In 1755, Benjamin Franklin wrote: “Those who would give up decarbonization, to purchase a little temporary energy security, deserve neither decarbonization nor energy security.”
Or something along those lines. I’m a little foggy on things pre-pandemic.
I’m also aware that plenty of folks would be fine giving up decarbonization and its attendant regulations in exchange for energy security. After all, it’s a fair point to acknowledge that the energy security provided by abundant reserves of fossil fuels in this country goes well beyond “little” or “temporary.”
And as long as we’re on the subject of security, let’s not forget national security. The shale revolution didn’t just free the U.S. from reliance on the whims of unstable foreign regimes (and allow us to rely on the whims of unstable domestic regimes). It allowed exports of crude oil and natural gas so our allies could feel more secure, as well.
Those exports have come in handy, of course. When Russia attacked Ukraine militarily, it also attacked Europe economically by cutting supplies of oil and natural gas. Western European countries scrambled to secure imports of natural gas from the U.S. and others so inventories would be high enough to get through winter.
Meanwhile, Poland and Baltic countries—which had decades of up-close-and-personal experience with Russia—struggled mightily to not scream, “WE TOLD YOU SO!” (with mixed results).
The lesson taken by the European Union was that it had erred in its abrupt dismissal of fossil fuels and premature embrace of renewables. Clearly, adopting a plan while skimping on planning was not the best idea.
The lesson taken by U.S. producers was that the chastened Europeans had seen the error of their ways in depending on a hostile Russia for fuel. They had come to their senses and would shift their dependence to the U.S., putting off that silly energy transition stuff because it had been proved to be a lousy idea.
So, hurray for us. Except … a funny thing happened on the way to Smug Self-Satisfaction, that wondrous hamlet on the shores of Lake Condescension in the Valley of Snark. Turns out, not everybody views the lessons of the Ukraine war in the same way.
Much of the rest of the world—Europe, in particular—has been locked in on decarbonization for a while. From their perspective, the lesson from the past year was to accelerate the move away from fossil fuels, not shift to a different supplier.
Part of that stems from unrelenting Russian hostility. The other is the realization that true energy independence begins at home. For Europeans, who lack a bountiful resource like the Permian Basin, shifting to renewables like wind and solar makes a lot more sense.
Europe is not alone, of course. Decarbonization has become a lodestar in the global energy industry, even if renewed concern over energy security has thrown obstacles in its way.
“To be honest, internally, it hasn’t slowed down our efforts toward decarbonization,” Santiago Martínez Ochoa, head of sustainability and decarbonization at Ecopetrol, Colombia’s national oil company, told me on the sidelines of CERAWeek by S&P Global.
“I think it balances, a bit, the conversation,” he said. “If you think about Scope 3 [emissions], for example, everyone is pressuring us on having Scope 3. I think we’re more hesitant to come up with a Scope 3 target, particularly in the medium term, because then it contradicts with energy security [concerns].”
Martínez Ochoa’s counterpart at Saudi Aramco sees recent events as a hindrance, but they won’t block the ongoing move toward decarbonization.
“When you incorporate nontechnical criteria—energy security or other stuff on the political agenda—you would actually negatively impact decarbonization,” Hassan El-Houjeiri, Saudi Aramco’s head of energy traceability & lifecycle analysis, told me at CERAWeek. “What we really need is support on the framework to actually enable the decarbonization technology application without differentiation.”
El-Houjeiri is a scientist with a doctorate from Oxford University who did his postdoc work at Stanford University. He’s all about figuring out solutions to the challenges of decarbonization, and he clearly would prefer that the rest of the world get serious about it, too.
Ben Franklin, scientist from another time, offers hope to this effort. “Energy and persistence conquer all things,” he said.
But Franklin offers another quote, one that can be taken as a warning as the world grapples with decarbonization and the energy transition: “You may delay, but time will not.”
Recommended Reading
CEO: Breakwall Providing Capital as RBLs ‘Materially’ Decrease
2024-10-09 - Breakwall Capital is stepping in to bridge the gap from the historic days of reserve-based lending, Breakwall Managing Partner and co-CEO Jamie Brodsky said at Hart Energy's Energy Capital Conference in Dallas.
ABS Market for Upstream Producers Expanding, Panelists Say
2024-10-09 - Asset-backed securitization or ABS, which transforms oil and gas reserves into negotiable financial assets, usually have a hedging element and offer producers another financing option, panelists said Oct. 3 at Hart Energy’s Energy Capital Conference in Dallas.
Investor Returns Keep Aethon IPO-ready
2024-10-08 - Haynesville producer Aethon Energy is focused on investor returns, additional bolt-on acquisitions and mainly staying “IPO ready,” the company’s Senior Vice President of Finance said Oct. 3 at Hart Energy’s Energy Capital Conference (ECC) in Dallas.
No Rush: Post-M&A Frenzy, Divestiture Market to Pick Up by 2025
2024-10-07 - Lenders with a variety of capital structures are poised to fund the upcoming portfolio rationalization in the post-consolidation era, bankers and deal advisers said at Hart Energy’s Energy Capital Conference.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.