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 address and resolve major crises – Many crises are linked – in many ways.
In this challenging context, the energy market has been transformed, with gas and oil soaring prices and concerns about supply security – Russia is a major exporter of hydrocarbons – heightened after the war in Ukraine.
All of the above is happening at a time when major economies and major companies are formulating plans to switch from fossil fuels to low- and zero-emission alternatives.
Events in Europe over the past few months have allayed the fragility of this planned energy transition. Speaking at the World Economic Forum in Davos Last week Fatih Birol, executive director of the International Energy Agency, said he thinks we are in the midst of the first global energy crisis.
In a separate discussion at Davos moderated by CNBC’s Steve Sedgwick, a panel of experts and business leaders covered the best way the world can find a way out of the turmoil. turmoil it is facing.
María Mendiluce, CEO of We Mean Business Coalition, said: “We are at a crossroads. “People may think that because of the energy crisis it is reasonable to invest in fossil fuels, but the opposite is true,” she said.
Mendiluce argues that gas is now more expensive than solar or wind. The goal of keeping global warming at 1.5 degrees above pre-industrial levels – an important part of the Paris Agreement – she said, “is pretty much dead unless we accelerate the transition.”
Clean energy offers energy security, jobs, a healthy environment, and is cost-competitive, Mendiluce said. “So it’s now or never… if you’re going to invest, you’d rather invest in renewable energy than… in an asset that could become depleted soon.”
Patrick Allman-Ward is the CEO of Dana Gas, an Abu Dhabi-listed natural gas company. Appearing alongside María Mendiluce on CNBC’s board of directors, Allman-Ward, perhaps unsurprisingly with her position, has made the case for continued gas use in the years to come.
“As you can imagine, I am a firm believer in gas as a transition fuel and the combination, especially gas with renewables, to solve the problem,” he said. continuous.
“Because yes, we have to use renewables as quickly as possible to reach our net zero goal. But… the wind doesn’t blow all the time, and the sun doesn’t shine all the time. So , we have to solve that continuity problem.”
The idea of using gas as a “transitional” fuel that would bridge the gap between a world dominated by fossil fuels and a world where renewables dominate is not a new idea, and has been the source of heated debate for some time.
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 released its position on the matter. “The role of fossil gas in the transition to 100% renewable energy is limited,” it said, “and does not justify increased fossil gas production and consumption, nor investment into the new fossil gas infrastructure.”
Back in Davos, Mendiluce pondered the arguments made about the use of gas. “I see what you mean, you know, maybe now the market will demand more gas,” she said.
“But when I talk to companies that are gas dependent and high-risk, they’re looking for a way to change. Maybe they can’t do it in the short term, but they know they will. that’s midterm.”
She went on to assert that renewables are a “competitive energy source”, adding that speed of deployment is now key. “So if I invest… I’ll be very careful not to invest in the infrastructure that’s going to be difficult.”
