The Climate of Business #25: Breaking up with fossil fuels

I am still speechless about these last days. The events in the beginning of the war last week made me feel it was inappropriate to be continuing with the "business as usual" content, hence why I didn't publish a newsletter last week.?

This week we are back with a desperately needed discussion on the energy transition. Once this war is done and the Ukrainian nation starts rebuilding, Europe and the rest of the world would need to put efforts also into the swift shift away from the dependency on Russia, which when you look at statistics isn't a straightforward process.

But with the willingness of governments, the switch seems possible overnight.

Climate Change Reality

Rapid drop in emissions due to COVID played a key role in record rainfall in China (BBC)

The mystery of methane gone missing (Vox)

Study suggests tropical forests can regenerate naturally — if we let them (Mongabay News)

Alaska worries for its salmon amid warming Arctic Waters (Reuters)

Expansion of two antarctic flowering plants is a sign of the continuing effects of climate change in the continent (Science Alert)

Ski resorts no longer trust there will be reliable snowfall in warming climate (NPR)

Earth’s Water Cycle is being intensified at twice the predicted rate (Guardian)

Earth’s Coldest Forests Are Shifting Northward With Climate Change (SciTechDaily)

Scientists ask what difference would more reports make if no action is taken? (NY Times)

Business Climate Reality

Kristalina Georgieva: the IMF boss tackling Covid, the climate crisis and, now, war (The Guardian)

German officials condemn climate protests at roads (ABC News)

EU countries to ask top diplomat to increase climate action (Reuters)

How can business leaders lead the climate ambition project? (Forbes)

How countries should prepare for climate migration? (NPR)

Tension and trade-offs between protecting biodiversity and avoiding climate change (The Hill)

China Banished Cryptocurrencies - Now “mining” is even dirtier (NY Times)

What to know about the UN’s Major upcoming climate change reports (UN Foundation)

Elsevier leading climate research publisher helps fuel oil and gas drilling (The Guardian)

Reality Check

In line with the current events, this week I decided to dedicate the newsletter to the energy transition, one desperately needed at the moment. But let's get the basis first: what is energy transition?

It is the shift to from fossil-based systems of energy production and consumption to renewable sources (wind, solar and including occasionally lithium-ion batteries.

If you look at the governmental models and the net zero plans of countries, the plans consider, given the current context, a slow shift which will take decades. The slowness is justified by the complexity of transitioning all sectors. The International Energy Agency forecasts the world’s total renewable-based power capacity to increase 50% between 2019 and 2024, but as we continue consuming even energy than before this statistic doesn't demonstrate our capacity to give up on our addiction to fossil fuels.?

The energy transition is a multidimensional story which is influenced by

Politics

For countries like Russia, Iraq, Kuwait, fossil fuels are a lifeline. These countries haven't spent much time thinking about technological advancement and innovativeness in the way they build their economy, as they are "blessed" with abundance of natural reserves that the world needs until it transitions. To keep their political statuses stable and their money inflow consistent, such fossil fuel sellers play with tactics like danger of cutting access and increasing prices. The expectation of a country like Russia that supplies half of the energy of Germany is that the rest of the world would move too slow to become sustainable, hence their position is stable.

The Scaling of Technology

The good news is that have the technology for the transition - pumped hydroelectric, carbon capture and storage, compressed air, flywheels, batteries, thermal energy storage - but it is costly or not distributed or simply not available at scale. There is a necessity for changes in transmission flow patterns, we need industries work alongside with governments for this transition to happen. The main alternatives to oil and gas energy include?nuclear power, solar power, ethanol, and wind power. These are not unfamiliar sources of energy, as demonstrated by the fact that in some regions of the US and Europe, wind power has become cheaper than traditional high-carbon energy resources.

The Implementation of Technology

Generating power from renewables is only one element of the equation of the energy transition. Mass implementation and introduction of?electric transportation infrastructure?and energy storage, combined with more significant use of tech to improve energy efficiency, should also be part of the planning.

Economy

One of the reasons why Russia has been comfortable to make such an outrageous attack on Ukraine is their assumption Europe's energy dependency will stop the Commission, the UK and the rest of the connected to the EU economy countries to respond with drastic measures.

Europe even today pays around 700M EUR a day to Russia for access to energy, given the reliance of these sources as presented below.

What comes next?

The good news is that a lot of smart people have spend decades on thinking how this transition can happen. Today the International Energy Agency published a 10-point plan to reduce the EU's reliance on gas from Russia (here). The suggestions are a logical mix between alternative sources, better storage capacity, bioenergy, heat pumps.

10 days ago it would have been unimaginable to think the transition can happen in a swift manner. Today the discussion is different.

My thoughts go with all the victims of this war.

Carbon Price

Understandable drop due to the war in Ukraine.