This image shows an onshore wind turbine in the Netherlands.
Mischa Keijser | Image Source | Getty Images
Discussions about the energy transition, what it means and whether it’s actually underway at all, have become major talking points in recent years.
How the transition — which can be seen as a shift away from fossil fuels to a system dominated by renewables — pans out remains to be seen.
It depends on a multitude of factors, from technology and finance to international cooperation. While crucial, all are bedeviled by a great deal of uncertainty and risk.
The above topics were considered in detail during a panel moderated by CNBC’s Dan Murphy at the Atlantic Council’s Global Energy Forum in Dubai on Tuesday.
“At the heart of the energy transition is digitalization,” Leo Simonovich, who is vice president and global head of industrial cyber and digital security at Siemens Energy, said.
“In the energy sector, 2 billion devices are going to be added over the next couple of years,” he said.
“Every one of those devices could be a potential source of vulnerability that could be exploited by bad actors.”
Expanding on his point, Simonovich explained the potential consequences of the above happening. “In a system that is increasingly connected and digitized, that includes legacy assets in need of digital assets, this could have cascading effects,” he said.
“And what we’re talking about is not just loss of data, what we’re really talking about is a safety issue, one that could bring down major parts of the grid or, as we saw with the Colonial Pipeline attack in the United States, parts of [the] gas network.”
Cybersecurity, Simonovich argued, was important both as “an opportunity to accelerate the energy transition if we can get it right because it builds trust, but also as a major source of risk that we need to address pretty urgently.”
Alongside cybersecurity, geopolitics will also have a role to play if the planet is to shift to a low-carbon energy system, a point forcefully made by Abdurrahman Khalidi, chief technology officer of GE Gas Power, EMEA.
“It took the world several decades, until 2015, to arrive at almost a consensus in Paris, that global warming is happening and it’s due to greenhouse gases and the commitments started flowing,” Khalidi said. “It took us a lot of debate.”
Khalidi’s mention of Paris refers to the Paris Agreement, which aims to limit global warming “to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels” and was adopted in Dec. 2015.
“For decarbonization to happen — as we saw in COP26 — you need … cooperative and collaborative world governments,” he said. “The risk I see right now [is that] the world is sharply polarized and the world is being divided along ‘with’ and ‘against’.”
Khalidi’s comments come at a time when Russia’s invasion of Ukraine has highlighted just how reliant some economies are on Russian oil and gas.
While the war in Ukraine has created geopolitical tension and division, it has also resulted in a number of initiatives defined by cooperation and shared aims.
Last week, for example, the U.S. and European Commission issued a statement on energy security in which they announced the creation of a joint task force on the subject.
The parties said the U.S. would “strive to ensure” at least 15 billion cubic meters of extra liquefied natural gas volumes for the EU this year. They added this would be expected to increase in the future.
President Joe Biden said the U.S. and EU would also “work together to take concrete measures to reduce dependence on natural gas — period — and to maximize … the availability and use of renewable energy.”
Given that fossil fuels play such a major role in modern life, any transition to an energy system and economy centered around renewables and low-carbon technologies will require a vast amount of money.
During Tuesday’s panel, the question of where this cash should be invested was tackled by Kara Mangone, who is global head of climate strategy at Goldman Sachs. Among other things, she stressed the importance of integration and commercial viability.
“Our research estimates that it’s going to take anywhere from 100 to 150 trillion [dollars] in capital, about 3 to 5 trillion a year — just an astronomical amount, we’re nowhere near that today — to deliver on the goals that were set forth in the Paris Agreement,” she said.
Around half of this capital would need to be focused on renewables and technologies that were already at a commercial scale, Mangone explained.
“But the other half, very importantly, will need to go into carbon capture, into hydrogen, into direct air capture, into sustainable aviation fuel, e-fuels — technologies that are not yet…
Read More: How hackers and geopolitics could derail the planned energy transition