence is not realistic and shows no signs of gaining any traction.  Preaching from the developed to the developing world may be successful in extracting unrealistic commitments but does little to address the problem when those commitments prove impossible to meet.

To finish on a positive note, the discussion and understanding of these challenges is growing, as is the appetite for realistic rather than idealistic solutions.  Our success in the energy transition will depend on it.

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 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.

Main image by Amy Elting on Unsplash