Energy

Mert Göksu. November 3rd 2022

Renewable energy is the future, but we’re in a transitional stage when our renewable sources of energy aren’t nearly as reliable and consistent as we need them to be. Because of this, many industries rely on batteries to store energy and ensure the renewable electricity we generate is available to use at all times.

The popular lithium-ion batteries typically used for these purposes are resource-heavy in their components and production, and demand for elements like lithium and nickel are expected to skyrocket in the next several decades (42 times between 2020 and 2040) as batteries become more and more essential to power grids. This could greatly strain the supply chain, with a deficit of 1.75 million metric tons by 2030, and even have geopolitical consequences involving major world powers like Russia (who controls 21 percent of global class 1 nickel production) and China (who controls 80 percent of cobalt processing capacity).

Because of this, it makes sense to seek alternative power sources and storage solutions that don’t face the serious supply chain and macroeconomic issues that lithium-ion batteries do. In fact, doing so could become a necessity in the near future, particularly with our increasing reliance on renewable energy solutions. So getting ahead of the curve is essential. Some battery alternatives include sodium-ion, liquid metal, sodium-sulfur and zinc-ion. Using a variety of battery options not only helps ease economic strain, it also keeps us from relying on a single energy storage solution, allowing us to pivot when unforeseen obstacles arise. Greater shares of minerals like iron, phosphate, silicon, calcium, and antimony can also ease supply chain issues with lithium.

The most important factors for any battery are performance, cost efficiency and ease of production. So these must be top of mind when determining which alternatives are best.

With advancements in battery technology, the future of renewable energy looks brighter than ever.

Mert Göksu

As emissions standards and environmental policies become stricter in more developed countries, it’s important to have regulations in place to ensure that corporations don’t try to take advantage of the more lenient climate policies in developing nations as a workaround. For example, there’s been an increase in tariffs on goods imported from countries with less strict industrial eco-regulations, making these goods more expensive and discouraging the import of environmentally-unfriendly products that otherwise would have been cheaper. Having more of these kinds of regulations in place could make the cost of carbon emissions fairly uniform across the world.

With a more uniform cost, countries who rely on these types of exports would then be more likely to invest in more eco-friendly manufacturing and industrial methods in order to remain attractive and competitive options for their affordable goods. And that may be the motivation some developing countries need to upgrade infrastructure to a more sustainable system.

But it’s not only a good thing for developing countries. More developed nations would be equally motivated to be wary of creating new fossil fuel energy sources or shutting down existing renewable systems and nuclear reactors. Plus, with growing demand for nuclear in a zero-carbon future, it would lead to stricter safety standards and a reassessment of nuclear standards around the world.

Mert Göksu. June 2021

In the ongoing climate crisis, the Inflation Reduction Act (IRA) is a breath of fresh air, with the ability to reduce greenhouse gas emissions by over 15% more than our current policies allow (42% reduction as opposed to 27% at our current rate, according to the Princeton Zero Lab). In addition to reducing admissions, the IRA could reduce the costs of other climate solutions as well, so businesses and the government can continue to make progress toward a cleaner future. If the US is to achieve its goal of reducing emissions by 50% by 2030, the IRA is an essential step in the process.

In the race to reduce carbon emissions, nuclear energy must be a part of the conversation. It’s already the largest carbon-free electricity source in the country (accounting for nearly 50% of all carbon-free power and 20% of the total electricity generation in the United States), and it could play a major role in greenhouse gas reductions as the world moves to clean energy alternatives. Nuclear energy could generate up to half of the electricity in the country by 2050.

The IRA would support this nuclear mission with methods like tax credits in support of nuclear plants (that would also help to keep existing plants open that would otherwise be decommissioned), similar to the Civil Nuclear Credit Program in the Bipartisan Infrastructure Law. These credits would be in effect from 2024 to 2032.

Starting in 2025, the IRA would take production tax credits and investment tax credits set aside for specific renewable energy technologies and make them available for advanced nuclear energy technologies as well, so other zero-carbon solutions wouldn’t have an unfair advantage over nuclear. These credits would help make more funds available to nuclear energy development and allow the technology to mature and advance at a faster pace. One thing to address would be the phasing out of these credits in the early 2030s. This quick phasing out could be a hindrance to nuclear development if not extended, so establishing an extension should be a priority for policymakers.

High-assay low-enriched uranium, also known as HALEU, is an essential fuel for advanced nuclear energy that helps it be more effective and efficient while producing less waste. The IRA would help make commercial-scale HALEU-producing facilities a reality in locations outside of Russia, which to this point has been a challenge due to the financial investments and long-term commitments required from advanced reactor developers and project sponsors. And with international relations more strained than ever between Russia and the rest of the world, this would be a welcome development in advanced nuclear energy. The invasion of Ukraine has made it all but impossible to get any necessary resources from Russia, so an investment from the IRA is now essential to make the development of advanced nuclear possible.

The IRA would provide much-needed funding to the tune of $600 million for the obtaining and transportation of HALEU through enrichment or, in much smaller quantities, Department of Energy stockpiles. Transportation concerns would also be addressed with a $100 million investment. This money would make up for the lack of funding provided by the Energy Act of 2020.

It’s important to remember that new energy solutions are replacing older technologies, and it makes economic sense to build new advanced nuclear facilities where there used to be fossil fuel sites like retired coal mines, coal power plants and brownfield sites. Known as “energy communities,” these existing spaces can fit nuclear plants, which can take advantage of existing transmission and water supply infrastructure to make their construction simpler. An example of this is TerraPower’s Natrium demonstration project in Wyoming.

With aggressive goals for carbon emissions around the corner in the US, it’s essential that advanced nuclear power is a part of the process. But the only way for that to happen is with the support of legislation like the Inflation Reduction Act, which can help pave the way for long term nuclear success.

Mert Göksu

The world is headed to a net-zero emissions future, but we’re not ready to abruptly leave oil and gas behind. As we’ve seen with recent fuel price surges, inflation and other global events, it’s essential to have a plan in place as we transition away from traditional fossil fuels. Without widespread usage of renewable energies, a smooth transition will be impossible. And it’s likely oil and gas use will never go entirely to zero. In fact, even as oil and gas companies face increasing pressure to make a transition into a net-zero world, most visions for the transition estimate that petrochemical demand and the ubiquitous use of oil and gas in transportation will mean there will continue to be a significant demand for both long into the future.

There will be a fine line to walk when it comes to phasing out of oil and gas while maintaining a stable economy, and we can’t do it without a well-defined plan from the industry and lawmakers. Some things that may ease the transition include the increased use of clean hydrogen fuel cells as well as carbon capture and offsetting, but these options all need to be explored in considered, strategic ways. Oil and gas companies will need to be transparent and vigilant in the measures they take to reduce their emissions as they take steps toward a net-zero future. The transition can go smoothly, but not without detailed plans and cooperation from the industry leaders.

Instead of labeling oil and gas companies as the enemy of a net-zero world, it’s time to discuss how they can play a crucial role in making the change to a decarbonized planet. Policies, technologies and financial markets are all being influenced by these goals, and oil and gas companies have an opportunity to actively participate and become a part of the solution.

It will be key to find ways for oil and gas companies to be active participants in the transition to net-zero energy systems rather than simply attempting to cut them out of the picture entirely. They have resources and investments that can help non-fossil energy advancements, and will be instrumental in making the switch go smoothly. Still, the pressure is on these companies to evolve and help with the ambitious global goal of net-zero emissions by 2050. More and more, there is a global awareness of environmental issues and a public desire to make sustainability and net-zero emissions a reality.

While there tends to be a rosy outlook on how smoothly the overall transition to net-zero will be, things like the war in Ukraine and its ripple effect on gas prices around the world show how volatile and fragile the oil and gas market can be, as well as its continuing influence on our daily lives. It also illustrates the dangers posed from an attempted net-zero transition that doesn’t go as well as planned. Even the most ambitious net-zero 2050 plans recognize the continued use of oil and gas, particularly in developing countries. BP’s Net-Zero by 2050 plan still accounts for 25 million barrels per day of oil demand, largely due to transportation needs. The International Energy Agency (IEA) projects a similar scenario, with 24 million barrels per day of oil demand in a Net-Zero 2050. So oil and gas companies will be critical to the process, and many have already pledged to make big emissions reductions in the coming decades. Some of these are limited to scope 1 and scope 2 emissions, others entail scope 3 emissions covering the full supply chain through consumer usage.

Some questions we will have to address include how oil and gas companies can contribute positively and productively to the transition to net-zero, how the ambitious net-zero plans can accommodate and include oil and gas companies into their vision, what the industry’s options are for how the can participate in the process, and what policies and technologies need to be established and developed along the way to make it all possible.

Financial considerations are obviously paramount in an industry transition as large as this one. The risks are high for oil and gas companies, as well as countries with stranded assets. It will also be important to make sure there is no lack of necessary resources as oil and gas production is reduced while alternative energies are increasing. One need look no farther than their local gas station to see the effects of high demand with reduced supply, a very real threat if the net-zero transition is not handled properly. Another effect of moving away from oil and gas is the reduced participation of countries that historically have held much power in the oil industry, and the kind of political instabilities that can result in this loss of power should be kept in mind as we plan for a net-zero future. And, there will need to be consideration for the risks of high-emissions assets still being used instead of being decarbonized or retired completely.

We will have to lean heavily on oil and gas companies to help with these concerns, as their participation is crucial for the success of a net-zero future. They have many options for how they can help bring positive change. From a science and technology standpoint, greenhouse gas (GHG) emissions solutions are an obvious place to start, particularly the reduction of methane emissions. Once methane emissions are reduced, carbon capture, utilization and storage (CCUS) technologies will play a key role. Companies will also need to play an active role in transitioning toward a hydrogen-based fuel industry, developing new renewable energy technologies, and developing a meaningful, long-term system (backed by clear policies and transparent cooperation among oil and gas companies) of carbon offset and removal. With time and effort, these things can help transition from scope 1 and scope 2 emissions reductions to the critically important scope 3 emissions reductions.

Reconciling a growing demand for policies and actions leading to net-zero with the very real gas and oil crisis we’re seeing now around the world will require delicate and careful action. It will neither be simple nor easy to reduce emissions and usage of fossil fuels, but it is of the utmost importance in order to achieve net-zero by 2050. In order for this to be accomplished, there are three major steps required for oil companies, governments and financial markets.

We’ll need clear net-zero policies and plans from both governments and oil and gas companies to start. Pledges are one thing, actions taken to achieve those pledges is something else entirely. The industry must do their part to support government legislation that helps us achieve a net-zero future.

Oil and gas companies will need to show active and aggressive participation in reducing greenhouse gas emissions. Policymakers will need to work together help make this happen to reduce scope 1 and scope 2 emissions.

Finally, the financial sector will play a key role in all of this. Financial investments in the oil and gas industry will help pave the way to net-zero, not only by helping to develop important new technologies, but by continuing to invest an appropriate amount in gas and oil to help ensure the transition goes smoothly.