This is what the future of energy looks like

So far, developed economies have been built on the exploitation of fossil fuels. However, scenarios such as climate change and the growth of clean energies pose new challenges. What should be taken into account regarding fossils in this new landscape?

 As the population grows and countries develop, it is natural for the demand for energy to increase. Therefore, the main challenge is to develop the necessary capacities and sources to provide this energy reliably and sustainably, both economically and environmentally.

Héctor Perea, director of Energy and Development at Cepsa (Spanish Petroleum Company), indicated that “a global demand peak cannot yet be determined, but there are several regions that are reaching their limits. However, the future suggests that demand will continue to grow strongly. Colombia, for example, has recorded a 40% increase in petroleum product requirements over the last 13 years.”.

It is estimated that the global middle class will double in the next 15 years, which implies an increase in the demand for efficient transportation and energy consumption in various aspects of daily life. This poses a challenge for the energy industry, specifically for the task of diversification, as it must respond to this demand while also considering the world's requirements regarding environmental issues (particularly the reduction of CO2).

Towards the energy transition

Economies still depend on the use of fossil fuels to maintain their growth and competitiveness. In light of this scenario, various scenarios have been proposed to facilitate the global transition from conventional fuels to cleaner energies without jeopardizing economic growth.

For this transition to avoid causing trauma, it will be necessary to consider the role of countries in relation to the planet's energy challenges, as well as to make adjustments in public policies. Orlando Cabrales, president of Naturgas, a guild of natural gas transport and distribution companies, explains that the energy transition and its speed will depend on many factors, mainly public policy, regulatory standards, and economic and technological aspects. “The United Nations Intergovernmental Panel, prior to COP24 in Poland, indicated that this transition should entail a reduction in the share of fossil fuels from 84% to 2050. In this case, the big question would be: how will the intermittency of unconventional renewable energies in electricity generation be supported?, and the answer has to be natural gas,” he stated.

The figures demonstrate this. According to the guild leader, the International Energy Agency indicates that, indeed, natural gas along with renewable sources are the ones that grow the most in the energy matrix. “By 2030, natural gas will displace coal and will position itself as the second most important fuel after oil. Additionally, the use of natural gas represents a reduction of almost 100% of particulate matter,” he added.

[prefix_blockquote cite=»Orlando Cabrales.»]“How will the intermittency of unconventional renewable energies in electricity generation be supported?, the answer has to be natural gas”[/prefix_blockquote]

However, Canadian Jeff Rubin, an economist and energy expert, although he finds gas to be the ideal platform to guide the transition, also considers that there are still challenges related to its price that must be resolved for it to be a competitive alternative in the market: “To meet the Paris Agreement, coal would need to be controlled, as it is the fuel responsible for 44% of emissions. The problem is that it has been doing very well, there is a great demand in Asia, and Japan is replacing nuclear energy with coal. In North America, on the other hand, it has gone from 52% to 30%, as shale gas – thanks to the fracking revolution – has reduced the price of gas. If shale gas can close coal plants in the U.S., could it also do so in other parts of the world? That is the question. The challenge is to lower gas prices so that it can compete with coal, and of course, this idea is not easy to sell to environmentalists.”.

In this context, Ricardo Ramírez, director of the Mining and Energy Planning Unit (UPME), considers it essential to review economic incentives: “The other fundamental issue is prices, with their subsidies and contributions. The assumption is that prices are market prices, but it is necessary to eliminate subsidies and, in some cases, impose taxes on coal. These are policies that need to be addressed.”.

[prefix_blockquote pull=»yes» italic=»yes»]Countries are called to lead an orderly process of smart energy transition.[/prefix_blockquote]

For Senator Jorge Enrique Robledo, the transition to cleaner energies should be welcomed: “There is an environmental argument, but there is also a cost issue that is paving the way for new energy alternatives, which fortunately are less polluting than those that can be derived from fossil fuels.”.

Undoubtedly, experts agree on the need to advance in diversifying the energy matrix in the face of current environmental challenges. For this, countries are called to lead a smart and orderly transition process, so that the ability to efficiently address the global growth of economies, which is closely linked to energy demand, is not put at risk. In this context, the energy transition should be a medium-term process to increase the role of unconventional renewable energies, but inevitably, fossil fuels will continue to play an important role.