The Energy Trilemma – Does the Need for Energy Security Derail the Energy Transition?
At ADIPEC 2022 in Abu Dhabi a few weeks ago, ABL Group’s global managing director of renewables, John MacAskill was invited to contribute to a panel answering the question ‘The Energy Trilemma – Does the Need for Energy Security Derail the Energy Transition?’. John’s initial reaction was “of course not”. But in reality, it is not that simple, and he discussed on the panel (and below) that it depends on ‘us’; our decisions, priorities, and focus, but this is an opportunity to balance the energy trilemma in the planet’s favour.
The Russian invasion of Ukraine has returned a sharp and painful focus to the topic of energy security, with ripples being felt from the global food supply to risks of near-term increased emissions, it is being used variously to both promote an increase in the ‘local’ production of fossil fuels, and as a call to accelerate renewables and other clean energy solutions. They cannot be both right…can they?
The energy trilemma is the fine and challenging balance between three dimensions: energy security, equity (universal access and affordability), and environmental sustainability. I will argue that the current crisis can and should accelerate the path to net-zero in our power and wider energy systems, and that it is an Archimedes Lever which should be grasped with both hands.
In one sense we must decide if this is an energy crisis at all, or whether it is a fossil fuel crisis?
We could be at risk of solving the wrong problem if we do not recognise that at its heart lies an oil drum…or a pipeline. I do not argue against the need for short term investment in oil and gas infrastructure per se, we must avoid the collapse of energy intensive industries and our people freezing in winter unable to afford heating. In the short term we must increase gas supplies, for instance in Europe, from alternative sources as well as driving for energy efficiency. We have seen at least a decade of under investment in oil and gas infrastructure and that lack of capacity is partly at fault. But to focus on that as the road out of this crisis would result in arriving at a cul-de-sac.
This is an opportunity to focus on a pathway that actually ‘solves’ the trilemma, not derail it.
But first a look at energy geopolitics.
This is not a new thing. Fossil fuel energy has been central to geopolitics for 200 years. From the British Empire deploying the first coal-fired steam ships in the First Opium War, to oil powering the U.S. to becoming the dominant global superpower in the last century…to Russia building Europe’s reliance on it as a source of cheap gas.
It is that last example that has now broken the spell. As far back as Putin’s invasion of Georgia in 2008, he has used Europe’s dependency on Russian gas to constrain their policy against his various actions of aggression.
Up to today, fossil fuel geopolitics has held back the energy transition. The U.S. failed to ratify the 1997 Kyoto Protocol as they thought it would disadvantage their economy. As Berlin started on the Energiewende, one result was a deeper reliance on Russian gas while at the same time Russia started a process to remove Ukraine from their gas transport system. We now see the end result of this; refugees and bombs over Europe again.
Fossil fuels, in the wider global sense, can therefore be said to bring energy insecurity.
The energy trilemma while a difficult and challenging balancing act, for me gets easier the deeper into the energy transition we progress. So how does accelerating ‘solve’ the trilemma?
In the short to medium term, certainly a greater diversification of gas sources for Europe and other dependant nations is a way to reduce the previously mentioned energy insecurity, so increasing security. This is vital as the energy transition will take time to penetrate into harder to electrify energy sectors such as heating, transportation, and some energy intensive industries such as steel.
However, this should not be seen as a reason to put a break on the transition, we must limit this as a ‘pull’ for new exploration or major new infrastructure that bakes in future emissions. We must ration what is built and increase the capacity of what we have as a first measure.
Only decoupling economies from fossil fuels will bring us closer to true energy security. Following Russia’s invasion of Ukraine the UK, EU and the U.S. have accelerated measures designed to reduce reliance on fossil fuels. The UK’s British Energy Security Strategy (BESS), the EU’s REpowerEU programme and the U.S.’s Inflation Reduction Act (IRA) have outlined that renewable energy, and other clean technology, has to play an integral role in delivering on net-zero, and so, energy security.
Wind and sun, unlike fossil fuel feedstock, is always local; the focus on both or either, is driven by the market’s location and resource. So, in terms of electricity generation any nation on earth can build a sufficient local, and so, secure, energy supply using renewables. The mix, the financing, the transmission, and other factors all make this a road that is easier in some places than others, which is why climate finance was such a priority topic at COP27. But the fundamental fact remains that increasing the renewables share in your electricity mix brings increased energy security.
The Russian invasion of Ukraine has finally allied energy policy with national security policies, basically aligning energy security agendas to that of net-zero. The faster we accelerate, the more secure our energy supplies become.
We need energy to live our everyday lives. An obvious statement, but for many in the West we take it for granted. It heats our homes, runs our cars and public transport, and powers the lights in our homes, offices, and streets, and of course the industries we work in.
But equity is about energy being affordable and accessible to everyone; it recognises that disadvantaged communities have been historically marginalised and overburdened by pollution, underinvestment in clean energy infrastructure, and lack of access to energy-efficient housing and transportation. The link between fossil fuel extraction, corruption and the erosion of governance in countries without strong existing institutions, is well known. This is not equitable.
So, what does the energy transition bring that can provide a more equitable outcome?
First, let us look at affordability. The Ukraine invasion and OPEC+ slashing production, are both tightening the market considerably and driven up the cost of oil and gas. Though this has been tempered by a slowing global economy, it is expected that we will see major oil price spikes again in 2023.
So, we need to reduce the cost of energy. From solar, the worlds cheapest energy generating technology, to onshore wind, offshore wind and battery storage, renewables allow for more local generation and are usually the cheapest option for electrical generation. From utility scale projects to rural agricultural, industrial and domestic settings; renewables are being deployed in all these target segments. Even with challenging raw material costs and supply chain crunches, we saw in 2021[i] that two thirds of new renewable energy capacity, circa 163GW, was brought online at a lower price than the cheapest coal-fired plants in the G20. And this was before the fossil fuel price spikes of 2022.
Looking at our whole energy system, the story is the same. Models from the IPCC and IEA have consistently overestimated key green technology costs and underestimated deployment rates. A recent study[ii] has shown that a rapid green energy transition is likely to be beneficial, even if climate change was not an issue. When the costs and risks from climate change are considered, the benefit of a fast transition is overwhelming. A fast transition scenario according to this study, has an expected payoff of around $5–$15 trillion, not taking into account mitigated climate change costs.
The Oxford English Dictionary explains ‘sustainability’ as the “avoidance of the depletion of natural resources in order to maintain an ecological balance”. It is absolutely impossible to see how fossil fuel extraction, processing, and use, can fulfil this requirement in the trilemma.
When measuring country against country, The World Energy Council’s Trilemma Index 2022[iii] considers energy resource efficiency, decarbonisation, carbon dioxide and methane emissions, and air pollution. Countries with high scores in the index feature high levels of renewables, or Nuclear, within their electricity mix, together with higher energy efficiency levels, or low energy consumption relative to GDP. Countries that score low show a higher dependency on coal and natural gas.
The report shows that the global average sustainability score has only improved by 2.4% in the last decade. Though Europe and some other countries with high renewables in their mix score high, countries such as China and fossil fuel producing countries such as Angola and Saudi Arabia – though showing significant improvement since 2022 -are still placed relatively low in the table.
The solution – the silver bullet ensuring that our energy system is sustainable – is accelerating the energy transition and the deployment renewables and other low carbon technologies.
Net-zero is the answer?
Fundamentally the energy crisis, and so energy security, should not need to derail the energy transition. The current cost of living and energy affordability crisis and energy market disruption could easily cloud our judgement and lose us scarce and priceless years in the transition.
The race for net-zero includes all the ingredients that will ensure that, at last, we can have an energy system that delivers on all three aspects of the trilemma.
Net-zero policies did not cause our energy crisis, they are the solution to it and the trilemma, and following on from COP27 our efforts need to be redoubled.
ABL Group and achieving net-zero
The road to net-zero is paved with opportunities for innovation and growth, unlocking the potential for the unknown across energy and oceans. However, as with any area of the unknown, there are challenges and risks in developing energy transition and sustainable solutions, which need to be addressed and managed from the outset. This is what ABL Group strives to do via our consulting and engineering services. If you want to see how and where we work, visit our energy transition discover zone on our website.
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By John MacAskill
Group Managing Director, Renewables
[i] IRENA Report, Renewable Power Generation Costs in 2021. https://irena.org/-/media/Files/IRENA/Agency/Publication/2022/Jul/IRENA_Power_Generation_Costs_2021.pdf
[ii] Empirically grounded technology forecasts and the energy transition, 2022. https://www.cell.com/joule/fulltext/S2542-4351(22)00410-X#secsectitle0065
[iii] The World Energy Council’s Trilemma Index 2022. https://trilemma.worldenergy.org/reports/main/2022/World%20Energy%20Trilemma%20Index%202022.pdf