Daniel Yergin’s Four Biggest Challenges of the Energy Transition

 

     Energy guru Daniel Yergin recently pointed out what he sees as the four biggest challenges of a transition to green energy. These are: 1) maintaining energy security – as recent geopolitical events have shown, we have a clear need to keep existing forms of fossil energy (80% of global energy) in sufficient supply at reasonable cost. Avoiding price shocks is important. Relying on suppliers like Russia and Iran is not smart nor feasible. Reduced investment in fossil fuels has taken a toll on Europe and other places and is now being increased. This also perhaps includes maintaining grid reliability, which could be considered a kind of energy security. 2) scaling up – change will happen slowly as scaling up is a major challenge. Important considerations include the fact that heavy industry is almost entirely reliant on existing fossil energy. These include what Vaclav Smil calls the four essential pillars of modern civilization: steel, concrete, plastics, and ammonia (for fertilizer). Those industries will take time in decades decarbonize even partially. 3) developing countries need the affordable energy access provided mostly by hydrocarbons to become prosperous. They need modern reliable energy systems and cannot afford to pursue renewables and deal with the variability and intermittency. 4) the demand for metals and minerals. The supply of metals and minerals must increase manyfold in order to supply what is needed for planned increased deployments of solar and wind generation, EVs, and batteries. This will not be easy, cheap, environmentally benign, nor well received by people living near mines and some governments. Chile just rejected a huge copper and iron mine project. Columbia just called for no new oil and gas exploration in the country. Solar, wind, and electric transmission projects are facing numerous public opposition hurdles. Demand for these minerals and metals is likely to lead to more price spikes which will inflate project costs.

     Each of these challenges is daunting. Each will require huge expense, overcoming logistical challenges, policy changes, and perhaps most important time. Simply throwing money at these issues will not be enough. Thus, we need to consider that many of these aspirational net-zero pledges and mandates will get further behind schedule and ultimately not be met in the time frames imagined. There also needs to be more pushback against those who unrealistically assert that we can decarbonize fast and deep. It is just rhetoric. I would venture that to globally decarbonize fully, maintaining reliability, by 2050 would take several hundred trillion, perhaps even close to a quadrillion dollars.    

 

References:

 

The Energy Transition Confronts Reality. Daniel Yergin. Project Syndicate. January 23, 2023. The Energy Transition Confronts Reality by Daniel Yergin - Project Syndicate (project-syndicate.org)