How Relevant are Transformation of Year 2022?

Although world’s biggest economies are relatively well protected many are not as food price that has soared almost 75% in March-April 2022.  Securing food supply happens to be societal and environmental priority – but, about half the food produced is lost at / near farm during / just after harvest – tomato happens to suffer the most compared to other vegetables as about 75 million tons are lost every year.

Troubles across China, Europe and the United States may soon drive towards a serious global recession.  Europe has been impacted by Ukraine war as prices have shot up almost eight fold adding to energy crisis and tightened monetary policy.  Understandably, effect of war seems more severe than Covid-19.  The impact on weather and energy especially in Europe – record breaking heat wave, uncertain energy supply due to Russian energy products while, Pakistan was devastated by floods calls for better strategies for the future Base load power delivery in Germany touched a new record in 2o23 which was six times higher.  Energy use accounts for 83% of carbon dioxide emission with coal contributing 35% followed by oil at 31% and natural gas at 17%.   

DEVELOPMENTS IN 2022

Some reports, cautioned saying that 2022 would trail 2020 as the worst year for global poverty so far, during this century.  There is a need for co-ordinated response by both public and private sectors towards sustainable and inclusive growth as business, economy and society are interlinked.

About 3000 companies committed to net-zero pathway in Europe and the United States in line with major climate legislation, before COP 27.  It is estimated that eleven high potential value pools could be worth $12 trillion of annual revenues by 2030 with net-zero transition advancing.

With the emphasis on carbon neutrality, the world witnessed interesting developments in the year 2022.  New technologies, policy and market environments reorientation and the new levels of turbulence were a few of them to take note.

Those familiar with the mandate of COP26 towards net-zero targets could feel positive as they seem either in place or under discussion covering almost 90% thus giving a hope of cooler future.  Since they are in fact for the future, they were asked to return by the end of 2022 with an upgraded target for 2030.  More importantly, United States and China have truly ambitious decarbonisation plans.  In addition, some of the major coal utilizers (Vietnam, Indonesia and South Korea) committed to phasing out coal in the next one or two decades.  However, some of those countries still have coal power under design or under construction.  Thus, it reflects a revisit of investments plans to support transition during 2022 and even beyond.  Many have realized the benefit of opting for renewables especially wind and solar as statistics show additions of almost 290 MW in 2021.  But, this initiative needs to be either doubled or even dribbled at the current level and pretty well soon.  Although hydrogen deserves attention as the new records in terms of megawatt and finance are in pipeline.  National hydrogen strategies seem to encourage the ambitious plans of EU on 80 GW electrolyser capacities jointly with partnering countries by 2030.  It is however still a waiting time to see hydrogen being promoted as ‘Silver Bullet’ before we would get clarity on the options including hydrogen.  Market volatility deserves a close look as fuel price fluctuations are hoped to come down with carbon prices staying up.  Weather may play a role in generation combined with short and long term back up.  While the price of electricity need not show an increase, decarbonisation road might threaten bumpy in terms of price.

The year 2022 witnessed some of the unprecedented disturbances – transformation of geopolitical order, dominant technologies reaching a saturation point, age acceleration in many populations and the transition to clean energy which could not have been easy seemed much more difficult.

The world seems marching towards the next era (2020) after Post-war boom (1940), Era of contention (1960) and Era of markets (2000).  One could witness multipolar world with global connect co-existing with increased polarization supported by beginning of transversal technologies, improvement in health and social inequalities, affordable transition to lo-carbon energy and outgrowing debt enabling orderly stabilization.

ENERGY PREDICTIONS FOR 2023

Many factors like, inflation, escalating demand for power, coal usage, Ukraine and Russia war conflict, weather impacting, energy delivery and increasing renewables challenged the energy sector.  More importantly, each one of them cried out to become a higher priority and some even conflicting energy transition goals.

It is imperative that energy demand is likely to rise despite inflation and high fuel prices and one has to balance a competitive price of electricity with customers through additional power generation.  This is likely to reflect the character of the units operating in many ways – best maintenance, adequate spares, Operators training to use simulators and most importantly, securing fuel supplies.

The situation is no different in ASEAN countries as the renewable integration has been challenging though the government is pushing for it.  One of the suggestions to tide over this challenge is to opt for Battery Energy Storage system (BESS) as the growth will reduce the pricing would get reduced.    This becomes imperative in the light of ASEAN energy grid to ensure sufficient energy.  This calls for ‘Connectivity’ an important tool for fulfilment of SDG 7 and integrate larger share of renewable energy.    This road map encompasses several demands such as, political will, harmonising policies and regulations, finance and building the right human and institutional capacity toward connectivity.  Bilateral agreements for cross border power trade to ensure affordable and sustainable power.  More investments both at the national and international level towards grid build and reinforcement would ease grid finance.  These efforts are believed to be fulfilling the decarbonisation goals in tune with next energy prediction.

The current efforts although should have come much earlier may prove insufficient in handling carbon emissions currently.  While the new induction of renewables, hydrogen and bioenergy are indeed important they may not be sufficient as all countries must work collectively towards net-zero by 2050.  Technologies like CCU, CCS or H2 demand incentives to hard-to-abate sectors  - high heat industry or heavy transport.

There is a greater responsibility to safeguard welfare of others (manufacturing, commercial, industrial, utilities and food and health sectors) through safe, reliable and economic power either directly or indirectly.  Combating poverty is believed to help walk that extra mile towards better future not only for the present but even future generations both locally and globally.  Governments and energy firms jointly need to aim at a turnaround in energy security, accessibility, affordability and sustainability. 

Stable and accessibility of electricity to all the darkest corners around the region should be the prime mission. More importantly, it should be affordable from a sustainable energy supply.

While the predictions for 2023 seem encouraging, it calls for lots of finance to achieve 2030 sustainable goals and maintain net zero targets.  In order to achieve this goal, two prime things need to happen – one, allow private finance for grids and second transparent and stable regulation with predictable projects to increase investors’ confidence.   This goes with an eye on digitalization and automation as well.  Assessment of environmental impact towards low carbon future stabilizes the strategies on decarbonisation solutions.

There are a number of events already lined up towards COP28 starting with Sustainable Investment Forum Europe May 2023; Climate Innovation Forum June 2023;  Sustainable Investment Forum North America September 2023;  Climate Action Innovation Zone at COP28 December – Sustainable Innovation Forum 4-5 Dec and Hydrogen Transition Summit.  One would get a clarity on the relevance of 2022 developments by Dec. 2023.

CONCLUSION:

A K Shyam  373  First Main  First Cross  Vidyaranyapura Post  BENGALURU – 560097. Email: akshay1948@gmail.com   Mobile: +91 9900204385