Just Energy: In Pursuit of a Fair Global Energy Transition Balance

On June 23, Meridian hosted a virtual program, “Just Energy: In Pursuit of a Fair Global Energy Transition Balance”, the latest program in our Diplocraft series. This program can be seen here. Moderated by Brian Sullivan, Anchor of “Worldwide Exchange” & Senior National Correspondent, CNBC, the program featured the following speakers: 

The Honorable Dan Brouillette, U.S. Secretary of Energy (2019-2021) 

Mr. Ejima Kiyoshi, State Minister of Economy, Trade and Industry of Japan 

Her Excellency Anniken Ramberg Krutnes, Ambassador of Norway to the United States 

The Honorable Ernest Moniz, U.S. Secretary of Energy (2013-2017); President and CEO, Energy Futures Initiative 

His Excellency Ha Kim Ngoc, Ambassador of Vietnam to the United States 

Dr. Vijaya Ramachandran, Ph.D., Director for Energy and Development, The Breakthrough Institute   

Top takeaways from the conversation:

  1. JUST ENERGY TRANSITION. There needs to be a balance between the energy needs of people in poor countries and the emissions concerns of people in rich countries.For many developing nations, natural gas is a vital tool to efficiently lift communities out of poverty. Currently, 600 million people in Africa do not have access to reliable electricity. As Dr. Ramachandran revealed, natural gas gives Sub-Saharan African countries who contribute less than 4% of annual global carbon emissions, access to many types of fuel and energyMr. Kiyoshi explained, “Ensuring energy excess and the stable supply for energy are significant challenges for energy transitions. There are concerns in Asian countries over whether they will be able to meet growing energy demand mainly with renewable energy and over the increasing public financial burden of [renewable energy].” Vietnam’s output of natural gas will not meet its citizens and industries’ energy demands, so they need to import from 1 to 4 billion cubic meters of liquefied natural gas (LNG) per year from 2021 to 2025 and double this amount from 2026 to 2035 to meet energy demands. There is a growing call from international government bodies to issue a blanket ban on the financing of fossil fuels, which would harm developing countries. This would especially hurt Africa. Dr. Ramachandran explained“Africa sits on 600 trillion feet of natural gas, and this is why it is vital to its development. It is vital to its food. It is vital to its transportation fuels. It is important for other sources of its infrastructure development.”  
  2. THE BIDEN ADMINISTRATION’S ENERGY AND CLIMATE PRIORITIES. Upon coming into office, the Biden administration has swiftly prioritized carbon emission reductions, promoting renewable energy, and other climate change policies. When asked if he would advise the Biden administration to use LNG as a part of their energy toolbox Secretary Moniz stated“Yes…We need to rebuild alliances, which have been in tatters for years. Rebuilding alliances include listening to and hearing and acting upon our allies' concerns as they make their energy transitions. And that means LNG.” Secretary Moniz later added, “The major customers for our LNG exports are OECD countries. And there is a consistent concern that the LNG exports which they depend on so much for their energy security, they’re concerned about what the United States will do.” The Biden administration has started the Global Climate Ambition Initiative to address climate change and plans to increase international financing, investment in infrastructure, and move towards net zero emissions by 2050. This last goal invited commentary by both former Secretaries of Energy. Secretary Moniz explained, “it’s [net-zero] possible, but realistic and possible are two different issues. The administration’s and my view is that I would actually start beyond net zero. Net-zero is a point in time on the way to a net-negative economy.” Secretary Brouillette respond that net zero is “very difficult, and it’s impossible without the use of important fuel sources. That’s natural gas and nuclear power. Without those two, 2050 goals, as articulated so far, are simply not going to be met.”  
  3. THE LNG INDUSTRY AND THE ECONOMY. In his opening remarks, Brian Sullivan stated “Energy is the only true global industry. It’s the one major part of the economy that binds everybody together.” Indeed, the oil and gas industry are important to the underlying components of the U.S. and the world economy. Secretary Brouillette cited, “During the financial crisis of 2008-2010, [the gas industry] was the only industry that was actually creating jobs. From 2009-2019, this industry accounted for 40% of the cumulative growth industrial production.” During the 2010 crisis, the administration quickly moved to permitting the licensing of LNG export facilities and resulting in new job growth. Since 2010, there has been a reduction of greenhouse gas emissions by about 10% nationally with 60% of this reduction coming from the switch from coal to gas. Secretary Moniz stated, “In roughly a decade, coal has gone from 50% to 20% share of the electric market, natural gas has gone from 20% to about 40% accompanied by a tremendous increase in the deployment of wind and solar. In fact, in 2020 there were 36,000 megawatts of solar and wind capacity added.”  
  4. FINANCING INFRASTRUCTURE PROJECTS. The international community, specifically the World Bank and other multilateral lending institutions, needs to come together and provide serious financing for infrastructure to support the energy transition. Pipeline infrastructure has been key in the U.S. as it allows the product to reach the coastline and ultimately Europe and other parts of the world. Speaking on Norway’s oil and gas export methods and pipelines in Europe, Ambassador Krutnes agreed, “Our gas have traditionally gone through these pipelines. They work excellently. They’ve been there for decades. And that’s the way we power Europe.” Ambassador Ngoc explained that LNG projects in Vietnam have focused on fixing outdated infrastructure, including building pipelines for LNG systems, terminals for distribution, processing, and storage systems. This is crucial at a time when China has made a commitment to countries in Africa to finance coal-fired power plants and other infrastructure. The international community must provide a cleaner path for supporting African countries’ development and LNG projects.
  5. LNG AS AN ENABLER FOR RENEWABLE ENERGY. With increasing energy consumption, there is a need to make energy more efficient. Natural gas is of particular importance on the global transition from traditional to renewable energies and can help countries face their own unique reality. In the case of Vietnam, Ambassador Ngoc explained, “Low-carbon energy including natural gas is a stepping stone for us to move fully to renewable energy in the future. In recent years, natural gas power has become an integral part of Vietnam’s energy structure. Vietnam’s output of natural gas will not meet our demands. Therefore, Vietnam has plans to import LNG.” Ambassador Krutnes explained that in the case of Norway, the nation is helping the European Union go renewable by providing 25% of the region’s natural gas, while also contributing wind power and other renewable energies. In order to finance these types of projects in Vietnam, they will need 10.6 billion USD from 2016 to 2025 for LNG production and renewable projects, so international support and investors with long term vision and the willingness to financial support LNG production and imports will be key. As Secretary Moniz stated, “It was natural gas that was the enabler for a major expansion of renewables because gas is what primarily has had the flexibility to balance those variable resources.”   

 

Further Reading

Project summary

Just Energy: In Pursuit of a Fair Global Energy Transition Balance | June 2021
Number of Attendees: 42
Regions: Africa, East Asia and Pacific, Europe and Eurasia, Western Hemisphere
Countries: United States, Japan, Norway, Vietnam, Botswana, Indonesia
Impact Areas: Energy and the Environment
Program Areas: Diplomatic Engagement