OPINION: Why we need to keep exploring for oil and gas, and triple our renewables capacity at the same time.

Minister of Energy and Natural Resources of the Republic of Türkiye,  H.E. Dr. Alparslan Bayraktar

There is a growing global consensus on the necessity for transitioning to renewable energy sources. It is essential to recognize the nuanced complexities involved, particularly for emerging economies. Factors such as historical responsibility, capital availability, and rapidly increasing quality of life contribute to the intricacies of this process. Several countries in the developing world are becoming leaders in creating pragmatic energy policies to meet the rising energy demand and decarbonize simultaneously while others fail to create meaningful change. Such a transition period is a challenge but also a unique opportunity for a carefully curated solution set to the specific needs of a country. Several questions need to be answered throughout the process. Is the national grid ready to take on a new challenge with the population growing, alongside rising electrification and digitalization? Are we financially ready for such transitions? How ready are we to let go of fossil fuels, do we even need to let go of it completely?

In Türkiye, our energy objectives are multi-faceted including ensuring supply security, affordability, achieving net-zero emissions, and attaining energy independence. Any action should aim to achieve most if not all. For instance, a rapid adoption in renewables capacity contributes to energy independence, lowers the cost of electricity and is the backbone of decarbonizing the energy industry.

Critics may question Türkiye’s continued investment in oil and gas amidst global calls for decarbonization. Similar to renewables, increased activities in the oil and gas industry serve multiple objectives. Türkiye’s self-sufficiency in energy rose above 30% only very recently. This achievement has been the result of a balanced approach that includes both renewables adoption and hydrocarbon exploration and production to create domestic alternatives to the country’s oil and gas imports.

The global oil demand remains significant, with Türkiye contributing approximately 1 million barrels per day. It is not feasible nor rational to abruptly abandon fossil fuels without creating alternative pathways that ensure the welfare of our people and maintain our competitive position globally. A transition ignoring the reality may impact public opinion due to drastic increases in energy prices, jeopardizing public support for net-zero targets and turning the transition period into a missed opportunity.

In addition, Türkiye’s oil discoveries came with positive externalities for the region. Gabar, a region previously considered unsafe, is now known for discoveries that excite the entire nation. Rapid investment in the region will quickly bring prosperity to an underdeveloped region. Many who had emigrated in the past decades have returned to the region. A smooth and smart transition rather than a strict transition ensures a win-win conclusion to reach targets. Thus, Türkiye remains committed to a diversified energy portfolio, investing in both traditional and renewable energy sources.

For all nations, but especially for developing ones like Türkiye, we believe that the transition must be responsive, rational, flexible, and digital. The preparation for a smart energy transition comes with the acceptance that we are living in an age of change and innovation. It is essential to be aware of the emerging technologies and the availability of the options to be included in the energy mix. This is why Türkiye is the country that simultaneously hosts the world’s largest nuclear plant construction site, one of the largest offshore natural gas discoveries of recent years, platforms enabling regional trade of natural gas and oil, approximately an 80 GW pipeline of renewable projects, one of the largest rare earth mineral mining sites, a multi-billion-dollar investment plan for the electricity grid and ambitious energy efficiency targets, all at the same time. A collective and holistic approach to energy will give us a resilient national energy system.

The challenge undertaken by almost all countries, many private entities and international organizations have taught us the need for a collective, rather than individualistic approach to address the challenges of climate change. This mission cannot be accomplished alone. We extend an invitation for collaboration with the global community in various areas, including financing, trade, and technology exchange.

As we embark on this journey towards sustainability, it is crucial to recognize the complexities at play, particularly for emerging economies like Türkiye. By embracing pragmatism and collective effort, we are confident in our ability to overcome these challenges and build a brighter, more sustainable future for all.

Let’s change the narrative from energy transition to a smart energy transition.

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The Moroccan government is betting on green hydrogen to spearhead its sustainable energy transition.

One million hectares of land have been earmarked in Morocco for green hydrogen projects, the government announced in a statement on Monday.

As part of the first phase, 300,000 hectares will be made available to investors, both foreign and domestic.

Green hydrogen refers to hydrogen that has been produced through electrolysis by using renewable energy, rather than relying on electricity generated by fossil fuels.

This hydrogen can then be used as a clean energy source, only generating water vapour and heat as byproducts.

According to the Moroccan government, hundreds of national and foreign investors have already expressed a “keen and real interest” in the project.

Officials assert that the initiative will allow the country to “occupy a privileged position” in the development of renewable energies by capitalising upon Morocco’s “rich and diversified natural resources, its strategic geographical position, its world-class infrastructure and its skilled human capital”.

Although Morocco has small oil and gas reserves, it is well-positioned to generate green energy because of its abundant solar and wind resources.

Unlike other countries in the region, it also enjoys political stability, a reassuring sign for investors.

Morocco hopes to produce 52% of its energy from renewable sources by 2030, and the government has been heavily investing in infrastructure to meet this target.

Financial institutions such as the World Bank, the European Investment Bank, and the African Development Bank have already provided funding for sustainable energy projects in the country, which is notably home to the Ouarzazate Solar Power Station – the largest concentrated solar power facility in the world.

For the time being, Morocco is nonetheless still reliant on imports for about 90% of its energy needs, and it is still heavily reliant on fuel sources.

62% of the nation’s electricity production came from burning coal, gas and oil in 2022, whereas only 21.3% came from wind and solar power, and 16.7% came from hydroelectricity.

Source: EURONEWS

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The economic transition has disheartened many, allowing political opportunists to exploit the frustration. However, our leaders should encourage workers to adapt to markets — to build solar panels, wind turbines, and electric batteries. And now, Artificial Intelligence (AI) will hasten the changes, affecting every industry and every employee — especially those working in energy.

“One of our big challenges has always been workforce development and how to train the next generation of workers,” says Robert Austin, senior manager of EPRI — the research and development arm for utilities. “AI offers a real opportunity to learn new skills,” but we must “ease this transition.”

The United States Energy Association held a virtual press conference last week on AI in which Austin appeared, and I was among the journalists asking questions.

AI eliminates routine tasks so those running heavy industrial operations can solve problems and improve performance, which translates into healthier bottom lines. Energy companies can, therefore, gather data and test millions of outcomes before making a final judgment. Humans have limits.

For example, power plant and grid managers will have the tools to balance supply and demand and predict weather patterns, allowing them to accurately measure when wind and solar resources will be available.

According to McKinsey & Company, AI and digitization can increase asset productivity by up to 20% while reducing maintenance costs by 10%. The impact on the economy? PwC puts that at $15.7 trillion by 2030. China and North America will benefit the most, seeing their gross domestic products rise by double-digits in some communities. AI affects product enhancements, which stimulate demand and potential growth.

“AI lets us simulate a significant number of options and make recommendations for the best course of action,” says Marc Spieler, senior managing director for Nvidia. “You will always have humans in the loop orchestrating decisions. We will make better decisions using AI.”

The federal government granted $50 million to Portland General Electic, which leads a consortium with Utilidata and NVIDIANVDA -2%DIA +0.1% to improve grid reliability. The consortium uses AI, integrating distributed energy resources such as solar energy, battery storage, and electric vehicles. The aim is to handle greater electricity demand and protect against freezing temperatures and wildfires.

The digital divide may widen. In the 1990s, I wrote about how the affluent had access to computers and the internet while disadvantaged communities did not. Today, the students focusing on science, technology, engineering, and mathematics have the upper hand — the critical knowledge supporting AI. They can afford tomorrow’s products, but what about everyone else?

If AI increases productivity, companies can increase profits. They can hire workers to help them meet demand. But those jobs will require more skills. While the technology will render some duties obsolete, it opens the door to many others. Workers must, therefore, stay on the cutting edge. For example, businesses are starting to hire chief AI officers.

“In the short term, we’re going to see people utilizing artificial intelligence, replacing other people”—especially where repetitive tasks are involved, says David Derigiotis, chief insurance officer at Embroker Inc. “People must re-tool and up-level their knowledge. AI will change things. The implementation of technology has always had some ripple effect.”

Undoubtedly, the world’s most advanced economies will deploy AI tools. But will emerging countries have the same access? Consider the quest to hit net-zero targets, which requires money and technology: Carbon finance is probably the biggest hurdle to success—money that would go into the latest and greatest technologies that cut emissions and improve processes.

Clinton Vince, head of Dentons’ U.S. Energy Practice, said that the digital divide between developed and developing nations is “very, very real.” Take Sub-Saharan Africa: It is trying to electrify, and AI could help it place wind and solar farms and give its economies more momentum if it can overcome the barriers to entry.

The concern, of course, is that AI will worsen inequality — not just among workers but also among countries. Change is occurring at a more rapid rate than ever before. People can either choose to keep up or deny reality. Responsible leaders will explain that economic advancement is continuous and inevitable. Indeed, America was once an agricultural economy, and today, the digital age dominates — an era pushing us harder than ever before.

Source: FORBES

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TOKYO, March 11 (Reuters) – Resource-scarce Japan is shoring up long-term supplies of liquefied natural gas from close allies Australia and the United States as key contracts from providers including Russia are set to expire by the early 2030s.

Key findings in the report are as follows:

• ‘‘Critical Materials’’ refers to minerals and metals generally viewed as highly important as inputs for a renewables-based energy transition, including but not limited to Cobalt, Copper, Graphite, Iridium, Lithium, Manganese, Nickel, Platinum, and selected rare earth elements.

• Selected Critical Materials Energy Related Technology Applications

• The Energy Transition will be a main driver of demand for several critical materials. IREA’s 1.5 °C scenario includes 33,000 GW of Renewable power and electrification of 90% of Road transport in 2050.

• Assessment of the criticality of materials is dynamic and continuously changing owing to Economic, Geopolitical, and Technological factors. Presently, there is no universally accepted definition of critical materials.

• Critical Material supply disruptions have minimal impact on Energy Security, but outsized impacts on the Energy Transition. For, already built renewable infrastructure could operate for decades. On the other hand, New renewable infrastructures could not be built if there is a supply disruption in critical materials which ultimately undermines the energy transition.

• Dependency risks and supply dynamics of critical materials fundamentally differ from those of fossil fuels. Despite there is no scarcity of reserves for Energy Transition materials, capabilities for mining and refining them are very limited now due to under-investment in upstream activities.

• The Mining and processing landscape of critical materials is geographically concentrated, with a select group of countries playing dominant role. For instance, 100% of natural graphite, dysprosium supply comes from China. 70% of Cobalt comes from Congo, 47% of Lithium comes from Australia.

• 15 billion tons of fossil fuels were extracted in 2021 alone. Oil and Gas exports represented a value of USD 2 trillion in 2021. On the other hand, only 10 million tons of critical materials were produced for low-carbon technologies in 2022.

• Export restrictions on raw materials are a growing concern in international trade. Incidences of such restrictions have grown more than fivefold over the past decade (Figure 2.11) (OECD, 2023). Export restrictions usually take multiple forms, including export quotas, export taxes, obligatory minimum export prices, or licensing

• A growing number of countries and corporations are showing interest in deep-sea mining for critical materials, that is, extracting mineral resources from the ocean floor. To date, 22 state and private contractors hold 31 mining exploration contracts to search for polymetallic nodules, polymetallic sulphides and cobalt-rich ferromanganese crusts which are extremely rich in valuable metals with high-grade ore, such as cobalt, copper and manganese.

• Critical material mining projects can exacerbate water stress. About half of the global copper and lithium production, for example, is concentrated in high-water-stress areas (Gielen et al., 2022b; IRENA, forthcoming). This includes the “lithium triangle”, a lithium-rich (65% of the world’s lithium reserves) region in Andes encompassed by the borders of Argentina, Bolivia and Chile.

• Many battery minerals are mined in developing countries in Africa, Asia and Latin America, the actual value-addition work, such as smelting, refining, cell assembly and ultimately EV production often takes place elsewhere. As Figure 3.8 illustrates, the mining of nickel, lithium and cobalt has only a 0.6% share in the total EV value chain (1.1% if metal smelting and refining are included).

• The concentration of critical material mining and processing in a handful of countries has raised concerns about the reliability of global supply chains, prompting governments and stakeholders to develop strategies to mitigate their vulnerability. These strategies aim to secure access to critical minerals and materials, promote domestic production, and reduce dependence on any single supplier or region.

Policy Considerations and The Way Forward

• Comprehensive, economy-wide evaluations of critical material demand are essential to identify potential risks and help avoid competition between sectors. Countries should carefully assess the effects of surging demand for critical materials across all economic sectors, in line with their net-zero strategies. Currently, most demand for these materials comes from sectors unrelated to the energy transition, including electronics, aviation, defense, healthcare, and steel and aluminum production.

• No country alone can fulfil its demand for all critical materials, so collaborative strategies that benefit all involved need to be developed and implemented. Given the extensive lead times for establishing new mines and processing plants, concentrated supply chains are expected to persist in the near future. Countries should aim to develop dual strategies to ensure co-operation to keep markets functioning while also working to diversify supply chains in the long term.

• Comprehensive assessments of critical materials should be conducted for each mineral to fully grasp the dependencies, risks and innovations that may affect supply and demand. Despite the long list of identified critical materials, not all are equally important for the energy transition, nor are their criticality assessments consistent. For instance, innovation has resulted in an increased use of substitute materials for those considered critical, such as neodymium, copper, and lithium.

• Geopolitical risks can be mitigated through enhanced investment in research and development, which would expedite the creation of alternative solutions, boost efficiency, and expand recycling and repurposing options. Several strategies can be employed to prevent major supply challenges leading up to 2050, with a focus on this decade. Key among these are product design strategies to minimize the use of critical materials, and the recycling and reuse of products to reclaim scarce materials.

• Greater data transparency and oversight of certain critical materials are required to mitigate uncertainty in supply and demand projections. The starting point should be the collection of more detailed information and data on reserves, production, investment, and pricing, among other factors, to track current supply and increase market transparency. The adoption of international quality standards and certification for key products involving critical materials could also facilitate market formation.

• International co-operation is crucial in creating transparent markets with coherent standards and norms, grounded in human rights, environmental stewardship and community engagement. The energy-driven mineral boom offers a chance to rewrite the legacy of the extractive industry. Known issues surrounding mining practices need a proactive response from both nations and corporations. Importer and exporter countries must collaborate to develop supply chains that uphold clear standards regarding human rights, environmental concerns and community engagement. These standards are essential to human security and their absence is one of the root causes of geopolitical instability. In this regard, mining corporations should be held accountable for the responsible management of extraction processes.

Full Report: “Geopolitics Of The Energy Transition-Critical Materials”, International Renewable Energy Agency

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Legislative update follows ruling from the EU Court of Justice related to products marketed before 2012.

The Singapore-based units of the two companies, ExxonMobil Asia Pacific Pte. Ltd. and Shell Singapore Pte. Ltd., have formed the S-Hub consortium to work with the Singapore government as lead developers for the CCS project to reduce the country’s carbon dioxide (CO2) emissions.

“S-Hub and the Singapore Economic Development Board (EDB) signed a memorandum of understanding in December 2023 to coordinate the planning and development of a CCS project, capable of capturing and permanently storing at least 2.5 million tons of CO2 a year, by 2030,” they said in a joint statement.

The project will store CO2 emissions from Singapore deep underground or under the seabed. The storage sites will be selected after undergoing analysis to ensure suitability, it added.

Source: REUTERS

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Investment of about $12 billion is expected for a pilot phase, followed by a further $29 billion for the first phase, Planning Minister Hala al-Said said according to the statement.

Egypt has signed a series of memoranda of understanding and framework agreements for the development of green hydrogen over the past two years.

The North African nation is trying to position itself as a green hydrogen and renewable energy hub, but faces competition from other countries in North Africa and the Middle East.

Source: REUTERS

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The National Development and Reform Commission (NDRC) said in a Tuesday notice that by 2027, the country will have 80 gigawatts of pumped hydro energy storage and will have upgraded its coal fleet so it can quickly respond to changes in power demand.

NDRC said new gas power plants will be built in areas with a stable supply of affordable natural gas, without giving a timeline.

By 2027, NDRC plans to establish a regulatory framework to ensure the market-oriented development of so-called new energy storage, which is largely comprised of battery storage.

Nuclear and solar will also be explored as potential peaking power sources, NDRC said. Neither have traditionally been considered so-called peaking power plants. Hydropower and gas plants are more typically considered for the role because they can change their output quickly.

The plan aims to make it possible for new energy – which typically refers to solar and wind – to eventually make up over 20% of power generation by 2027, up from just 12% last year, according to the national statistics bureau.

Source: REUTERS

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