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Clean Energy Has Questions to Answer

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Xcel Energy out of Colorado is shutting down two coal-fired generating power plants in favor of the largest solar-plus, storage project in the United States (US). This $2.5 billion “scheme,” only allowed 11 companies to bid on the project out of 400 applicants. Pueblo County, Colorado originally had reservations over losing tax revenue from the former coal-fired power plants. Xcel wants zero emission electricity by 2050 without saying publicly how that will happen.

California, billionaire coal-fired power plant investor, turned environmentalist, Tom Steyer,assisted Xcel’s decision to move towards taxpayer-subsidized renewable energy that is the backbone of the clean energy economy. Colorado officials never questioned Mr. Steyer’s intentions, or asked if solar and wind farms can replace reliable, abundant, affordable, scalable and flexible coal-fired generating capacity. Currently, renewables only make energy and electricity more expensive for ratepayers.

Maersk, the world’s largest container shipping company, announced they would cut CO2 emissions to zero by 2050, according to their CEO, Soren Toft. Mr. Toft reiterated, “This goal would require coming up with emissions-free engine technologies by 2030 and we will have to abandon fossil fuels.”

Maersk will need to invent a different type of fuel to power their massive ships. An entity or Maersk will need to identify who funds the endeavor to change the way transportation assets have been powered on a large-scale basis for over one hundred years.

In November 2018,Bloomberg Newsheadlined: “Clean Power See First Win Over Fossil Fuels in Emerging Markets,”Bloomberg New Energy Finance added: “Developing Nations Assume Mantle of Global Clean Energy Leadership. Then ironically, OilPrice.com reported in December 2018:

“Clean electricity surpasses fossil fuels in emerging markets by adding more clean electricity generation than fossil fuel generation for the first time ever,” (data was taken from 2017).

A recent, major study said that oceans were rising. This study had serious, mathematical miscalculations, and other bias that came to light. In fact, oceans are not rising. Will clean energy be needed if oceans aren’t rising?

NASA data confirmed global temperatures, “dropped sharply over the past two years from February 2016 to February 2018.”Yet reporters found editorial space to write about a group wanting to carve President Donald Trump’s face into a glacier to prove climate change was occurring instead of understanding the geopolitical implications of clean energy.

Major media outlets never covered the global cooling story by investigative journalist Aaron Brown of Real Clear Markets.If the planet is cooling, warming or somewhere in between then how will clean energy counter these changes? Unfortunately, the answer is, it won’t. Clean energy will not be the answer in the near or distant future.

Amidst the impressive amount of graphs, charts, tables and prognostications by the likes of western governments, leading environmental organizations and energy researchers, “the percentage of total global primary electricity demand provided by wind and solar is 1.1%.” Forecasts to 2050 show renewables and clean energy unable to eliminate fossil fuels or nuclear.

The world still runs off fossil fuels, and the IEA confirmed this fact with the release ofThe World Energy Outlook 2018. China, Russia, Iran and North Korea’s militaries all run off fossil fuel or nuclear for their blue-water navies. Renewables and clean energy are niche, energy options to the detriment of global security and prosperity.

Even the technologically-sophisticated Germans have increased emissions from German Chancellor Angela Merkel’s “Energiewende,” policy,which consists of transitioning the German economy away from nuclear and fossil fuels into renewables. Now the Germans are building and using coal-fired power plants to power their country.

All of the above-mentioned examples, reports and studies are major reasons why clean energy is an unfolding, geopolitical nightmare. The reports and headlines also failed to mention that global emissions rose in 2018, according to the International Energy Agency (IEA) off increased oil, petroleum, natural gas and coal usage.

If clean energy is the future then it is time to build a better solar panel, wind turbine, electric vehicle, and inventing a smart grid that can store and disperse power on cloudless and sunless days. Otherwise, Germany will continue relying on Russian owned, and operated Nord Stream 1 and 2 pipelines for natural gas since clean energy cannot meet their domestic or national security needs. This is a continued geopolitical issue for NATO, and US security arrangements in place, since the end of World War II.

The get-off-fossil-fuel leaders like former Vice President Al Gore are crusading at all costs to pursue intermittent, dilute, low-energy-density renewables in their quest to “save the world.” China, Russia, Iran, and North Korea have never indicated they will only use solar and wind, or eliminate oil, natural gas, coal and nuclear energy.

Additionally, Billions of people are still without reliable electricity; instead they are burning cow dung and rotted wood for energy. As an example, 600 million Africans, do not have electricity. This is a breeding ground for Islamic extremism, failed states, and chaos leading to continent-wide war.

The hopes of using diplomacy, soft power and realist balancing against China off the Horn of Africa are dashed when so many are without reliable energy and electricity. The problem with clean energy are the countless misconceptions about the origin and nature of electricity; its reliability, scalability and whether the electricity sources being contemplated are cost effective, and do not create national security problems, and geopolitical havoc.

Energy at its core should empower individuals, nations and continents. If you want clean, carbon-free energy then only nuclear meets those qualifications.

Understanding the limitations of clean energy will help come up with the best energy policies to bring billions out from crippling poverty, lowered life expectancies and the allure of terrorism and war as economic choices. There is an opportunity to alleviate poverty and war if every person on the planet had access to scalable, reliable, affordable, abundant and flexible energy. When facts are shoved aside for political gain then rational energy discussions no longer happen.

Todd Royal, MPP, is a geopolitical energy consultant and author based in Los Angeles, California. Todd has written for National Interest, OilPrice.com, EurasiaReview.com and had his works picked up Yahoo Finance, USA Today and Business Insider. His upcoming book, "Energy Made Easy," will be released this summer. Todd can be reached on Twitter @TCR_Consulting

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Jordan, Israel, and Palestine in Quest of Solving the Energy Conundrum

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Gas discoveries in the Eastern Mediterranean can help deliver dividends of peace to Jordan, Israel, and Egypt. New energy supply options can strengthen Jordan’s energy security and emergence as a leading transit hub of natural gas from the Eastern Mediterranean. In fact, the transformation of the port of Aqaba into a second regional energy hub would enable Jordan to re-export Israeli and Egyptian gas to Arab and Asian markets.

The possibility of the kingdom to turn into a regional energy distribution centre can bevalid through the direction of Israeli and Egyptian natural gas to Egyptian liquefaction plants and onwards to Jordan, where it could be piped via the Arab Gas Pipeline to Syria, Lebanon, and countries to the East.  The creation of an energy hub in Jordan will not only help diversify the region’s energy suppliers and routes. Equal important, it is conducive to Jordan’s energy diversification efforts whose main pillars lie in the import of gas from Israel and Egypt; construction of a dual oil and gas pipeline from Iraq; and a shift towards renewables. In a systematic effort to reduce dependence on oil imports, the kingdom swiftly proceeds with exploration of its domestic fields like the Risha gas field that makes up almost 5% of the national gas consumption. Notably, the state-owned National Petroleum Company discovered in late 2020 promising new quantities in the Risha gas field that lies along Jordan’s eastern border with Iraq.

In addition, gas discoveries in the Eastern Mediterranean can be leveraged to create interdependencies between Israel, Jordan, and Palestine with the use of gas and solar for the generation of energy, which, in turn, can power desalination plants to generate shared drinking water. Eco-Peace Middle East, an organization that brings together environmentalists from Jordan, Israel and Palestine pursues the Water-Energy Nexus Project that examines the technical and economic feasibility of turning Israeli, Palestinian, and potentially Lebanese gas in the short-term, and Jordan’s solar energy in the long-term into desalinated water providing viable solutions to water scarcity in the region. Concurrently, Jordan supplies electricity to the Palestinians as means to enhancing grid connectivity with neighbours and promoting regional stability.

In neighbouring Israel, gas largely replaced diesel and coal-fired electricity generation feeding about 85% of Israeli domestic energy demand. It is estimated that by 2025 all new power plants in Israel will use renewable energy resources for electricity generation. Still, gas will be used to produce methane, ethanol and hydrogen, the fuel of the future that supports transition to clean energy. The coronavirus pandemic inflicted challenges and opportunities upon the gas market in Israel. A prime opportunity is the entry of American energy major Chevron into the Israeli gas sector with the acquisition of American Noble Energy with a deal valued $13 billion that includes Noble’s$8 billion in debt.

The participation of Chevron in Israeli gas fields strengthens its investment portfolio in the Eastern Mediterranean and fortifies the position of Israel as a reliable gas producer in the Arab world. This is reinforced by the fact that the American energy major participates in the exploration of energy assets in Iraqi Kurdistan, the UAE, and the neutral zone between Saudi Arabia and Kuwait. Israel’s normalization agreement with the UAE makes Chevron’s acquisition of Noble Energy less controversial and advances Israel’s geostrategic interests and energy export outreach to markets in Asia via Gulf countries.

The reduction by 50% in Egyptian purchase of gas from Israel is a major challenge caused by the pandemic. Notably, a clause in the Israel-Egypt gas contract allows up to 50% decrease of Egyptian purchase of gas from Israel if Brent Crude prices fall below $50 per barrel. At another level, it seems that Israel should make use of Egypt’s excess liquefaction capacity in the Damietta and Idku plants rather than build an Israeli liquefaction plant at Eilat so that liquefied Israeli gas is shipped through the Arab Gas Pipeline to third markets.

When it comes to the West Bank and Gaza, energy challenges remain high. Palestine has the lowest GDP in the region, but it experiences rapid economic growth, leading to an annual average 3% increase of electricity demand. Around 90% of the total electricity consumption in the Palestinian territories is provided by Israel and the remaining 10% is provided by Jordan and Egypt as well as rooftop solar panels primarily in the West Bank. Palestinian cities can be described as energy islands with limited integration into the national grid due to lack of high-voltage transmission lines that would connect north and south West Bank. Because of this reality, the Palestinian Authority should engage the private sector in energy infrastructure projects like construction of high-voltage transmission and distribution lines that will connect north and south of the West Bank. The private sector can partly finance infrastructure costs in a Public Private Partnership scheme and guarantee smooth project execution.

Fiscal challenges however outweigh infrastructure challenges with most representative the inability of the Palestinian Authority to collect electricity bill payments from customers. The situation forced the Palestinian Authority to introduce subsidies and outstanding payments are owed by Palestinian distribution companies to the Israeli Electricity Corporation which is the largest supplier of electricity. As consequence 6% of the Palestinian budget is dedicated to paying electricity debts and when this does not happen, the amount is deducted from the taxes Israel collects for the Palestinian Authority.

The best option for Palestine to meet electricity demand is the construction of a solar power plant with 300 MW capacity in Area C of the West Bank and another solar power plant with 200 MW capacity across the Gaza-Israel border. In addition, the development of the Gaza marine gas field would funnel gas in the West Bank and Gaza and convert the Gaza power plant to burn gas instead of heavy fuel. The recent signing of a Memorandum of Understanding between the Palestinian Investment Fund, the Egyptian Natural Gas Holding Company (EGAS) and Consolidated Contractors Company (CCC) for the development of the Gaza marine field, the construction of all necessary infrastructure, and the transportation of Palestinian gas to Egypt is a major development. Coordination with Israel can unlock the development of the Palestinian field and pave the way for the resolution of the energy crisis in Gaza and also supply gas to a new power plant in Jenin.

Overall, the creation of an integrating energy economy between Israel, Jordan, Egypt, and Palestine can anchor lasting and mutually beneficial economic interdependencies and deliver dividends of peace. All it takes is efficient leadership that recognizes the high potentials.

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The EV Effect: Markets are Betting on the Energy Transition

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The International Renewable Energy Agency (IRENA) has calculated that USD 2 trillion in annual investment will be required to achieve the goals of the Paris Agreement in the coming three years.

Electromobility has a major role to play in this regard – IRENA’s transformation pathway estimates that 350 million electric vehicles (EVs) will be needed by 2030, kickstarting developments in the industry and influencing share values as manufacturers, suppliers and investors move to capitalise on the energy transition.

Today, around eight million EVs account for a mere 1% of all vehicles on the world’s roads, but 3.1 million were sold in 2020, representing a 4% market share. While the penetration of EVs in the heavy duty (3.5+ tons) vehicles category is much lower, electric trucks are expected to become more mainstream as manufacturers begin to offer new models to meet increasing demand.

The pace of development in the industry has increased the value of stocks in companies such as Tesla, Nio and BYD, who were among the highest performers in the sector in 2020. Tesla produced half a million cars last year, was valued at USD 670 billion, and produced a price-to-earnings ratio that vastly outstripped the industry average, despite Volkswagen and Renault both selling significantly more electric vehicles (EV) than Tesla in Europe in the last months of 2020.

Nevertheless, it is unlikely this gap will remain as volumes continue to grow, and with EV growth will come increased demand for batteries. The recent success of EV sales has largely been driven by the falling cost of battery packs – which reached 137 USD/kWh in 2020. The sale of more than 35 million vehicles per year will require a ten-fold increase in battery manufacturing capacity from today’s levels, leading to increased shares in battery manufacturers like Samsung SDI and CATL in the past year.

This rising demand has also boosted mining stocks, as about 80 kg of copper is required for a single EV battery. As the energy transition gathers pace, the need for copper will extend beyond electric cars to encompass electric grids and other motors. Copper prices have therefore risen by 30% in recent months to USD 7 800 per tonne, pushing up the share prices of miners such as Freeport-McRoran significantly.

Finally, around 35 million public charging stations will be needed by 2030, as well as ten times more private charging stations, which require an investment in the range of USD 1.2 – 2.4 trillion. This has increased the value of charging companies such as Fastnet and Switchback significantly in recent months.

Skyrocketing stock prices – ahead of actual deployment – testify to market confidence in the energy transition; however, investment opportunities remain scarce. Market expectations are that financing will follow as soon as skills and investment barriers fall. Nevertheless, these must be addressed without delay to attract and accelerate the investment required to deliver on the significant promise of the energy transition.

IRENA

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Lebanon and Syria: A Complicated Relationship between Energy and Geopolitics

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Syria continues to offer the ground where Russia and the United States compete over control of oil and gas fields and the transportation routes that bring energy to consumers. Russia seeks to expand its energy footprint in Syria to build influence over rebel-controlled areas in Northeast Syria that are backed by the American military and over neighbouring Lebanon through Syria’s Mediterranean coast.

The Syrian government’s decision to sign exploration and production contracts with Russian energy companies Mercury LLC and Velada LLC for three blocks in different parts of Syria ensures delivery on Russian objectives. The contracts for oil and gas exploration include a gas field north of Damascus, and oilfields in west of Deir Ez-zor and near the oil-producing town of Rasafa in Northeast Syria. Russian energy companies have also reportedly taken over contracts for hydrocarbon exploration in three blocks off Syria’s Mediterranean coast, while a Russian ship conducted geophysical mapping across Syrian and Lebanese territorial waters for gas exploration. The presence of Russian energy companies Mercury LLC and Novatek, both with direct ties to Kremlin, in Syrian and Lebanese maritime blocks signal a long-term involvement of Russia in the East Mediterranean’s energy geopolitics.

New sanctions on Syria under the Caesar Act that took effect in June 2020 are an American tool to counter Russian companies from doing business in the Syrian petroleum and military sectors and in rehabilitating Syria’s energy infrastructure. The presence of small sized American Delta Crescent Energy company in northeast Syria solidifies American energy interests in the region and cements U.S. alliance with the Syrian Democratic Forces. The fact that the U.S. Department of Treasury extended a waiver to Delta Crescent Energy to allow development of oil and gas fields and to revamp the energy infrastructure in northeast Syria shows American commitment to maintain a long-term presence in Syria.

In fact, Delta Crescent Energy plans to build a refinery in northeast Syria at a cost of 150 million dollars. The aim is to reduce the northeast’s dependence from the Assad government where currently there is no refining capacity and as consequence, all extracted oil from the American-backed Syrian Democratic Forces is sold to the Assad government and is bought again after it is refined.  Delta Crescent Energy signed a contract with the Syrian Democratic Forces that foresees not only exploration and development of energy resources but also construction of transportation infrastructure so that energy products reach the international market either through Turkey or the Kurdistan region of Iraq. 

In this complex context, it seems that it would be of great value if revenues from oil and gas trade are directed to alleviate the humanitarian burden in Syria and to restore basic infrastructure. 

In neighbouring Lebanon, the surge in coronavirus cases in Lebanon and global low oil prices prompted the government to postpone the second international licensing round for the third time to the end of 2021. This development along with the failure to identify commercially viable gas in block 4 impedes Lebanon from proceeding with long-anticipated projects like Liquefied Natural Gas (LNG) terminals and Floating Storage and Regasification Units (FSRU). In addition, the lack of bidders or potential financiers puts on hold the construction of power plants that will convert gas into electricity for domestic consumption.

The development of Lebanon’s hydrocarbon reserves faces internal and external challenges ranging from lack of institutional mechanisms to enhance transparency and accountability to geopolitical complexities that hinder overall exploitation in block 9 that is located on the disputed Lebanon-Israel maritime border. Poor drilling results in block 4 that lies in the Lebanese Exclusive Economic Zone (EEZ) has surfaced the absence of transparency that favoured the diffuse of conspiracy theories. One such conspiracy held that the block’s consortium found gas but was forced to falsify its report for political reasons. In fact, conspiracies have come to counterbalance perpetual failure of the existing political system to address deep-seated economic problems that plague Lebanon.

Lebanon’s gas hopes are built on exploration of block 9 that is partly disputed by Israel. Lebanon has been sceptical about Israel’s initiation of oil and gas exploration activities in a maritime area close to disputed Block 9 and within block 72, previously known as Alon D, that lies in the northern part of Israel’s EEZ. Interestingly, Israel has released a map, in light of the upcoming 4th international offshore licensing round, that does not extend the northern limit of block 72 into the Lebanon-Israel disputed maritime area. This can be viewed as a token of de-escalating bilateral tensions while leaving room for third party mediation.

American mediation to settle the Lebanon-Israel maritime 854 km dispute resumed in October 2020 at a base of UNIFIL, the UN peacekeeping force. Discussions have been conducted upon a map that was registered with the UN in 2011 with Lebanon raising demands for an extra sea area of 1,430 sq. km further south extending partly to Israel’s Karish gas field that is owned by Greek medium-sized company Energean Oil & Gas. On the other side, Israel demanded the maritime border to be moved further north in compliance with its traditional position that it is entitled to potential gas findings in Block 9.

For the resolution of the maritime dispute that could unleash Israel’s and Lebanon’s energy potential, various proposals have been put in place. The most representative is the 2019 proposal of David Satterfield, former US deputy assistant secretary of state, that centred on the establishment of a mutual trust fund under UN supervision so that profits are allocated to Lebanon and Israel in accordance with an agreement over gas fields’ distribution and profit-sharing percentages. Another proposal that surfaced recently revolves around a likely constructive role of the UAE in the resolution of the Lebanon-Israel maritime dispute through the taking over of a development and operational stake in northern Israeli blocks and in Lebanese southern blocks. Overall, likely unitization agreements can ensure joint development and production of the reservoirs across the disputed maritime border maximizing the economic recovery of gas from licenses of the contract areas.

Evidently, Syria and Lebanon must explore opportunities in terms of financing, revenue sharing and political relations with third countries. Despite challenges both countries have an interest in ensuring that they are not excluded or left behind from regional energy cooperation. In this respect, time is of paramount importance.

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