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The energy transition is essential but complex and challenging.
The pace of the transition and the balance between future and current energy security are key issues.
Economic and logistical barriers, as well as geopolitical and environmental concerns, need to be addressed for a successful transition.

The future of the global energy sector is caught up in a messy and misleading ideological debate. Depending on which politically informed echo chamber one inevitably finds themself confined to on social media, they are either told that the energy transition is a dangerous myth that will end in economic disaster and permanent rolling blackouts, or that clean energy is going to save the world overnight – as soon as conservatives get out of the way. As usual, the truth lies somewhere in between.

The energy transition is strictly necessary. But it’s going to be very, very hard. It’s damaging to deny that there will almost certainly be shocks, missteps, and setbacks as we undergo one of the most disruptive chapters in industrial history. In large part we’re relying on untested and in many cases as-yet unproven technologies to emerge in the nick of time.

There’s a temptation to sugar-coat the scale of the imperative to make the energy transition more palatable and less daunting. But there’s no denying it – it’s a very uncomfortable, and even frightening, petition to be in. And there will be winners and losers as economic priorities shift – the energy transition is good for humanity as a whole, but it certainly isn’t good for everyone. Acknowledging these difficult truths is essential to properly planning for and managing humanity’s greatest cooperative project.

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South Africa’s Energy Crisis Could Spark A Political And Economic Disaster

February 1, 2023

South Africa’s Energy Crisis Could Spark A Political And Economic Disaster

Eskom is operating at 50% capacity with rolling blackouts that are causing civil unrest and economic hardship.
An international aid package worth $8.5 billion is being put together by the U.S. and Europe to help fund South Africa’s green energy transition.
The dismal track record of Eskom provides an opportunity for South Africa to revamp its energy industry into green energy with the help of financial support from wealthy nations.

South Africa’s energy crisis is teetering on the edge of a major political and economic crisis. Bogged down by inefficiency, ineptitude, and severe levels of corruption, the country’s power utility Eskom has proven incapable of providing sufficient and reliable energy to the nation’s grid, despite the domestic abundance of coal. Once one of the most reliable utilities in Africa, Eksom now exists in a state of constant emergency which is currently threatening to push the country into civil disarray and economic catastrophe.

Eksom desperately needs to service its poorly maintained power plants. On any given day, Eksom operates at about 50% capacity. Rolling blackouts, known locally as ‘load shedding’ have become a normal and expected part in day-to-day life in South Africa. “It even has predictable stages,” Forbes reported in a recent excoriation of Eksom operations, “ranging from Stage 1 (reducing power for two hours at a time over a four-day period) through Stage 8 (reducing power for 12 hours out of every 24).”

In the last 12 months, however, these blackouts have gone into overdrive, with the power going out several times a day and up to 12 hours at a time. Adding insult to injury, Eksom has added a steep energy tariff to help bolster their own failing finances. The issue has transformed to a semi-accepted nuisance to a barrier to local livelihoods and the functioning of the national economy…

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Europe’s Energy Crisis Leaves Almost All Of Pakistan Without Power

January 27, 2023

Europe’s Energy Crisis Leaves Almost All Of Pakistan Without Power

Pakistan faced an almost nationwide power outage on Monday.
A significant energy shortage is one of the main drivers of the nation’s current economic crisis.
The energy crisis in Europe has made Pakistan vulnerable to high fuel prices.

The long-awaited winter energy crisis has finally hit…but it wasn’t in Europe after all. On Monday, almost the entirety of Pakistan was left without power when a misguided energy saving strategy by the government backfired. Runaway inflation, a severely weakened currency, and rapidly emptying foreign exchange reserves have left Pakistan on the brink of economic collapse. The country of 230 million people is plagued by overdue energy payments, and was seeking to cut costs by lowering energy use when the plan went off the rails, leaving people across the country without power or water for more than 12 hours.

Pakistani officials had planned to save on energy costs by turning off electricity across the country overnight. Nighttime has the lowest usage hours for energy in Pakistan, where winters are relatively mild. The problem came when technicians tried to reboot the electric system in the morning, and found out that the infrastructure wasn’t capable of booting up the entire nation’s energy grid all at once. Major cities, including the capital city of Islamabad, as well as smaller cities and towns across the country were left in the dark for 15 hours on Monday, lasting into the night.

“As an economic measure, we temporarily shut down our power generation systems” Sunday night, Energy Minister Khurram Dastgir told local media. He went on to explain that when engineers tried to turn the systems back on, a “fluctuation in voltage” occurred, which “forced engineers to shut down the power grid” stations altogether.

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Europe’s Energy Crisis Is Reshaping Geopolitics

December 7, 2022

Europe’s Energy Crisis Is Reshaping Geopolitics

Europe’s energy crisis is fueling a major geopolitical reconfiguration.
The IEA is warning that we are currently living through a “global energy crisis of unprecedented depth and complexity,” and that “there is no going back to the way things were.”
The financial vulnerabilities emanating out of Europe threaten to destabilize not only some of the more indebted European countries, but also developing nations and net energy importers around the world.

Europe’s energy crisis is about far more than just energy. It’s also the impetus for a major geopolitical reconfiguration at a global scale. No one knows exactly what the world’s energy and political landscapes will look like when the dust settles (which, by the way, will be years from now) but it’s guaranteed that it will be markedly different than it was the day before Russia – historically the largest exporter of oil and natural gas to the European Union by a long shot – illegally invaded Ukraine.

This year’s annual energy outlook from the International Energy Agency (IEA) warns that we are currently living through a “global energy crisis of unprecedented depth and complexity,” and that “there is no going back to the way things were” before the unprecedented dual shocks of the novel coronavirus pandemic and Russia’s war in Ukraine. Together, these events have already reconfigured the energy trade worldwide, but the shockwaves to the global economy are just getting started.

Many look at Europe’s current energy deficit as a kind of heroism, as the European Union has taken a huge economic hit in order to impose energy sanctions on the Kremlin – the one kind of sanction that could really cripple the Russian economy in the hopes of ending the war in Ukraine. “In the struggle to help Ukraine and resist Russian aggression, Europe has displayed unity, grit and a principled willingness to bear enormous costs,” the Economist recently reported.

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Europe’s Natural Gas Shortage Could Trigger A Food Crisis

September 14, 2022

Europe’s Natural Gas Shortage Could Trigger A Food Crisis

Energy crises impact nearly every aspect of our lives, and that is particularly true of food markets, with food production next year expected to be severely threatened.
About 70 percent of the cost of fertilizer production is solely the price of natural gas, and as the price of energy soars, the cost of making and moving food is increasing alongside it.
At the same time, Russia’s invasion of Ukraine and threats from Putin that Russia may alter grain export routes have only added to uncertainty in food markets.

The problem with an energy crisis is that it’s actually an everything crisis. In a world where virtually every industry relies on energy in some form, runaway inflation is an inevitability. This phenomenon is not news – you’ve been experiencing it for the better part of two years now. But while global governments are using every tool in their kits to curb the rising inflation rates, there’s far less they can do about the coming food shortage.

For months, the agricultural industry has been warning the rest of the world that next year’s food production is severely threatened, as the fertilizer industry is in shambles. Industrial NPK fertilizers (so named for their makeup of nitrogen, phosphorus, and potassium oxide), are heavily reliant on natural gas supplies. About 70 percent of the cost of fertilizer production is solely the price of natural gas, which is used in liberal amounts to make the ammonia phosphate slurries that turn into fertilizer. Indeed, according to CRU Group, European fertilizer producers in the region are currently losing approximately $2,000 for every ton of ammonia produced. So as Russia has stemmed and then indefinitely stopped the flow of natural gas into Europe, sending gas prices through the roof, the continent’s fertilizer sector has halted as much as 70 percent of its production capacity.

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France Sees Nuclear Energy Output Plummet At The Worst Possible Moment

July 3, 2022

France Sees Nuclear Energy Output Plummet At The Worst Possible Moment

France, the European Union’s leader in nuclear energy, is seeing a massive decline in output.
Though it has been relatively unfazed by the bloc’s ongoing energy crisis, declining nuclear production could pose a significant problem in the coming months.
The collapse of French nuclear power generation and Putin’s retaliatory cutback on energy exports to Europe could be disastrous for the continent.

France has long been one of the world’s greatest champions of nuclear energy. France leads the European Union in nuclear production, with the most productive reactors in the bloc, and relies on nuclear power for a larger share of its energy mix than any other country in the world. It makes sense that France should lead the charge for nuclear energy development as they have long been the global poster child for safe and reliable nuclear energy – until now.

A recent flurry of unexpected issues at the Électricité de France (EDF), the state nuclear power operator representing the largest nuclear fleet in Europe, has caused French nuclear energy output to tumble to its lowest levels in 30 years. Around half of the EDF’s massive nuclear fleet has been taken offline, delivering a massive blow to the EU’s energy independence and security in the midst of a worldwide energy crisis.

France has become increasingly reliant on nuclear power in recent years. French President Emmanuel Macron has given nuclear energy an even bigger boost in his time in office. Indeed, in February, before the Russian invasion of Ukraine, he announced a €52 billion plan to revitalize the country’s “nuclear adventure.” He has also fought for the inclusion of the emissions-free power source as a “green investment” in the nomenclature of the European Union as the continent moves toward establishing its green energy budget for the coming years.

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Europe Turns To Russia For More Coal As Energy Prices Skyrocket

October 6, 2021

Europe Turns To Russia For More Coal As Energy Prices Skyrocket

Europe is facing a perfect storm of increasing demand for energy in the wake of the COVID-19 pandemic, and a dwindling supply of natural gas used to produce electricity.
As Europe’s struggling energy markets look to import any form of affordable energy they can, power producers have resorted to asking for Russian coal as well.
Europe is competing with Asia for limited energy resources as both continents surge back to life as pandemic restrictions ease.

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Energy prices are through the roof across Europe as demand surges and supplies tighten in the wake of the novel coronavirus pandemic. Over the course of the global economic shutdown, energy production has decreased considerably as industries shut down, people stayed inside, and demand for electricity and fuel plummeted. Now, as the world returns to work and gets back to the ‘new normal’, energy demand is back with a vengeance, but the energy supply simply isn’t there.

Europe’s leading natural gas benchmark, the Dutch Title Transfer Facility, reports that prices have skyrocketed from €16 per megawatt-hour at the beginning of this year to €75 by mid-September, representing an increase of more than 360%. Italian officials have warned their citizens to expect a 40% increase in their bills in the coming weeks and months. Spain has agreed to send €100 payments to over 5.8 million low-income households and sent a letter to Brussels pleading with the European Union (EU) to take sweeping action.

And then there’s Russia. Nearly half of all-natural gas imports in the EU come from the great white north, making Europe highly dependent on the Kremlin for its energy security. This dependence is a big part of the reason that Europe is now entering into an energy crisis, because as demand for natural gas has surged, Russia has not increased its exports to the EU…

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The World Will Run Out Of EV Batteries By 2025

July 26, 2021

The World Will Run Out Of EV Batteries By 2025

In many ways, the world is not ready for the EV revolution. While electric vehicles are an absolutely invaluable and essential component of the clean energy revolution and combating climate change and imperative which grows more urgent with each passing second, the world has been unable (or, in some cases, unwilling) to keep up with the necessary infrastructure installations and investments to prepare for the kind of wide-scale adoption which is both necessary and imminent. For one thing, even in some of the most developed countries in the world, aging power grids are entirely unprepared to handle the onslaught of increased energy demand as more and more of the country leaves their gas guzzlers behind and plugin. This problem is far from insurmountable, and can indeed be all but completely solved by making our energy use and production more efficient, but it needs to be addressed in a big hurry in order to make the EV revolution viable.

And then there’s the issue of those pesky car batteries. While you can cut down your carbon footprint by a massive margin by switching over to an EV, you just can’t get away from using finite resources completely. EV batteries contain a litany of expensive and finite rare earth metals and minerals, most notably cobalt and lithium, which cause tricky negotiations with global supply chains and which are not without their negative environmental externalities thanks to sometimes messy mining operations.

The energy revolution’s dependence on rare earth metals, which is only set to intensify, has inadvertently put a huge amount of control into the hands of China, which controls around 90% of the market for some of these resources, and has shown that it is not afraid to use that power to sway international politics and diplomacy…

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Why The World Can’t Quit Fossil Fuels

December 8, 2020

Why The World Can’t Quit Fossil Fuels

Have the recent pronouncements of the death of oil and reigning renewables been more rhetoric than reality? Yes and no. It’s true that peak oil is now closer than ever, and globally we’re seeing a more earnest effort to decarbonize than ever before, in large part thanks to green stimulus packages for post-COVID economic recovery. But for all of the advances that green energy is making around the world, it’s just not enough to achieve the kind of greenhouse gas emissions reductions necessary to curb the impact of climate change. In fact, it’s not even close. This week Axios reported on the “chasm between CO2 goals and energy production,” saying that “projected and planned levels of global oil, natural gas and coal production are way out of step with the kind of emissions cuts needed to hold global warming significantly in check.” This reporting is based on a brand new study. The second annual “Production Gap Report” is the continuation of a project developed in collaboration with the United Nations Environment Programme (UNEP). The 2020 report was put together by the UN, the Stockholm Environment Institute, the International Institute for Sustainable Development, the Overseas Development Institute and the climate think tank E3G.

The purpose of the report, which is modelled after and alongside UNEP’s Emissions Gap Reports is to synthesize and communicate “the large discrepancy between countries’ planned fossil fuel production and the global production levels necessary to limit warming to 1.5°C and 2°C.” And, as it turns out, that discrepancy is still quite large, even after the COVID-19 pandemic took a huge bite out of fossil fuel demand and the oil and gas industry as a whole.

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Is The OPEC+ Alliance Coming To An End?

August 10, 2020

Is The OPEC+ Alliance Coming To An End?

It’s been a wild and bumpy ride for OPEC+ this year. The consortium, consisting of the traditional members of the Organization of the Petroleum Exporting Countries plus oil and gas superpower Russia, was largely responsible for the huge collapse in oil prices toward the end of April. After a huge drop in oil demand corresponding with the devastating spread of the novel coronavirus around the world, an OPEC+ strategy meeting turned into a spat between Russia and Saudi Arabia which then turned into an all-out oil price war and massive global oil glut. The oil storage shortage created by this glut would go on to push the West Texas Intermediate crude benchmark into previously-unthinkable negative territory, closing out the day on April 30th at nearly $40 below zero per barrel.

OPEC+ has since reconciled and once again banded together to address the oil market crisis, making myriad pledges and severe production cuts to bolster crude oil prices. But many of the countries that made those pledges have fallen far short of their promises. “OPEC reached a historic deal to cut output by 9.7 million barrels per day in April, but a number of countries fell significantly short in meeting their production targets,” reports Markets Insider.

But, just this week Iraq, OPEC’s second-biggest member just made a huge commitment to cut its oil production in the coming months. After a Thursday night conversation between Iraqi and Saudi leadership, Baghdad “made a commitment to cut oil production by 400,000 barrels per day in August and September,” a massive uptick from the nation’s relatively paltry July production cut of 11,000 barrels per day.

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Permian Bankruptcies Could Fuel A Buying Spree For Big Oil

April 29, 2020

Permian Bankruptcies Could Fuel A Buying Spree For Big Oil

The United States shale revolution is over. Production in the Permian Basin, which spreads across West Texas and Southeast New Mexico, has been slowing for months, but the novel coronavirus took things from bad to much, much worse for U.S. shale. The oil price shock that followed the spread of the COVID-19 pandemic, combined with a massive global oil glut spurred by a spat between with learning OPEC+ member countries of Russia and Saudi Arabia, drove West Texas Intermediate oil prices down to a previously unthinkable -$37.63 a barrel earlier this month. While shale prices have since moderately rebounded, the Permian Basin is still in bad shape. The oil fields that made the United States the biggest crude oil producer in the world is now seeing tens of thousands of fired and furloughed employees as the region is rocked by a sweep of bankruptcies across the shale sector. Last week CNBC reported that “the oil industry shakeout is just beginning with more production cuts and bankruptcies ahead,” detailing that “U.S. oil companies are already paring back spending and closing wells, but wild trading in the futures market was a warning to curb production now because the world at some point will not be able to store any more supply.”

Just because the U.S. oil industry has hit a rough patch, however, doesn’t necessarily mean that the West Texas shale play is all played out. In fact, it stands to reason that, as competition dries up and blows away like so many tumbleweeds, Big Oil may step in and buy up faltering shale independents.

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How Oil Prices Could Go To $100

April 23, 2020

How Oil Prices Could Go To $100

“We’re in a deflationary moment that surpasses anything seen in most people’s lifetimes,” proclaimed a New York Times byline on Tuesday, the morning after oil prices went negative. The West Texas Crude Intermediate benchmark plummeted to previously unimaginable depths, closing the day at negative $37.63 per barrel. The novel coronavirus has wreaked unprecedented havoc on the global economy, shutting down entire industrial sectors and bringing countries across the world to a halt as the global community shelters in place to slow the spread of the COVID-19 pandemic. Economists have warned that the fallout is going to be the largest economic downturn that we have seen in our lifetimes, but few could have foreseen the absurdity of negative oil prices.

Few, but not none. Three weeks ago, on April 1, CNBC published a report titled “Oil prices could soon turn negative as the world runs out of places to store crude, analysts warn,“ which predicted exactly what is happening now. “Global oil storage could reach maximum capacity within weeks, energy analysts have told CNBC, as the coronavirus crisis dramatically reduces consumption and some of the world’s most powerful crude producers start to ramp up their output.”

While the situation is totally unprecedented it’s impossible to say what will happen next for oil markets, some experts think that oil is poised for a major comeback. Even though oil prices are lower than they have ever been, “one energy fund thinks $100 a barrel is achievable,” reported the Midland Reporter-Telegram earlier this week. At the time of the report, oil was only at an 18-year low rather than an all-time low. The article intro continued: “But first, prices need to fall even further.” Well, they got their wish.

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Tumbling Yuan Sends Ripples Through Petrochemical Market

August 27, 2019

Tumbling Yuan Sends Ripples Through Petrochemical Market

The trade war between China and the United States has triggered a global economic slowdown thanks to far-reaching tensions between the world’s two biggest economies. Last Friday China lobbed their most recent retaliation back at the United States by announcing tariffs on an additional $75 billion worth of goods. This is just the most recent counterattack in a now yearlong tit-for-tat spat that has seen both countries confront each other again and again with hard-hitting tariffs (you can see a detailed timeline here) and even culminated in Beijing allowing the Yuan reach its lowest value in years, making Chinese goods cheaper to export and, conversely, making U.S. goods more expensive and therefore less desirable in Chinese markets.

Because of the far-reaching economic implications of the trade dispute, United States president Donald Trump has been put under a great deal of pressure from global leaders to de-escalate tensions with China. In response, Trump has announced that he will soon begin trade talks with Beijing in order to reach an accord and end the trade war, but the reality is not so simple, especially as the U.S. president seems to be talking out of both sides of his mouth. In a report titled “Trump sends mixed signals on China trade war as pressure mounts to de-escalate” the UK’s Independent points out that, “on Sunday, [President Trump] seemed to express regret over escalating the trade dispute, but the White House later said his only regret was that he didn’t impose even higher tariffs on China.”

Even if Trump does follow through on his public promises to make peace with China, in many sectors of the economy the damage is already done. One of the most recent casualties of the trade war is the Asian petrochemical market, which just hit its lowest profit margin in months.

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The “Polar Silk Road” Could Be A Gamechanger For Natural Gas

June 15, 2019

The “Polar Silk Road” Could Be A Gamechanger For Natural Gas

It’s been well over a year since the then-United States Secretary of Defense Jim Mattis accused Russia and China of being “revisionist powers” each working its way toward making a power grab on the world stage and announced that the U.S. would be shifting its international relations focus away from fighting terrorism and instead prioritize what Mattis referred to as a “great power competition.” Now, 17 months later, it looks like Mattis’ nightmares are coming true as Russia and China have increasingly worked together in defiance of the Trump administration in a kind of diplomatic ‘marriage of convenience’.

Just this month, Chinese President Xi Jinping made his eighth official visit to Russia in a trip highly publicized in both Russian and Chinese media. “This year marks the 70th anniversary of our diplomatic ties and China’s ties with Russia are deepening at a time of profound change in the global geopolitical landscape,” remarked former Chinese ambassador to Britain Ma Zhengang, as quoted by the South China Morning Post.

One of the most current examples of this newly strengthened relationship between Beijing and Moscow is a new joint venture between state-owned shipping corporations in Russia and China to create a “Polar Silk Road” in the Arctic Sea. a year ago, officials in Beijing announced that China would be pursuing investment across the Arctic Route to encourage commercial shipping through the northern passage as a part of the country’s Belt and Road Initiative. Belt and Road is a massive undertaking involving investments programs worth trillions of dollars, which will go toward connecting Asia and Europe by sea, rail, and road to promote more trade between the continents.

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Pipeline Bottlenecks Cost Canadian Producers $20 Billion

May 5, 2019

Pipeline Bottlenecks Cost Canadian Producers $20 Billion

Canada has plenty of oil, and demand is high, but the Canadian oil industry has nevertheless taken a major hit this year thanks to its persisting pipeline bottleneck. The Albertan oil industry has long been plagued by insufficient pipeline volumes but has not been able to fix the issue with any semblance of efficiency thanks to major bureaucratic and litigation-based delays on building new infrastructure like the long-delayed Trans Mountain pipeline expansion project.

With pipeline capacity maxed out, Canadian oil producers have run out of storage space, leading to a major glut in oil reserves with nowhere to go. This has forced Canada to sell their oil at a major discount. In fact, a new study released this week by conservative think tank the Fraser Institute calculates that Canadian oil producers missed out on a whopping $20.62 billion more than they earned this year thanks to their severely depressed prices. Compared to the West Texas Intermediate benchmark, in the last year Canadian heavy crude traded, on average, at a discount of $26.50 U.S. a barrel. This is a huge dive from the five-year preceding, when Canadian heavy crude traded at an average of just $11.90 U.S. a barrel less than West Texas Intermediate.

The pipeline capacity deficit has negatively impacted the Canadian economy in a number of ways. “Canada’s lack of adequate pipeline capacity has imposed a number of costly constraints on the country’s energy sector including overdependence on the US market and reliance on more costly modes of energy transportation,” states the Fraser Research Bulletin. “In 2018, these factors, coupled with the maintenance downtime at refineries in the US Midwest, resulted in significant depressed prices for Canadian heavy crude (Western Canada Select) relative to US crude (West Texas Intermediate) and other international benchmarks.”

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