Friday, October 28, 2022
How can we tackle the energy crisis? What is the role of financing in the fight against climate change? What is the status of international negotiations? In order to address the global impact of the current energy crisis, the Spanish Committee of the World Energy Council (WEC), in cooperation with the Spanish Energy Club and the Elcano Royal Institute held its traditional annual event on October 26, 2022. An edition focused on analyzing the situation of the energy sector at the international level and looking for possible solutions to deal with the challenges Europe is facing to advance in the energy transition.
During the meeting, experts from different organizations and entities highlighted the crucial context in which we find ourselves: the Russian invasion of Ukraine has forced countries to react, in order to ensure European independence of supply, while aiming to reduce energy consumption and demand, always keeping in mind the long-term energy efficiency goals set out in the Paris Agreement. The geographical diversification of suppliers and the balance between different energy sources are two essential aspects for maintaining a strategic position in the global energy landscape. "It has been an intense year from the point of view of advocacy, but also significant in what not acting means," said Teresa Ribera Rodríguez, third vice-president and minister for Ecological Transition and the Demographic Challenge. "If we want to reduce vulnerability, climate change or the footprint on the domestic economy of a system subject to volatility, we need to accelerate the transformation of our energy system," she added.
The European Union has taken measures to increase investment in alternative energies, such as renewables and green hydrogen. They also presented plans to save gas in order to have enough storage for a quiet winter. The same happened with the plan for to reduce electricity demand and last October, the European Executive proposed a new package of emergency energy measures to address high supply prices.
Investment, the key piece of the energy transition
Climate finance is one of the main points discussed during the event. Climate change cannot be mitigated without sufficient investment by all countries. Faced with the goal of $100 000 billion per year from 2020, José Juan Ruiz Gómez, chairman of the Elcano Royal Institute, called for the need to make an additional effort to exceed the current level of $83 500 obtained in 2020.
At the European level, investment in the energy industry is essential to position the continent as an attractive power in terms of clean energy. The global investment trend in this sector is focused on mature economies, such as China. However, if we look at it from an overall perspective and take population into account, Europe leads the way in clean energy investment. "The biggest growth lever for the future is investment in clean energy, and without clean energy, no growth is possible," said Ruiz Gómez.
However, investing in clean energy is not enough to achieve decarbonization. This investment must exceed those that currently exist in the oil and gas industry. "There is a gap that has not been resolved. We need a large set of investments in clean energy, in all its energies and in all markets Until we resolve this gap, we will face the same situation," warned Carlos Fernandez, acting head of the Division of Gas, Coal and Energy Markets at the International Energy Agency (IEA).
Another key aspect to be addressed by States are regulations and policies to develop a common market to navigate the energy transition. "We need a favorable regulatory framework, because without the right regulation, Spain and Europe could lose the train to other regions or powers," said Maarten Wetselaar, Cepsa's CEO, who also stressed the importance of Europe "rowing together" and that the measures affecting the sector "are aligned in design and intensity in all territories.”
Another solution put on the table during the congress was the necessary cooperation between countries to carry out actions to adapt to and mitigate the consequences of climate change. The energy transition must also be equitable, leaving no region of the planet behind. "African countries contribute the least to climate change, yet they suffer greatly from its impact," said Sarah Henry, second secretary of the Embassy of the Arab Republic of Egypt, host country of COP27 to be held next November. "It's time for the world to stop complaining and start taking timely action," said Henry.
The role of international negotiations is therefore absolutely necessary to reach agreements on the lines of action to achieve the desired decarbonization. However, regulations, laws and agreements are required to promote progress towards established objectives. In this regard, Cambridge University professor Cristina Peñasco, highlighted the value of public-private collaboration to generate effects related to financing, always under a common measurable framework that is aligned nationally and internationally. This was also highlighted by Cepsa's CEO, who recalled that "we are at a historic moment, in which energy is at the center of all global changes, at the center of public debate, and in which governments and companies must go hand in hand, with the lights on and looking for truly productive scenarios together.”
But it's not all about financing and big deals. Mario Ruiz-Tagle, president of the Spanish Energy Club and CEO of Iberdrola Spain, highlighted during his speech the importance of communication, transparency, trust and, above all, education about the current energy situation, which "is essential to understand the process of today and understand the solutions for tomorrow.
We are living in the era of energy transition, even if the path seems complicated. "When we are in a shared society, if someone needs help, you have to help, and that solidarity requires flexibility," concluded Vice President Teresa Ribera. The current crisis is just an opportunity for all countries to join forces, cooperate, invest and move forward together towards a better future.
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