On November 17, 2018, at 7.30 a.m., near the Paris métro station of Porte Maillot, several hundred people – all wearing the motorcyclists’ yellow reflective vests and waistcoats – started a protest demonstration against President Macron’s government. The protest then spread to the entire French metropolitan territory and lasted almost a year with a toll of 15 deaths and several hundred injuries.
It was the protest of the so called ‘gilet jaunes’, employees and workers of all levels who took to the streets, after a mobilisation via Facebook, to protest – at least initially – against the increase in fuel prices decided by the French President to curb carbon dioxide emissions into the atmosphere and hence try to reach the threshold of CO2 emission containment provided for by the 2012 Paris Agreements aimed at combating global warming and the climate emergency.
The decision taken by President Macron and his Ministers to protect the environment by increasing taxes, thus triggering the violent demonstrations of the “gilet jaunes“, is a classic example of what we could define as “defensive environmentalism”. It is the kind of approach – unfortunately very much linked to an outdated environmental ideology, which, faced with the actual or potential damage caused by man to nature with the tools essential to the development of the economies in the third millennium, attempts to curb the negative impact with bans, controls, barriers, taxes and excise duties.
It is a type of environmental ‘protection’ which, far from leading to the ‘happy degrowth’ so dear to Rousseau and his modern followers, is inevitably bound to lead to ‘unhappy degrowth’ and the inevitable collapse of highly industrialised economies, without which it would be impossible to ensure the survival of the seven billion inhabitants of this planet.
This is not to argue that economic progress should proceed regardless of the environmental damage that its pursuit causes.
Quite the reverse.
There are currently the conditions and instruments to reconcile the needs of progress and growth with the sacrosanct need to improve the protection of the ecosystem in which we live.
For centuries man has fed and heated himself using the first available energy sources, namely wood and coal.
Coal was the protagonist of the first industrial revolution, when it was used not only to heat homes, but above all to power the steam turbines that drove textile machines, ships and trains.
Coal as a source of energy also played a leading role in the second industrial revolution, mainly with oil and its gaseous derivatives and, lastly, (dangerous) nuclear energy, thus contributing to lay the foundations of the world in which we currently live – a world in which population growth and the impressive rise in population’s average life expectancy bear witness to the undeniable success of science and human enterprise.
All this has had a cost: in view of growing and getting better, we have progressively impoverished and damaged the environment in which we live. This has increased the drive to protect the environment with the approach described above.
Protection through bans and prohibitions.
Cutting down on the use of polluting energy sources by increasing taxes on their production, without taking into account the related negative economic and social effects which then lead to political and subversive consequences such as the ‘Gilet Jaunes’ protest.
In recent years, however, thanks to the commitment of good researchers and ‘brave captains’ from small, medium and large enterprises, the idea that the environment can be protected without bridling and holding back progress with costs and bans imposed authoritatively, often on the wave of anti-scientific ideological pressures, has gained ground at global level.
This major paradigm shift is based on the discovery that natural renewable energy sources such as sun, wind and sea waves can not only reduce world pollution levels, but also contribute to healthy and ‘clean’ growth for all mankind.
It is no coincidence that, at the end of last year – after three decades of whirlwind growth which, while significantly improving population’s living conditions, have nevertheless led to environmental and atmospheric pollution rates that are sometimes incompatible with human life, and in any case deadly for flora and fauna – China decided to launch its 14thfive-year plan that envisages cutting CO2 emissions by 65% within 2030 compared to 2005.
With a view to reaching these results, the Chinese government has promoted cooperation agreements with Europe. Furthermore, thanks to the commitment of the young Minister of Natural Resources, Lu Hao, it has boosted research and development in the field of renewables for the production of electricity from water and hydrogen.
Hydrogen can become the link between progress, development and protection of the ecosystem, as well as the driving force behind the ‘ecological transition’ that many governments, including Italy’s, now consider a fundamental factor of economic growth based on ‘propulsive environmentalism’, i.e. environmentalism that is no longer paralysing and anti-scientific, but is the source of an industrial reconversion aimed at ‘clean’ growth and global development.
Hydrogen is not only the first element in Mendeleev’s Periodic Table, but also the most abundant one on the planet and in the entire universe.
However, it is not available in its gaseous form in nature, as it is always bound to other elements, such as oxygen, in water (H2O) and methane (CH4).
Therefore, in order to be used as a gaseous form of energy, hydrogen must first be ‘separated’ from the other elements that bind it – a process that requires energy and, as far as separation from methane is concerned, can produce environmentally harmful and polluting greenhouse gases, the so-called ‘grey hydrogen’.
But why is hydrogen used? The answer is very simple: because it is a lighter-than-air, non-toxic gas that – if properly extracted and stored – can be used as a source of energy for heating, for propelling cars, trains and rockets, and for replacing all non-renewable and polluting energy sources in industrial production processes.
The best way to produce clean hydrogen, the so-called ‘green hydrogen’ to distinguish it from ‘grey hydrogen’ coming from methane, is to extract it from water through electrolysis, a chemical process of water splitting which, however, has the defect of requiring a considerable amount of electricity –currently produced with traditional systems, i.e. with non-renewables – to obtain significant quantities of storable and usable gas.
In short, the paradox is that in order to obtain a clean source of energy that is abundantly available in nature, expensive and polluting systems and equipment need to be used.
This paradox has held back the production of industrial hydrogen until the idea of creating a sort of ‘circular economy’ has taken shape in the hydrogen production cycle. It is a cycle that plans to use the electricity produced by natural or artificial sea waves to activate the electrolytic process that, by separating hydrogen from oxygen in seawater, produces a renewable energy source that is practically inexhaustible, with ever lower costs and in any case competitive with those incurred for the production of traditional and highly-polluting energy sources (coal, oil and gas).
Using renewable sources such as sun, wind, and above all sea waves, to produce an energetic and clean gas such as hydrogen may represent the solution to the development-environment equation in an acceptable and assertive manner.
If properly supported by politicians’ attention, motivation and momentum, hydrogen can be the basis for Italy’s recovery at the end of the pandemic crisis and be not only a source of non-polluting energy, but also of scientific, economic and political cooperation between Europe (with Italy in the forefront, owing to the level of its applied research), the United States and China, thus contributing not only to the recovery of economies and the environment, but also to the improvement of international relations.
The hydrogen revolution: A new development model that starts with the sea, the sun and the wind
“Once again in history, energy is becoming the protagonist of a breaking phase in capitalism: a great transformation is taking place, matched by the digital technological revolution”.
The subtitle of the interesting book (“Energia. La grande trasformazione“, Laterza) by Valeria Termini, an economist at the Rome University “Roma Tre”,summarises – in a simple and brilliant way – the phase that will accompany the development of our planet for at least the next three decades,A phase starting from the awareness that technological progress and economic growth can no longer neglect environmental protection.
This awareness is now no longer confined to the ideological debates on the defence of the ecosystem based exclusively on limits, bans and prohibitions, on purely cosmetic measures such as the useless ‘Sundays on which vehicles with emissions that cause pollution are banned’, and on initiatives aimed at curbing development – considered harmful to mankind – under the banner of slogans that are as simple as they are full of damaging economic implications, such as the quest for ‘happy degrowth’.
With “degrowth” there is no happiness nor wellbeing, let alone social justice.
China has understood this and, with a view to remedying the environmental damage caused by three decades of relentless economic growth, it has not decided to take steps backwards in industrial production, by going back to the wooden plough typical of the period before the unfortunate “Great Leap Forward” of 1958, but – in its 14thFive-Year Plan (2020- 2025)-it has outlined a strategic project under the banner of “sustainable growth”, thus committing itself to continuing to build a dynamic development model in harmony with the needs of environmental protection, following the direction already taken with its 13th Five-Year Plan, which has enabled the Asian giant to reduce carbon dioxide emissions by 12% over the last five years. This achievement could make China the first country in the world to reach the targets set in the 2012 Paris Climate Agreement, which envisage achieving ‘zero CO2 emissions’ by the end of 2030.
Also as a result of the economic shock caused by the Covid-19 pandemic, Europe and the United States have decided to follow the path marked out by China which, although perceived and described as a “strategic adversary” of the West, can be considered a fellow traveller in the strategy defined by the economy of the third millennium for “turning green”.
The European Union’s ‘Green Deal’ has become an integral part of the ‘Recovery Plan’ designed to help EU Member States to emerge from the production crisis caused by the pandemic.
A substantial share of resources (47 billion euros in the case of Italy) is in fact allocated destined for the “great transformation” of the new development models, under the banner of research and exploitation of energy resources which, unlike traditional “non-renewable sources”, promote economic and industrial growth with the use of new tools capable of operating in conditions of balance with the ecosystem.
The most important of these tools is undoubtedly Hydrogen.
Hydrogen, as an energy source, has been the dream of generations of scientists because, besides being the originator of the ‘table of elements’, it is the most abundant substance on the planet, if not in the entire universe.
Its great limitation is that in order to be ‘separated’ from the oxygen with which it forms water, procedures requiring high electricity consumption are needed. The said energy has traditionally been supplied by fossil – and hence polluting- fuels.
In fact, in order to produce ‘clean’ hydrogen from water, it must be separated from oxygen by electrolysis, a mechanism that requires a large amount of energy.
The fact of using large quantities of electricity produced with traditional -and hence polluting – systems leads to the paradox that, in order to produce ‘clean’ energy from hydrogen, we keep on polluting the environment with ‘dirty’ emissions from non-renewable sources.
This paradox can be overcome with a small new industrial revolution, i.d. producing energy from the sea, the sun and the wind to power the electrolysis process that produces hydrogen.
The revolutionary strategy based on the use of ‘green’ energy to produce adequate quantities of hydrogen at an acceptable cost can be considered the key to a paradigm shift in production that can bring the world out of the pandemic crisis with positive impacts on the environment and on climate.
In the summer of last year, the European Union had already outlined an investment project worth 470 billion euros, called the “Hydrogen Energy Strategy”, aimed at equipping the EU Member States with devices for hydrogen electrolysis from renewable and clean sources, capable of ensuring the production of one million tonnes of “green” hydrogen (i.e. clean because extracted from water) by the end of 2024.
This is an absolutely sustainable target, considering that the International Energy Agency (IEA) estimates that the “total installed wind, marine and solar capacity is set to overtake natural gas by the end 2023 and coal by the end of 2024”.
A study dated February 17, 2021, carried out by the Hydrogen Council and McKinsey & Company, entitled ‘Hydrogen Insights’, shows that many new hydrogen projects are appearing on the market all over the world, at such a pace that ‘the industry cannot keep up with it’.
According to the study, 345 billion dollars will be invested globally in hydrogen research and production by the end of 2030, to which the billion euros allocated by the European Union in the ‘Hydrogen Strategy’ shall be added.
To understand how the momentum and drive for hydrogen seems to be unstoppable, we can note that the Hydrogen Council, which only four years ago had 18 members, has now grown to 109 members, research centres and companies backed by70 billion dollar of public funding provided by enthusiastic governments.
According to the Executive Director of the Hydrogen Council, Daryl Wilson, “hydrogen energy research already accounts for 20% of the success in our pathway to decarbonisation”.
According to the study mentioned above, all European countries are “betting on hydrogen and are planning to allocate billions of euros under the Next Generation EU Recovery Plan for investment in this sector”:
Spain has already earmarked 1.5 billion euros for national hydrogen production over the next two years, while Portugal plans to invest 186 billion euros of the Recovery Plan in projects related to hydrogen energy production.
Italy will have 47 billion euros available for “ecological transition”, an ambitious goal of which the government has understood the importance by deciding to set up a department with a dedicated portfolio.
Italy is well prepared and equipped on a scientific and productive level to face the challenge of ‘producing clean energy using clean energy’.
Not only are we at the forefront in the production of devices for extracting energy from sea waves – such as the Inertial Sea Waves Energy Converter (ISWEC), created thanks to research by the Turin Polytechnic, which occupies only 150 square metres of sea water and produces large quantities of clean energy, and alone reduces CO2 emissions by 68 tonnes a year, or the so-called Pinguino (Penguin), a device placed at a depth of 50 metres which produces energy without damaging the marine ecosystem – but we also have the inventiveness, culture and courage to accompany the strategy for “turning green”.
The International World Group of Rome and Eldor Corporation Spa, located in the Latium Region, have recently signed an agreement to promote projects for energy generation and the production of hydrogen from sea waves and other renewable energy sources, as part of cooperation between Europe and China under the Road and Belt Initiative.
The project will see Italian companies, starting with Eldor, working in close collaboration with the Chinese “National Ocean Technology Centre”, based in Shenzhen, to set up an international research and development centre in the field of ‘green’ hydrogen production using clean energy.
A process that is part of a global strategy which, with the contribution of Italy, its productive forces and its institutions, can help our country, Europe and the rest of the world to recover from a pandemic crisis that, once resolved, together with digital revolution, can trigger a new industrial revolution based no longer on coal or oil, but on hydrogen, which can be turned from the most widespread element in the universe into the growth engine of a new civilisation.
Jordan, Israel, and Palestine in Quest of Solving the Energy Conundrum
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.
The EV Effect: Markets are Betting on the Energy Transition
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.
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