The two events separated by thousands of miles have the same concern: Will the energy crisis threaten the goal of carbon neutrality?

This week, the most watched event in the global political and economic fields is undoubtedly the World Economic Forum held in the small Swiss town of Davos, and almost at the same time, in Daegu, South Korea, the 28th World Gas Conference hosted by the International Gas Union is also being held. Held in full swing.

Interestingly, these two events, which are thousands of miles apart, face completely different participants, and seem to be irrelevant, have the same concern, which is quite "coincidental": the current event organized by Russia and Ukraine. Will the conflict-induced global energy crisis ultimately threaten global efforts to transition to clean energy, and even the ambitious long-term carbon neutrality goals set by countries?

Worries about the World Gas Conference

The 28th World Gas Congress hosted by the International Gas Union was held in Daegu, South Korea from 23rd to 27th. The theme of this conference is "Sustainable Future Powered by Natural Gas". However, the price of natural gas, which has been soaring to record highs around the world, seems to be increasingly incompatible with the word "sustainable".

Energy industry executives at the meeting said that energy security is now a top priority for major importing countries, as forecasts of tighter natural gas supplies and price volatility in the next few years have made them generally jittery and could threaten global disengagement. carbon process. Executives at the meeting called for increased financing and investment in the oil and gas industry to increase supply and stabilize prices, and maintain the momentum of coal-to-gas conversion in recent years.

European liquefied natural gas (LNG) imports have recently hit a record as the conflict between Russia and Ukraine has caused European energy companies to worry about disruptions to natural gas supplies from Russia. That directly pushed LNG prices in Europe and Asia to record highs earlier this year, fueling local inflationary pressures and hampering efforts to switch from coal to natural gas to cut pollution and carbon emissions.

At this World Natural Gas Conference, Li Yalan, chairman of Beijing Gas Group, officially took over as chairman of the International Gas Alliance. "The geopolitical conflict has destabilized the gas market," she said in a speech at the conference.

Li Yalan added that the price of natural gas is too high for users to bear, which increases the possibility of coal returning. Natural gas supplies are facing tightness, especially in winter, which also undermines the confidence of governments and users in natural gas as an energy transition transition.

Notably, India, a key LNG growth market in recent years, has been consuming more coal and slowing spot LNG purchases due to high prices. Some European countries have also opted to increase coal use in the short term.

Chae Hee-bong, chief executive of Korea National Gas Corporation (KOGAS), said that with prices and volatility unacceptably high for buyers, stabilizing gas prices is a priority for the industry. "Prices need to stabilize to ensure long-term demand growth. If the current situation persists for a long time, some experts have said it will lead to demand destruction, especially in emerging countries," he said.

Yukio Kani, executive president of JERA, Japan’s largest power generation company, also pointed out, “The world has been working hard to decarbonize, and we do try to ensure sustainable energy, but we are facing serious challenges in achieving this goal. High prices have Marginalizing potential LNG buyers in developing countries.” JERA is investing in gas-fired power projects in Bangladesh and the Philippines.

Foresight at Davos

If it is reasonable for an energy industry event like the World Natural Gas Conference to worry that the current energy crisis will affect emissions reduction efforts. Then, a series of warnings from the Davos forum is undoubtedly more worthy of people's high vigilance.

Political and economic officials and business leaders at Davos this week have warned that the worst energy crisis in half a century is providing a new impetus to invest in fossil fuels and is disrupting the West’s shift to clean energy. transformation. As countries seek to reduce greenhouse gas emissions linked to climate change, producers may seize the opportunity to invest in traditional energy projects that Western governments have discouraged.

Fatih Birol, head of the International Energy Agency, said, "It is indeed reasonable to provide energy security and address this pressing and urgent problem, but this should not be confused with a new round of large-scale investment in fossil fuels. By investing in new coal-fired power plants, we have to say goodbye to the 1.5°C climate target."

Birol was referring to the ambitious climate goals set out in the Paris Agreement. Most of the world's largest carbon emitters pledged to abide by the accord at the 26th UN climate summit in Glasgow last year.

His warning was echoed by the US President's climate envoy John Kerry, who said, "The Russian-Ukrainian conflict has created some short-term options, and people will have to be realistic. But if someone uses this conflict and the current situation as an excuse, plan Building big infrastructure, that's dangerous."

Coal generation in Western Europe could reach 13 gigawatts by 2023, according to forecasts by Glenn Rickson, head of European power analysis at S&P Global Commodity Insights — the highest level since 2019 and nearly double his forecast this time last year. , the price of natural gas had not yet started to soar.

Joe Kaeser, chairman of Siemens Energy AG, said a basic energy assumption had developed in Europe over the past few decades, that while energy supply was unsustainable and not always cheap, it was at least reliable. , and the Russian-Ukrainian conflict completely overturned this assumption. "Now, that's clearly not the case," he noted.

Can the world turn a crisis into an opportunity?

For countries around the world, the solution to the current energy crisis is to increase the supply of traditional energy and even highly polluting coal, which is a "short-sighted" and most direct approach. Of course, it is one of the options, but it is not without other options. better choice.

For example, it may be time to take advantage of the opportunity to further increase investment in renewable clean energy, with some governments and businesses predicting that the crisis will accelerate the world's acceptance of low-emission alternatives such as wind, solar and nuclear. , and even finally turn this "crisis" into an "opportunity".

Last week, the European Union unveiled a 210 billion-euro plan to accelerate the pace of reducing its own reliance on Russia's fossil fuels and switching to renewable energy. This plan has been well received by many environmentalists.

"You're going to see a huge acceleration in green energy, and we're going to see a faster transition to clean energy all over the world," said British politician Alok Sharma, who is currently chair of the UN climate process, which last year hosted the The United Nations climate conference in Glasgow.

Medium- and long-term investments in fossil fuels also don't make much sense to some Western oil companies that have committed to an energy transition.

Mads Nipper, CEO of Orsted A/S, said, "There is nothing wrong with keeping some high-emitting assets in the business, but investing in more traditional capacity over the long term is a fatal mistake. From a purely commercial point of view, That kind of decision is insane, because when those assets come into operation, they're going to be stranded assets."

However, the above-mentioned measures to accelerate the transition to clean energy require the joint efforts of all countries and long-term planning step by step. At the same time, it is likely that the urgent need for short-term energy price surges will not be fully resolved.

So, at least for now, there are welcome changes, but they don't seem to be many...

Article source: Financial Associated Press