Market forces |
Jeremy Wilcox is managing director of the Energy Partnership, an independent Thailand-based energy and environment consulting firm 8/27 Sukhumvit Soi 8, Klongtoey, Bangkok 10110, Thailand | T: +66 2 653 1263 | Mobile: +66 860993375 | S: energypartnership
The road to net zero
The victory of Donald Trump in the US presidential election has been called the greatest political comeback, but even though the president-elect is an avowed climate denier there will not be a comeback for fossil fuels. The pathway to decarbonisation is now past the point of no return.
The week after the US election delegates gathered in Baku for COP29, the UN’s annual feelgood climate conference that always fails to deliver on its goals. The irony has not been lost on observers that Azerbaijan’s wealth is from oil and gas with the government seeking to use the climate jamboree to further fill its coffers with new fossil fuel deals. The value of COP29 was further reduced by the leaders of China and the USA, the world’s leading emissions producers, declining to attend.
In his conference address UK prime minister Keir Starmer urged Trump to learn the “lesson from history” and back the shift to green energy. He will not. And in his opening address Azerbaijan president Ilham Aliyev said countries should not be embarrassed by selling fossil fuels that he called natural resources and a “gift from God” like other natural resources. And he presciently called out the political hypocrisy of the West that lectures other countries on emissions having built their economies on carbon. And as if on cue, Starmer announced that the UK will set an 81% emission reduction below 1990 levels target for 2035. Apart from carbon virtue signaling the target will have no climate impact, the UK produces just one percent of global emissions, and this will not be a pied piper moment. The climate debate has moved on from whether rising temperatures are a natural occurrence or are caused via emissions. The debate is now focused on the cost of decarbonisation and net zero. This is the approach that Trump will likely take, setting out the socio–economic cost of closing the US coalfields and the additional costs from subsidising renewable energy that, 44 years on from the world’s first windfarm in New Hampshire, has not seen the technology sufficiently commercialised to obviate the need for subsidy support. Trump will also pull back on the Biden administration’s rules on climate and air pollution, including the Inflation Reduction Act that provides federal subsidies to fuels that produce fewer emissions, and he is expected to end the review of non-FTA export licenses for US LNG plants, a Biden initiative driven by the environmental lobby. From an energy perspective a Trump presidency is good news. The removal of environmental restrictions will increase energy
production and lower prices. Lower oil prices will weigh on LNG cargoes that are priced out on an oil index (mainly Qatar) while rising US export capacity from removing restrictions on non-FTA export licences will also weigh on LNG prices. Lower LNG will also weigh on natural gas prices and, as gas prices set the marginal cost of generation, will lower electricity prices. Starmer’s approach will also progressively lower energy costs as renewable energy displaces gas in the generation mix, although as the state-owned National Energy System Operator (NESO) notes in its Clean Power 2030 report, to decarbonise Britain’s power sector by 2030 will require a four to fivefold increase in demand flexibility, an increase in grid connected battery storage from 5 GW to 22 GW, more pumped storage and major expansions in onshore wind (from 14 GW to 27 GW) and solar (from 15 GW to 47 GW) along with nuclear plant life extensions. NESO added that an investment programme averaging £40 billion annually would be needed to achieve the 2030 target. The approaches of Trump and Starmer represent two extremes in addressing the energy trilemma; Trump believes in ensuring energy security in the knowledge this will improve affordability but at the cost of delaying sustainability, while Starmer favours accelerating decarbonisation to guarantee sustainability in the expectation this will improve affordability but with the risk of endangering supply security when winds don’t blow and the sun doesn’t shine. Both approaches also present a different economic cost. Trump’s approach will be effectively cash positive as renewable subsidies and tax breaks are rolled back, while as previously noted, Starmer’s approach will cost £40 billion annually, and while this may not be directly recovered in energy tariffs it will be recovered through some form of taxation as this Labour government does not like economic black holes. There is though, potentially, an alternative approach and one that could evolve from the
Trump presidency. Elon Musk, who has been a vocal supporter of Trump and has been handed the co-lead in the new Department of Government Efficiency, is a champion of decarbonisation. But unlike the conventional pathway to reducing emissions by removing all emission sources Musk favours the technological approach.
If the industrial revolution seeded climate change, then the technological revolution that followed should provide the solution. Yet technology advancement has mostly been focused on enhancing renewable energy efficiency. The exception is carbon capture and storage (CCS). While CCS has been put forward as a technological solution it faces both environmental and political issues, with the technology also not proven to be deliverable at scale. Environmental objections are based on the risk of carbon leakage, while the need for additional energy to run the CCS makes generation plant operation less economical, and then there is the political issue that using CCS provides an excuse to continue using fossil fuels. If CCS technology could be advanced to remove leakage risks and make its operation more economical it would accelerate the decarbonisation pathway, particularly in fast growing economies that are reliant on coal. While there is no suggestion this is even close to being on Trump’s agenda it surely fits with the aims of his new Department of Government Efficiency to slash excess regulations, cut wasteful expenditure and bequeath a fit and efficient government. Replacing the layers of regulation, extensive subsidies and tax breaks in the green energy sector with a carbon efficient conventional energy system would be a worthy bequest. And if Musk plans to put a man on Mars, then the little matter of making CCS a viable technology should be a no-brainer.
The [climate] approaches of Trump and Starmer
represent two extremes in addressing the energy trilemma; Trump believes in ensuring energy security … at the cost of delaying sustainability, while Starmer favours accelerating decarbonisation to guarantee sustainability
8 | November/December 2024 |
www.modernpowersystems.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45
