Understanding the energy transition

Much in the same style of the article where I described what, in my opinion, is driving the Mobility Transition, I have decided attempt the same analysis for the over-arching Energy Transition.

1: Cost reductions

THIS is the death toll for oil, gas and nukes (for more information about CfD contracts, read here)

Sure, fancy footwork around science can (but only momentarily) blur the issue in the eyes of weak-minded governments too used to sucking up fossil narrative, but hard cost advantages are real and growing: whether for generation or for moving cars and trucks,


2: De-risking

De-risking is another big driver for the energy transition. The volatility of prices due to the pandemic aftermath and the war is scything through the business models of a lot of smaller energy players. Profits may be through the roof for O&G, but not necessarily so for energy generation and trade companies.

This interesting article (thanks Joseph D. Ortiz) describes the decision by PSEG following that of Duke Energy, American Electric Power and AES to focus back on regulated markets only.

in a nutshell, the generation company risks being caught between a rock (rising fuel prices) and a hard place (inflexible selling contracts).

3: National Security

This comes last because while it’s very relevant for Europe it’s much less so for the U.S. and China, which seems to have a plan that’s largely revolving around the control of natural resources and is probably waiting to pick-up the pieces after Russia implodes after the ill-advised war in Ukraine.

Source: Eurostat

Europe imports between €20B and €25B per month worth of fossil fuel products: it is inevitable that such a mass of money whets the appetite of a would-be dictator thinking s/he could rule the world by holding Europe as hostage. It happened with the Arab nations in the 70s, it’s happening with Russia today. While the U.S. has a strategic interest in a strong Europe, its energy policy will never coincide with that of the EU, being the largest crude producer in the world.

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