Many countries around the world faced a dilemma last year. Whether to look at fossil fuels to maintain energy security or rely on renewables to reach long-term goals.
In the aftermath of the pandemic, more and more countries have endured power outages, low inventories, and rising oil and gas prices. Despite investing billions of dollars in green technologies such as solar and wind, the output was unable to meet the enormous demand, making it extremely difficult.
Another problem is that Russia relies heavily on crude oil and natural gas exports, especially in Europe. The euro area was importing large amounts of energy from Moscow — 40 percent oil and 30 percent natural gas. Due to the harsh winter that struck the region and led to a decline in stockpiles, the European Union recently announced that it would gradually reduce its reliance on energy imports from Russia by up to two-thirds by the end of the year.
In recent years, many developed and developing countries have promised to invest more in green energy, such as solar panels and windmills, to eliminate their dependence on fossil fuels and reduce emissions.
But for the foreseeable future, more countries are returning to crude oil, coal and natural gas, with data showing that alternatives are not keeping up with significant consumption.
Germany’s Treasury Minister Christian Lindner told a local newspaper that he should reconsider a ban on new oil and gas drilling in the North Sea to reduce Russia’s energy purchases.
Germany does not approve new permits for drilling oil and gas in the region as part of a coalition agreement between Prime Minister Olaf Scholz’s Social Democratic Party, Greens and the Free Democratic Party (FDP) of Lindner. However, Lindner believes that this should be postponed due to recent geopolitical and market developments and the need for more fossil fuels in the country.
“We need to question the decision of the coalition agreement. This looks more economical due to global market price trends,” he told Tagespiegel.
“We encourage you to consider our overall energy strategy without disturbing our thinking about changes in the geopolitical background.”
Last year, Germany had coal as a country Main power supply Again, topping style. This was after the government planned to close all 84 coal-fired power plants and import 45% of their needs from Russia.
It is estimated that Germany’s anthracite imports will increase by 7.7% this year.
“Europe’s coal-fired power has remained at a high level since last year due to soaring gas prices, and it is likely that gas prices will continue to rise sharply this year,” said Refinitiv analyst Yang Kin. Stated. Note.
In recent weeks there has been speculation that the German government will postpone plans to close the remaining nuclear power plants. However, Berlin rejected this proposal.
Germany’s Deputy Prime Minister Robert Habeck said in a statement last week that he “again carefully considered whether long-term operation of nuclear power plants would help in this foreign policy situation.” “The answer is negative. It doesn’t help us.”
Gas and nuclear power still make up a significant part of Europe’s power grid, according to ING analysts.
“The future role of gas and nuclear will depend heavily on political choices regarding Europe’s future power system,” said Gerben Hieminga, senior sector economist at ING, and Maureen Schuller, head of its financial sector strategy. It says. report..
Are China and India environmentally friendly or stick to fossil fuels?
In September 2020, before the UN General Assembly, Chinese leader Xi Jinping vowed to achieve carbon neutrality by 2060.
Beijing is building more wind power than the rest of the world combined and is expected to grow stronger in capacity over the next five years.
At the end of last year, India also promised to achieve net zero emissions by 2070, including meeting half of the energy demand from renewables by 2030.
However, it may prove difficult for these two countries to succeed in this broader green-related pursuit as they purchase and mine more conventional energy.
The world’s second-largest economy experienced a gradual power outage nationwide last year. As a result, Beijing has revived coal consumption, approved the expansion of the mining industry, and began construction of coal-fired power generators. China still buys more than 30 million tons of coal per month, but is aiming to reduce imports and improve domestic production.
The National Development and Reform Commission (NRDC) is the country’s top economic planner and wants to increase domestic production by about 300 million tonnes and at the same time build a stockpile of 620 million tonnes as a fuel source.
Deputy Prime Minister Han Chang called coal the “last barrier” to China’s energy security.
The Government of India confirmed last month that coal production in January was 79.6 million tonnes, up 6.13% year-on-year.
India also plans to increase coal production by 75% to 1.2 billion metric tons by 2023 or 2024.
Authorities say they want to reduce their reliance on imports, but South Asian economies witnessed a plunge in coal inventories to very low levels in October. As a result, rolling blackouts occurred nationwide.
India is also reportedly considering buying Russian crude oil and other commodities at discounted prices.
How about America?
Even in the United States, where the administration is expanding its green energy agenda, coal imports remain strong and production is up significantly from the previous year.
The Energy Information Administration estimates that US coal production increased by more than 6% last week.EIA). Although it is also a net coal exporter, the country still imports over 5 million short tons.
Meanwhile, as prices soar, some industry observers believe that the US oil and gas sector could start increasing production.
Experts point out that companies are worried about drilling at full speed, whether because they are trying to reduce carbon dioxide emissions or because of regulatory uncertainty at the federal level. increase. However, this can change over time.
IHS Markit statistics Emphasize that, contrary to the White House’s proposal, private companies are steadily increasing production.
“In the long run, inventory depletion may emerge as a concern. Drilling inventory within the lower acreage remains abundant, but core acreage depletion has matured smaller in the coming years. It can manifest itself in unconventional play, “says IHS.
According to the US crude oil rig, it rose from 519 last week to 527 in the week leading up to March 11. Baker Hughes.. This is the highest number since April 2020.
“The technology that provides the energy needed for the United States does not yet exist in the world of green energy. We are confident that we can instrumentally and gradually increase the breakthroughs in solar and wind battery technology. But at the moment they aren’t. ” I have written Phil Flynn, author of the Energy Report.
October 2021, EIA forecast International Energy Outlook By 2050, its oil and gas will remain the world’s top source of energy, with renewables accounting for about a quarter of the international energy mix.
In his outlook presentation, Chris Namovic, leader of the EIA’s electricity, coal and renewable energy modeling team, said, “We see significant impacts from carbon intensity reductions, such as renewable energy growth.” That said, demand is still growing and there is still a portion of the demand that is most economically met by the burning of fossil fuels. ”
Overall, soaring fossil fuels reflect significant demand for these products, strategists point out.
Coal prices are expected to exceed $ 500 per ton this year, according to the company. Restad Energy.. West Texas Intermediate and Brent Crude barrels are over $ 100. Natural gas trades for about $ 4.50 per million British thermal units (Btu).
Strategyians claim that fossil fuels will continue to exist in the global economy until 2050, until renewables can play a role and remain reliable in all kinds of conditions, from markets to weather. doing.
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Andrew Moran covers business, economics, and finance. He has been a writer and reporter in Toronto for over 10 years and has signed Liberty Nation, Digital Journal and Career Addict. He is also the author of “Cash War”.