Global energy consumption is expected to
grow by 1.3 percent in 2023, despite a slowing economy and high energy prices.
And due to recent hardships, many countries have had to fall back on fossil
fuels and delay their transition to green energy. And despite pricing
pressures, global recession fears are causing a decrease in oil prices.
اضافة اعلان
In terms of climate, the current global
energy system, which is almost 85 percent based on fossil fuels, is already too
high to remain within the 1.5°C target of the Paris Agreement. The rapidly
growing demand for energy is increasing emissions and climate change. This is
all causing energy prices to increase too, leaving the challenges of the global
energy sector front and center.
To face this conflict, BP's Statistical
Review of World Energy 2022 revealed that value of balancing energy security,
affordability, and reducing carbon emissions when addressing the energy
trilemma.
Seeing as consumption of natural gas
will remain stagnant in 2023, declining in Europe and remaining flat in North
America, but rising by 2.4 percent in Asia; Asia is predicted to become the
largest market for natural gas by 2027, surpassing North America.
Global hydrogen production is already shifting from “gray” to “green” as costs drop, accelerating investments. And now that we are at the beginning of 2023, the time for hydrogen has arrived.
By 2027, the International Energy Agency
predicts 2,400 gigawatt growth in renewable power capacity, with an 85 percent
acceleration from the previous five years. This expansion is expected to create
a diverse energy mix, with low-carbon systems offering clean and secure energy.
Time for hydrogenGlobal hydrogen production is already
shifting from “gray” to “green” as costs drop, accelerating investments. And now
that we are at the beginning of 2023, the time for hydrogen has arrived.
In Asia, the forward-looking Singapore
and GCC governments are investing in the hydrogen economy as it seeks to
diversify their heavy reliance on natural gas, which is vulnerable to supply
chain disruptions.
Renewable energy consumption will grow at an annual average rate of 10 percent during the next 10 years. Asia will continue to be the world's biggest market for renewable energy investment. But, the commodity price boom will divert some investment toward fossil-fuel projects.
Before the Russia-Ukraine war, renewable
capacity was expected to increase by an upward of 8 percent in 2022 compared
with the previous year. However, energy security concerns sparked a surge in
renewable energy development. This accelerated the clean energy transition and diversified
alternative energy supplies, reducing Europe's need for energy imports, which are
at the forefront of REPowerEU's objectives.
So, what comes next?Renewable energy consumption will grow
at an annual average rate of 10 percent during the next 10 years. Asia will
continue to be the world's biggest market for renewable energy investment. But,
the commodity price boom will divert some investment toward fossil-fuel
projects.
It is difficult to respond to consumer
and regulatory demands for more sustainable energy with the supply squeeze in
the market. There are cost increases in materials, freight, fuel, and labor.
Weak supply chains, particularly the soaring prices of raw materials with inflation,
are biting into renewables' profitability.
Geopolitical tensions are also causing
supply chain disruption. The price of cobalt increased 63 percent in 2022 to an
average of $51,000/tonne. Similarly, lithium carbonate prices rose 58 percent
to an average of $11,000/tonne. So far, in 2023, mineral prices have continued
to surge.
The volatile economic and geopolitical
environment in the US and Europe is likely to shift public sentiment towards
channeling climate adaptation funds for domestic needs before committing to
assist other countries. The new adaption will affect the availability of global
climate finance and increase the cost of interest rates for renewable energy
projects, slowing down the pace of the energy transition.
The volatile economic and geopolitical environment in the US and Europe is likely to shift public sentiment towards channeling climate adaptation funds for domestic needs before committing to assist other countries.
The financial sector has a crucial role
in directing funds towards sustainable development, with ESG assets expected to
reach $41 trillion in 2023 and reach $50 trillion by 2025.
In 2020, the US took the lead from
Europe. Increasingly tangible ESG obligations, supported by the various COP
events — marking three decades of activity — have amplified a collective voice
sweeping across major insurers to acknowledge and support the energy transition
and to be less supportive of heavy carbon-based industries.
Effective risk management is important
for the success of transition projects, and risk intermediaries can provide
solutions to countries and the private sector. This includes intelligence analysis
to support the scaling up of clean fuel generation.
Hamzeh S. Al-Alayani is a board member of a Jordanian public-sector
government investments management company and a regular regional energy and
industrial commentator. Hamzeh holds an MBA from the University of Aberdeen,
UK, and a BSc in Mechanical Engineering.
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