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The Life of a Global Energy Pioneer — Agata de Ru

This week we speak with Agata de Ru who is a Portfolio Manager of the South and Eastern European Region for the Clean Air Fund. In this episode, we take a different turn and go into Agata’s background of moving from a Polish NGO to Shell and then her decision to do an MBA in the United States. We learn about her experience working for a US energy start-up. We learn about her decision to leave the US behind and move to Nigeria and join up with local organizations and businesses working with farmers and delivering solar power to consumers across a number of countries.  

Before we begin, I want to give a bit some background. Agata and I have known each other for ten years. We were part of the first batch of ELEEP members. This is the Emerging Leaders in Environmental and Energy Policy Network, which began as an initiative of the Atlantic Council and Ecologic and which was funded by the Robert Bosch Foundation and the European Commission. This was a great trans-Atlantic initiative as it really brought together a range of younger people who are still in contact today. Looking back, we can say all of them have built on their ELEEP initiative to shape their lives and careers. My point is these types of initiatives that bring people together in a loosely structured way really make a difference.  

As we’ll learn from Agata, her work in Europe, the US and Africa built on her ELEEP experience. And it is here where we get to the point of the MyEnergy2050 podcast. We like to share both the knowledge and experience of people making a difference. Understanding how and why people make decisions in their lives to build a better energy system assists all of us in transforming the energy system.  

My request to you this week is to help us spread the message of the MyEnergy2050 podcast. Please share this episode or others on LinkedIn or Twitter. We grow by word of mouth. And the longer we do this, our message is becoming clearer. It takes dedication of personal commitment to build and deliver a cleaner energy system. So let’s make this happen together. 

The History – and future of Energy Efficiency in Europe – Rod Janssen

In this episode, we speak with Rod Janssen, a long time expert who began his career after the oil crisis of the 1970s. Rod may have decades of experience, but he is still young and stays active with the latest research and policy developments in energy efficiency. 

I wanted to have Rod on to discuss both the recent history around energy efficiency and whether EU policy is making an impact. As you’ll hear we are a bit critical of the EU and the Member States for the lack of progress.  

There are a number of terms that will probably be new to the listener and not everyone may know them. The first is USAID, which is the United States Agency for International Development. It sounds like an organization for Africa, but it was active in Eastern Europe – and still is in non-EU member states. After countries in the East joined the EU, USAID moved on, thinking the EU would assist in development. We have a few words to say on how well the EU took on its role to promote energy efficiency. 

We discuss the ‘acquis’, which is  “the body of common rights and obligations that are binding on all EU countries”, which now is being stressed by some countries. But there was a time when the former Communist countries transformed their economies and legislation to make it look like they could be good EU members. They did a tremendous amount of good in revamping public administration and shifting economies onto a market footing. 

Rod and I discuss these topics and we also cover how energy efficiency policy making has changed in the EU and where it is going. That 2050 goal? Is enough being done? Rod has an opinion. Community engagement? We discuss this too.

Digital Democracy: Blockchaining the Paris Agreement – Marco Schletz

This week we speak with Marco Schletz, a research associate at Data-Driven EnviroLab, and an innovation fellow at the Open Earth Foundation. Marco holds a PhD from the Technical University of Denmark. It is the research for this PhD and the related publications that describes both the present and future uses of blockchain technology as a means for tackling climate change.  

In this episode we delve into Marco’s research on blockchain and how it can assist verification of projects addressing climate change. This spurs both greater efficiency in oversight and reduces transaction costs for ensuring climate change is addressed through meaningful action.  

The purpose of the MyEnergy2050 podcast is to promote meaningful action around climate change. This is why I’m excited to have Marco on to discuss his PhD research on blockchain and the potential it holds to ensure commitments made in the Paris Agreement are fulfilled no matter where in the world the projects are.  

Marco and I have a long discussion on blockchain, we cover the basic concepts of what a blockchain is, why it can promote transparency and the problems with our current financial system, which makes financial transactions costly and why blockchain replaces our current bankers and financiers. With blockchain and cryptocurrencies, say good bye to both expensive corporate bank headquarters and the carbon footprint produced from the corp of office workers. 

In the first half of the episode we discuss what blockchain is, and we  stay largely with cryptocurrencies like bitcoin. In the second half, we get more grounded and discuss how blockchain can actually work to connect communities and businesses around the world. Blockchain can hold granular information, so we can actually know, who is making an effort to save the environment for us. So while we fly places, we also buy credits from other places, to mitigate our environmental damage.  

A final note, is don’t be scared by the terminology in this episode if you don’t know what blockchain is. We hopefully explain throughout the episode what it is, and how it works. Marco does a good job of breaking it down by comparing it to waking in a bar and ordering a drink. So if you know how to drink in a bar, you can understand what a blockchain is.  

Creating Radical Shared Value – Michael LaBelle

This week we are delving deeper to understand how oil and gas companies are being pushed by activists and investors seeking to up-end the carbon economy. Industries emitting carbon are not only bad for the environment but bad for long-term shareholder value. 

We discuss why a capitalist system with people, the planet and profits aligning can save the Earth. We pursue this line to understand how these actions are radical interventions that seek to change the people hanging onto the carbon economy.

Radical share value delivers a new economic system that values long-term financial returns utilizing greener technologies. Central to this model are people who understand money is to be made in green technologies, not carbon-spewing technologies. 

The intent of the MyEnergy2050 podcast is to spread knowledge about how the energy system can assist our transition towards a greener future. 

Energy Cultures: The axioms of an energy transition – Michael LaBelle

In this episode, I cover the basic concepts in my new book ‘Energy Cultures: Technology, Justice, and Geopolitics in Eastern Europe‘ published by Edward Elgar Publishing. We cover the three Axioms which guide the Energy Cultures framework: Space, Scale and Transformations. Energy cultures are a way to understand how society interacts with governments and other countries to create the energy system. It is a means to understand the deeply embedded practices people perform every day, from driving a car to cooking their meals. People are unaware or are non-reflexive of when and how they use energy. By highlighting the role of culture, then we can perceive the everyday landscape and practices to understand how we interact and build our societies around the energy system. At the end of the day, it is best to remember the energy system should serve us, not we should serve the energy system. Often this basic principle is lost.

Not so Fast! The Carter Doctrine and cheap oil in the Covid-19 era

The tremendous economic and security gains the United States made in domestic oil and gas production in the past 10 years fostered a global power rebalancing. The withdrawal of the US military from the Middle East corresponds to the rising US self-sufficiently in oil and gas. Shale oil and gas underpin this dramatic reconfiguration. According to Tina Soliman Hunter, Professor of Energy, Environment, and Resources Law, at Macquarie Law School, University of Macquarie, this disengagement may now end. The once spurned US military protectorate of the Middle East may hold renewed value to ensure a global economic recovery and benefit US shale oil producers.

The Covid-19 economic collapse created a price plunge of global oil and gas prices. Marked by negative oil prices in April 2020. The overall trend moved from above $50 a barrel, to a June 2020 price of somewhat above ten dollars. Before the pandemic the US had recently become the top oil and gas producer in the world, reliant on hydraulic fracturing technologies to extract oil and gas from the plentiful shale formations. This performance created a pricing band for global oil which the US could influence from its production capacity. The theory was global oil prices would be influenced by this shale pricing band.

Professor Tina Soliman Hunter, Professor of Energy, Environment, and Resources Law, at Macquarie Law School, University of Macquarie in Australia

The rapid and swift drop in global oil and gas resulted in the band breaking. Low prices now favor those with conventional oil wells, which can’t easily stop the flow of oil out of tapped wells. Middle Eastern producers sit at the bottom of the pricing scale. The cheap oil of the region may now be more valuable to sustain a weakened global economy and necessitate the US military presence to ensure access and low prices for US and global consumers. For Professor Soliman Hunter, it is a return to the Cold War era of the Middle East limiting external interference in the region.

Support for the traditional US oil allies of Saudi Arabia and Kuwait means a reassertion of the Carter Doctrine. A doctrine that followed previous policies but was elucidated by President Jimmy Carter in 1980.  The doctrine states the US will use military force to keep out external influence. In the 1980s this was aimed at the Soviet Union after the Soviet invasion of Afghanistan. Looking at the Middle East today, and the US withdrawal from Afghanistan, Iraq and Syria both the determination to exert influence and the retreat of this intent are apparent.

There is an almost corresponding rise of US as a major oil and gas producer with its declining role in the Middle East. It is hard to separate the actions of the US and whether President Trump blew this agreement up for the hatred of foreign US engagement and international coalitions, or because of the US self-sufficiency in oil and gas. Nonetheless, Middle Eastern dynamics around military engagement and the price of oil and gas were shifting under President Obama. In addition, the shale revolution underpinned the US economic recovery after the 2008 financial crisis. Keeping oil and gas cheap. Is it possible a similar cheap fossil fuel policy will underpin the Covid-19 economic recovery?

Source: EIA, 2019

According to a Federal Reserve Bank of Dallas report, the US may be reliant more on sustained investment into the oil and gas sector, rather than low prices. With limited ability of consumers to take advantage of low prices, due to stay-at-home orders, and a general curtailment of economic activity, low energy prices hold limited benefits for the economy. Rather, it may be the lack of financial spending in the oil and gas sector that will reduce economic activity even further. 

“In the current environment, the sharp reduction in capital expenditures by oil companies explains why this oil price decline, on balance, actually hurt U.S. investment spending—and hence, economic growth”

The US the shale boom previously acted as a price floor and ceiling. Not allowing oil and gas prices to drop below or rise above a certain level. Shale fracturing to extract oil or gas could either done or not done, depending on the price. With a general band around $50 to $60 per barrel, oil producers could withstand previous pricing wars with OPEC countries, by using more efficient techniques, but they could also act as regulators to high global oil prices. The new dynamic exposes how much the US is reliant not only on low prices from shale production, but on the investments going into the shale plays. 

Professor Soliman Hunter demonstrates this link. “Shale relies on continued hydraulic fracturing, so there’s always on costs, ongoing costs. So you need to continue to fracture in order to get continued field development. And so when there’s no appetite for that, and there’s no sort of economic drivers to continue, then essentially your incomes going to dry up.” And not only the income for the company disappears but also for the workers and the communities where these workers live and work, along with the larger economic ripples through communities.

Professor Soliman Hunter talks about shale and its reliance on continued hydraulic fracturing.

Due to the US competitive price advantage from shale wells, the country essentially had a freer rein in global politics. There was reduced reliance on OPEC countries to maintain low oil prices underpinning the country’s economic growth. The use of the military to ensure US economic domestic and international dominance could be seen as waning. In fact, the ripple effects of shutting down shale and conventional wells in the US demonstrates the economic reliance on investments into oil and gas well developments. This further calls into question the ability of the US to economically move away from domestic fossil fuels for climate change targets.

Internationally, the fall in price may reset the US relationship back to what it was before it was a giant producer of oil and gas. This changing role of the US from global consumer to producer shifts the geopolitical perspective and assumptions underpinning the Carter Doctrine. For Professor Soliman Hunter, this was questioned, “in the last half a dozen years, I’ve looked at the Carter Doctrine and thought, is that really relevant now that the US is producing, you know, 12 to 13 million barrels of oil and gas a day?” With the US the top oil producer why would it need the Middle East to sustain its oil hungry nation? According to Professor Soliman Hunter, 

“The US has just become the biggest oil and gas producer in the world. And in three months, that’s been wiped out, their gains that they’ve made in the last 10 years have been wiped out, as shale producers cannot sustain that. So, where does that leave us in terms of the value of the Middle East and Saudi Arabia in particular?”

Professor Soliman Hunter explains the Carter Doctrine.

The US military presence in the Middle East can act both as a protector of oil supplies and limit conflict risks. Lower prices through geopolitical stability can ensure some economic recovery. However, tension in the Middle East, can also increase prices and benefit US producers, if oil climbs above the break-even points for domestic producers. Military tension can influence the price both ways, and influence the US economy, along with oil producers as well. The abrasiveness of the Trump administration may just benefit from the unstable relationship with Iran and any military tension. The Persian Gulf Wars may be done, but low-grade conflicts also move markets and ensure the US stays a top oil and gas producer, benefiting its economy and security.

The current state in June 2020, is the huge rise and self-sufficiency of oil and gas production in the US is stagnate. Production is shut down and shale wells abandoned due to their higher operating costs. The US shale industry is broken and it accomplishes previous attempts by Russia and Saudi Arabia to reassert their former dominance over the global oil economy. It is hard to see a clear short-term path when US shale producers reclaim their global influence. Nonetheless, falling company investments into oil and gas field development expresses the significant economic impact technologies and innovation have in the US economy. A US transition away from fossil fuels may be even further away than projections may hold.  Geopolitically, it remains to be seen the importance of the 40-year-old Carter Doctrine in an era with more renewables but drastically low oil prices. Nonetheless, US military presence can influence markets both ways. Professor Soliman Hunter succinctly summarizes the future. “This is a new world order now, where this is going to lead us. I have no idea. But it’s exciting.”

References:

Federal Reserve Bank of Dallas. “How Falling Oil Prices in Early 2020 Weakened the U.S. Economy.” Dallasfed.org. Accessed June 8, 2020. https://www.dallasfed.org/research/economics/2020/0519.

LaBelle, Michael. “MyEnergy2050: Oil and Gas Markets in the Covid-19 Era: Interview with Tina Soliman Hunter.” Fossil Fuel Markets, n.d.

Plante, Michael D., and Kunal Patel. “Breakeven Oil Prices Underscore Shale’s Impact on the Market – Dallasfed.Org.” Federal Reserve Bank of Dallas, May 21, 2019. https://www.dallasfed.org/research/economics/2019/0521.

U.S. Energy Information Administration (EIA). “U.S. Total Energy Exports Exceed Imports in 2019 for the First Time in 67 Years.” Today in Energy, April 20, 2020. https://www.eia.gov/todayinenergy/detail.php?id=43395.

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