In less than 3 years, we have been through a global pandemic, a war in Europe, economic depression across many OECD countries and the beginning of a wider Energy Transition, especially in developed countries.
All the above to different extents contributed to an energy crisis that highlighted the need to debate topics such as energy poverty, energy diversity and energy security when discussing a Just Energy Transition.
The best way I could find to wrap all the concepts above-mentioned is described by the World Energy Council (WEC) as the energy trilemma. It comprises a framework for understanding the challenges of energy security, energy equity, and environmental sustainability.
In their 2022 Index1, the WEC defines energy security as the ability of a country to meet its current and future energy needs in a reliable and affordable way. Energy equity refers to the fair distribution of energy resources and services in a fairly priced way. Environmental sustainability refers to the use of energy in a way that mitigate and/or avoids potential environmental harm.
Being a student or a young professional in energy-related matters during these uncertain times might generate anxiety. Nonetheless, at the same time it creates the right opportunity to shape the debate based on data and facts, aiming to help the world to find the best possible solution going forward.
The energy trilemma is a complex challenge, and there is no easy solution neither a one that can be replicated in full in every single country. What Europe experienced in 2022 is just a taste of what around 2 billion3 people that live in energy poverty face every day. We must also remember that any policy applied in any country will have an impact across borders.
The world’s energy demand is growing, putting a strain on resources. Most of this growth is coming from developing countries, where there is often less reliable access to energy2 . In addition, global energy supplies are becoming increasingly volatile, for example after the Russian invasion of Ukraine. This is making it increasingly challenging for countries that were already struggling before to ensure a reliable and affordable supply of energy. As a result, energy security in parts of the world has been negatively affected.
The challenges related to energy equity are no less evident. In a world of 8 billion people, there are around 2 billion lacking access to affordable, safe energy2. By 2050, the world is set to reach a population of around 10 billion4 necessitating a suitable mechanism that can provide access to affordable and reliable energy to everyone. This presents a major challenge for policymakers worldwide.
Last, but definitely not least, environmental sustainability is vital: the use of energy, in particular from unabated fossil fuels, is a major contributor to greenhouse gas emissions. To address this challenge, countries need to think about a world less reliant to fossil fuels, hence there is a need for greater thinking about the role of renewables as a vital player in the Energy Transition.
As part of a fair and Just Energy Transition, a complete move away from fossil fuels might initially seem to be the right solution for the UK. However, as seen in previous energy transitions5, adaptation takes time and people’s behaviours are hard to change. Speeding up the Energy Transition will inevitably lead to a higher degree of risk, and it is key that, as young professionals in the energy industry (and therefore as future leaders of the sector), we understand what these risks are.
David Whitehouse, CEO of Offshore Energy UK, noted to Sir Keir Starmer the need for caution around a rapid transition away from oil and gas6, given the UK still relies heavily on hydrocarbons in a number of areas. For example, around 75% of the UK’s total energy consumption is provided by oil and gas, 24 million UK homes rely on gas boilers for heat and hot water, and the nation has 32 million vehicles running on petrol or diesel. In addition, around 42% of the UK’s electricity comes from gas-fired power stations.
As mentioned above, the energy trilemma is very complex – a shift to renewables would require changing a huge percentage of UK homes away from gas boilers, the automobile market and much of the UK’s energy infrastructure and design.
In one way or another, the UK’s offshore industry supports the country’s economic wellbeing, employing more than 200 000 skilled jobs. In 2022-23, this added over £20bn to the economy and paid around £11bn in taxes6.
To mitigate these factors, the Energy Transition must involve a wide range of policies and strategies that assess all key risks involved.
For example, the UK has had success in diversifying its energy mix to some extent. Renewables, in particular wind power, are becoming increasingly cost-competitive with fossil fuels, in particular due to the support the government has given at the inception of the technologies in the previous decade and to renewables support schemes such as Non-Fossil Fuel Obligations (NFFO), Renewable Obligations (RO) and Contracts for Difference (CfD)7. Investing in renewable energy can help to reduce greenhouse gas emissions and improve energy security. Energy diversity matters.
Improving energy efficiency and promoting conscious energy consumption are other ways to tackle this challenge. Energy efficiency measures, such as insulation and energy-saving appliances, can help to reduce energy demand. Creative campaigns can lead to more conscious energy consumption, especially during high demand months.
Although the electrification of everything might seem appealing at this point, we should not be blind to some of the risks that this presents. Diversity matters and the impacts of the chain might be examined – reliance of the energy transition on the mining sector for example! Large scale energy storage back up using batteries might become a game changer, however as a technology it is has not yet been tested at an envisaged scale. Given the potential reliance on battery storage in the EU plans to be Net Zero by 2035 and challenges related to the supply of critical raw materials, as alerted by the EU’s financial watch dog8, this may come back to bite policymakers. Therefore, the UK has broadly been successful in building up wind and solar assets on its journey to diversify its energy sources. In 20 years, renewables jumped from less than 1%9 to ~20%10 in 2022 mainly replacing coal-fired power generation.
A complete energy transition ahead of us is undoubted challenging and demand that all risks, opportunities, and costs are assessed and displayed in a clear and open manner to the population of the country as a whole. Our role as Young Energy Professionals is to come to the debate with data and facts, in a way well informed decisions are taken. After all, we are the ones that will deal with the consequences of the decisions that are now being made.
Natan Battisti
Planning and Economics Adviser (International), Harbour Energy. This blog represents the views of the author and not necessarily the views of their employer.
About the Author
A Petroleum Engineer passionate about energy, economy, and politics. Currently, at Harbour Energy plc, Natan coordinates the International P&E area as a Planning & Economics Adviser and act as the STEM Ambassador London Chair coordinating activities that promote the importance of STEM and Energy for our lives in schools around London. Before Harbour, Natan worked for Premier Oil, Origem Energia and New Fields in Brazil. As a volunteer, Natan has been a member of SPE since 2013 where he has been a member and an active officer at SPE UFPel Student Chapter, SPE Macae, Brazil and London Section.
Natan is also a YEP Forum Ambassador.
Footnotes
1 – https://www.worldenergy.org/publications/entry/world-energy-trilemma-index-2022
3- https://www.savannah-energy.com/media/ article: Championing the African energy transition – CEO Shareholder Letter
5- https://www.weforum.org/agenda/2022/04/visualizing-the-history-of-energy-transitions/
9- https://ourworldindata.org/energy/country/united-kingdom
10- https://grid.iamkate.com/
