January 2021 – @alvaroriosroca – This 2020 will be very particular because of what we had to challenge. An unknown virus, of vertiginous contagion and with some lethality (1.7 million deaths reported in one year vs. A global mortality of 58 million in 2019, that is 3%). The worst thing, it arrived shored up by misinformation and exacerbation of fear in the social networks and made many politicians nervous and willing to do anything. What will be the mortality due to the increase in poverty that the different confinements will leave us? That remains to be seen. The infamous thing, everything indicates that 2021 will not be very different in spite of accelerated and multiple vaccines.
Entering the topic, below, the 4 relevant events of 2020 in the field of energy. The first is associated with the virus. The mobility to which we were accustomed did not return and the virtual became exponential (home office, etc.). This, added to the lower economic growth projected, will cause a very strong impact on the demand for oil. Short, medium and long term impact on oil producing countries and oil companies. Just remember that this 2020 ExxonMobil, the once powerful gringo oil company, is no longer among the 500 companies listed in the Dow Jones.
A second issue is associated with what happened in Europe in July. The document and the communication from the European Commission to the European Parliament, the Council, the European Committee for Social and Economic Affairs and the Committee of the Regions on “A Strategy for Hydrogen for a Climate Neutral Europe” was made public.
The European Union understands that it must lead this issue for various reasons associated with technology and generating skilled employment and has put the world to talk about hydrogen. The economic resources for scientific research are beginning to come in large quantities to lower costs throughout the chain from production to final uses of the new energy.
The shortest term bet is with the blue hydrogen from natural gas and CO2 capture. The green hydrogen from water and with renewable energies for its separation are medium to long term. Several pilot projects have begun to be developed and are already thinking big. Hard blow to the demand of fossil energies in the long term.
A third theme, just two months later, in September. Chinese President Xi Jinping surprised the world by announcing to the UN General Assembly that China has set itself the goal of becoming carbon neutral by 2060. With this announcement, the world’s largest carbon emitter finally changed its position from having limited responsibility for reducing global emissions as a developing country to taking a clearer lead in combating climate change.
Remember that China achieved much of its economic growth in the past two decades, thanks to massive installation of coal-fired plants that provided cheap energy to become the world’s factory and achieve global leadership. The impacts of pollution in several of its cities and the global pressure for climate change forced the political decision. Natural gas will replace coal in the short to medium term with renewable energy and hydrogen much later. Another blow to the demand for fossil fuels.
And finally, just two months later, in November, the Democrats’ victory in the US, which will accelerate the longed-for global energy transition to cleaner fuels. President Biden’s proposed Green New Deal will add to the somewhat lonely effort of the European Union, joined by China in September.
The political will of the three major global powers (also in terms of energy demand) have come together in 2020 for a much more rapid change in the global energy model. However, we should not forget that fossil fuels still account for nearly 80% of the world’s energy matrix and that by 2050 natural gas and some oil will most likely still be in abundant use.
This 2020 was certainly strange and in energy terms it really surprised us. I wish all our readers a prosperous 2021 and we meet every year.
*Former Minister of Hydrocarbons of Bolivia and current Managing Partner of Gas Energy Latin America