Reading through the WSJ this morning I wanted to underscore a thought I’ve had on the future of energy-the 2020s will be the decade of an energy mix. Renewables will come into the picture in a big way this decade, but it doesn’t matter if you spend a dollar or a trillion dollars today, they are still years off. Consumer habits have to change as well since 97% of cars on the road today are fossil fueled.
The “mix” of energy will have traditional oil producers competing with their take on carbon neutral fuels against the picturesque alternatives such as wind and solar. Hydrogen is also trying to make an entrance, and it will be fascinating if LNG infrastructure and knowledge will help to transition to such a fuel. To capture this moment at another time in history, look at the automotive industry in the 1920s, where steam, battery, and gas cars competed for acceptance. Examples of competition among fuels are already here such as oil produced with wind energy (already happening in west Texas with Exxon) and renewable fuels being produced by tradition refinery companies (Phillips 66 already doing this in California).
It would seem that one political philosophy will push a narrative that all energy must be electrified, but I’ve thought that there would be an event that would cripple an electric only infrastructure and change the opinion of the public. This could be a cyber attack on an offshore wind grid, a chip shortage, or a drop in industrial production due to restricted electrical supply. While I do believe in wind and hope it brings many stable jobs to Mariners, I believe this decade will be one of an energy “mix” where we see a “revenge of the old economy” and oil prices rising among scarcity concerns, both legitimate and panic.
Quoted from the WSJ article “Climate Policy Meets Cold Reality”
In short, all of Europe’s green chickens are coming home to roost. Several U.K. retail electricity providers have collapsed in recent weeks because of the surging price of gas. Energy experts warn that some German power suppliers are in danger of going insolvent. Germany’s electricity prices, which were already the highest in Europe because of heavy reliance on renewables, have more than doubled since February.
Skyrocketing power prices have caused U.K steel makers to suspend production. A former energy adviser to the U.K. government warned last week that the country’s energy shortage this winter could prompt a “three-day working week”—a reference to the coal and rail worker strike in 1974 that caused the government to ration energy for commercial users. The European Steel Association has warned that the Continent’s producers are becoming globally uncompetitive. Fertilizer producers, which use gas as a feedstock, are raising a fuss. Norway’s Yara International plans to curb 40% of its fertilizer production capacity in Europe. U.S.-owned CF Industries earlier this month halted operations at its fertilizer plant in northeast England, threatening downstream businesses.