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The Competition of Electric Vehicles and Fuel Production In 21st Century: opportunities and challenges

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Authors: Nani Septianie and Ramadhan Dwi Saputra*

The oil and gas industry is very influential on the automotive sector. Globally, 99% or 1.4 billion cars that drive are conventional cars with internal combustion engines (ICE) that consume fuel. (Setiawan, 2021). However, along with the development of the times until the 21st century, the trend of electric vehicles is increasingly dominant as an effort to renew carbon emissions which have an impact on environmental pollution so that electric vehicles continue to be developed rapidly until now and in a few years later, the electric vehicles will replace the conventional vehicles that still using an internal combustion engine (ICE) which still consumes fuel. It will have an impact on global oil demand which will decrease. The world’s oil demand is predicted to decrease drastically, it is even estimated that it will fall by up to 70%. It is known, currently, the largest oil imports account for 1.5% of China’s GDP and 2.6% of India’s GDP (Dananjaya, 2020). If electric vehicles are able to occupy a third of the market by 2040, this could lead to a decrease in fuel demand by as much as 9 million barrels per day, or about 90% of production in Saudi Arabia every day (Aszahri, 2017). Therefore, with the development of times and technology from year to year, electric vehicles are created in the world currently, it is true that electric vehicles were created as a good form of effort for the sustainability of our lives in the world, because electric vehicles, air pollution from conventional vehicles that we usually get is bad, but when electric vehicles are present the environmental pollution due to carbon emissions is reduced. One form of environmental pollution is the pollution released by conventional vehicles that still use fuel. On the other hand, the oil and gas industry is threatened by world oil demand. So that the oil and gas industry has the potential to reduce world oil demand, if the oil and gas industry cannot look for opportunities in the current and the future technology era, it will be very risky for the industry.

 Although in the previous 21st century, energy, especially oil, was needed everywhere as the driving force for daily human activities such as transportation, delivery of goods, sanitation, water systems, agriculture, and construction. However, when the world enters the 21st century, the world is slowly changing its energy management to minimize carbon emissions, where this increase in emissions is due to the high world carbon production which in turn harms the environment, and disrupts human daily activities due to poor air quality. Therefore, with the competition between electric vehicles and oil production in the 21st century, this phenomenon can be an opportunity taken, which with the existence of electric vehicles, can adversely affect the environment. Moreover, with the existence of electric vehicles, it is suitable with vision and mission of the Paris Agreement in reducing Greenhouse Gas emissions by 29% by 2030 without foreign intervention and targeting the use of renewable energy by 23% by 2025, which shows that each country that ratifies the Paris Agreement must be independent in reducing carbon emissions in their country as a strategy to create the world with a clean environment. As for the Paris Agreement, it emphasizes five points that must be complied by ratifying countries including mitigation efforts by reducing emissions quickly, a transparent carbon accounting and emission reduction system, seeking to strengthen the ability of countries to overcome the negative impacts of climate change, implementing recovery efforts that caused by climate change, and providing assistance in the form of funding for countries to build green and sustainable economies (Windyswara, 2019). Therefore, with the five agreed points of the Paris Agreement, indirectly, the existence of electric vehicles now reflects the five points mentioned above. Research from the European Energy Agency explains that carbon emissions produced from electric vehicles are about 17-30% lower than electric vehicles that use gasoline (European Environment Agency, 2018). In addition, the presence of electric vehicles, it can minimize dependence on energy supplies from other countries because electricity is a domestic energy source. So far, countries are very competitive to fulfill their country’s oil supply which can lead to a peak oil situation, which is a condition where the oil production is at its maximum point in the future.

How about Gasoline? Can Gasoline Survive in the Midst of the Existence of Electric Vehicles?

Indeed, with the high production of electric vehicles in the 21st century, it could have an impact on oil production. This causes global oil demand to decline and the use of fuels such as gasoline begins to slowly decline. So it can be a challenge how oil suppliers can play their role in preparing other plans that are more sustainable in the long term that is not only focused on fueling a vehicle but can maximize in creating an item in which oil and gas can be the main driver of the machines besides vehicles. In addition, the role of gasoline can be maximized in other sectors as well as in the manufacture of raw materials for goods, the chemical industry which procedures several construction products, sources of polymer production, and other productions that require petroleum in the management of a product. Therefore, with the current production of electric vehicles, it does not make the electric vehicles become a threat if the innovation keeps on developing, technology continues to improve, so the fuel is still needed and important. 

*Ramadhan Dwi Saputra, Chemical Engineering Research Assistant at Universitas Islam Indonesia

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Russian Energy Week: Is the world ready to give up hydrocarbons?

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In an official message to mark the opening of the Russian Energy Week international forum on 13-15 October in Moscow, Russian President Vladimir Putin stressed that there are numerous issues on the agenda related to current trends in the global energy market, including improvements to industry infrastructure and the introduction of modern digital technologies into its operation.

“The efficiency of energy production and consumption is the most important factor in the growth of national economies and has a significant impact on people’s quality of life. Many countries have already adopted policies to accelerate the development of clean energy technologies,” he wrote in the message to guest and participants.

“The forum business programme is therefore set to look in detail at the possibility of developing green energy based on renewable sources and the transition to new, more environmentally friendly fuels. I am confident that the events of the Russian Energy Week will allow you to learn more about the achievements of the country’s fuel and energy sector, and that your initiatives will be put into practice,” Putin said.

Leaders of foreign states have also sent greetings to the participants and guests. For instance, President of the Republic of Angola João Manuel Gonçalves Lourenço, Prime Minister of Vietnam Pham Minh Chinh, Crown Prince of Abu Dhabi Armed Forces Mohamed bin Zayed bin Sultan Al Nahyan, and Vice Premier of the State Council of China Han Zheng.

In their greetings, it generally noted the importance of the topics to be discussed at the forum as well as the need to build an international dialogue and consolidate efforts to achieve the sustainable development goals, including as regards climate change.

The programme covers a wide range of issues of transformation and development in the global energy market. In the context of energy transition, the issues of energy development are inextricably linked with the introduction of new technologies, and the transformation aimed at reducing greenhouse gas emissions into the atmosphere. Climate protection is a task that cannot be solved by one country; it is a global goal, which can be achieved through building dialogue and cooperation between countries.

The participants in the discussion will answer the question: Is the world ready to give up hydrocarbons? In addition, during the panel session, the participants will discuss whether oil, gas and coal are really losing ground in the global energy sector; whether the infrastructure will have time to readjust for new energy sources; how long will there be enough hydrocarbons from the field projects that are being implemented; and whether an energy transition using fossil fuels is possible.

The international climate agenda is forcing many countries to reform their carbon-based energy systems. For Russia, which holds a leading position in the global hydrocarbon markets, the transition to development with low greenhouse gas emissions presents a serious challenge, but at the same time it opens up new opportunities for economic growth based on renewable energy, hydrogen technologies, advanced processing of raw materials and implementing green projects.

The Climate Agenda included sessions dedicated to the operation of the Russian fuel and energy sector in the context of energy transition, the impact of the European green pivot on the cooperation between Russia and Europe, as well as the session titled ‘The Future of Coal in a World Shaped by the Climate Agenda: The End, or a New Beginning?’

Sessions of the ‘New Scenarios for the Economy and the Market’ track are dedicated to the global challenges and opportunities of the electric power industry; the impact of ESG on the Russian fuel and energy sector; the potential for the renewable energy sources; and other issues of the future of energy.

The Russian Energy Agency under the Ministry of Energy brings together experts from key international analytical organizations to discuss the future of world energy during the session titled International Energy Organization Dialogue: Predicting the Development of Energy and Global Markets.

The Human Resource Potential of the Fuel and Energy Sector, participating experts will discuss the prospects for developing the professional qualification system, and a session titled Bringing the Woman’s Dimension to the Fuel and Energy Sector. Optimizing regulation in the energy sector and organizing the certification and exchange of carbon credits in Russia are the basis of the Regulatory Advances in Energy. 

Anton Kobyakov, Advisor to the Russian President and Executive Secretary of the Russian Energy Week 2021 Organizing Committee, said “the level of various formats of international participation testifies to the importance of the agenda and Russia’s significant role in the global energy sector. We are a reliable strategic partner that advocates for building international cooperation based on the principles of transparency and openness. With the period of major changes in the industry, it is particularly important to engage in a dialogue and work together to achieve both national and global goals.”

The forum, organized by the Roscongress Foundation, the Russian Ministry of Energy, and the Moscow Government, brought together many local and foreign energy and energy-related enterprises. The speakers attending included  Exxon Mobil Corporation Chairman of the Board of Directors and CEO Darren Woods, Daimler AG and Mercedes-Benz AG Chairman of the Board Ola Kallenius, BP CEO Bernard Looney, and TotalEnergies Chairman and CEO Patrick Pouyanné.

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World Energy Outlook 2021 shows a new energy economy is emerging

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A new energy economy is emerging around the world as solar, wind, electric vehicles and other low-carbon technologies flourish. But as the pivotal moment of COP26 approaches, the IEA’s new World Energy Outlook makes it clear that this clean energy progress is still far too slow to put global emissions into sustained decline towards net zero, highlighting the need for an unmistakeable signal of ambition and action from governments in Glasgow.

At a time when policy makers are contending with the impacts of both climate change and volatile energy markets, the World Energy Outlook 2021 (WEO-2021) is designed as a handbook for the COP26 Climate Change Conference in Glasgow, which offers a critical opportunity to accelerate climate action and the clean energy transition. The new analysis – which the IEA is making available for free online – delivers stark warnings about the direction in which today’s policy settings are taking the world. But it also provides clear-headed analysis of how to move in a well-managed way towards a pathway that would have a good chance of limiting global warming to 1.5 °C and avoiding the worst effects of climate change.

The WEO-2021, the IEA’s annual flagship publication, shows that even as deployments of solar and wind go from strength to strength, the world’s consumption of coal is growing strongly this year, pushing carbon dioxide (CO2) emissions towards their second largest annual increase in history.

“The world’s hugely encouraging clean energy momentum is running up against the stubborn incumbency of fossil fuels in our energy systems,” said Fatih Birol, the IEA Executive Director. “Governments need to resolve this at COP26 by giving a clear and unmistakeable signal that they are committed to rapidly scaling up the clean and resilient technologies of the future. The social and economic benefits of accelerating clean energy transitions are huge, and the costs of inaction are immense.”

The WEO-2021 spells out clearly what is at stake: what the pledges to reduce emissions made by governments so far mean for the energy sector and the climate. And it sets out what needs to be done to move beyond these announced pledges towards a trajectory that would reach net zero emissions globally by mid-century – the Net Zero Emissions by 2050 Scenario from the landmark IEA report published in May, which is consistent with limiting global warming to 1.5 °C.

As well as the Net Zero Emissions by 2050 Scenario, the WEO-2021 explores two other scenarios to gain insights into how the global energy sector may develop over the next three decades – and what the implications would be. The Stated Policies Scenario represents a path based on the energy and climate measures governments have actually put in place to date, as well as specific policy initiatives that are under development. In this scenario, almost all of the net growth in energy demand through 2050 is met by low emissions sources, but that leaves annual emissions still around today’s levels. As a result, global average temperatures are still rising when they hit 2.6 °C above pre-industrial levels in 2100.

The Announced Pledges Scenario maps out a path in which the net zero emissions pledges announced by governments so far are implemented in time and in full. In this scenario, demand for fossil fuels peaks by 2025, and global CO2 emissions fall by 40% by 2050. All sectors see a decline, with the electricity sector delivering by far the largest. The global average temperature rise in 2100 is held to around 2.1 °C.

For the first time in a WEO, oil demand goes into eventual decline in all the scenarios examined, although the timing and speed of the drop vary widely. If all today’s announced climate pledges are met, the world would still be consuming 75 million oil barrels per day by 2050 – down from around 100 million today – but that plummets to 25 million in the Net Zero Emissions by 2050 Scenario. Natural gas demand increases in all scenarios over the next five years, but there are sharp divergences after this.

After decades of growth, the prospects for coal power go downhill in the Announced Pledges Scenario – a decline that could be accelerated further by China’s recent announcement of an end to its support for building coal plants abroad. That move may result in the cancellation of planned projects that would save some 20 billion tonnes in cumulative CO2 emissions through 2050 – an amount similar to the total emissions savings from the European Union reaching net zero by 2050.

The differences between the outcomes in the Announced Pledges Scenario and the Net Zero Emissions by 2050 Scenario are stark, highlighting the need for more ambitious commitments if the world is to reach net zero by mid-century.

“Today’s climate pledges would result in only 20% of the emissions reductions by 2030 that are necessary to put the world on a path towards net zero by 2050,” Dr Birol said. “Reaching that path requires investment in clean energy projects and infrastructure to more than triple over the next decade. Some 70% of that additional spending needs to happen in emerging and developing economies, where financing is scarce and capital remains up to seven times more expensive than in advanced economies.”

Insufficient investment is contributing to uncertainty over the future. Spending on oil and natural gas has been depressed by price collapses in 2014-15 and again in 2020. As a result, it is geared towards a world of stagnant or even falling demand. At the same time, spending on clean energy transitions is far below what would be required to meet future needs in a sustainable way.

“There is a looming risk of more turbulence for global energy markets,” Dr Birol said. “We are not investing enough to meet future energy needs, and the uncertainties are setting the stage for a volatile period ahead. The way to address this mismatch is clear – a major boost in clean energy investment, across all technologies and all markets. But this needs to happen quickly.”

The report stresses that the extra investment to reach net zero by 2050 is less burdensome than it might appear. More than 40% of the required emissions reductions would come from measures that pay for themselves, such as improving efficiency, limiting gas leakage, or installing wind or solar in places where they are now the most competitive electricity generation technologies.

These investments also create huge economic opportunities. Successfully pursuing net zero would create a market for wind turbines, solar panels, lithium-ion batteries, electrolysers and fuel cells of well over USD 1 trillion a year by 2050, comparable in size to the current oil market. Even in a much more electrified energy system, major opportunities remain for fuel suppliers to produce and deliver low-carbon gases. Just in the Announced Pledges Scenario, an additional 13 million workers would be employed in clean energy and related sectors by 2030, while that number doubles in the Net Zero Emissions by 2050 Scenario.

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Russian Energy Arrogance or American Cold War Psychology?

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Lately, there has been much garment-rending across Western media and governmental sources, all criticizing Russia’s so-called hostility toward the European Union on the issue of gas supplies this coming winter. The core essence of the criticism is the accusation that the Russian Federation is playing geopolitical games with the European Union, threatening it with a freeze-out this winter if it does not play ball on accepting the massive Nord Stream 2 pipeline deal. A cursory glance across many important media sources in the West reveals just how quickly the “analyses” seem eager to ratchet up the emotionality:

  • The Washington Examiner reported that “winter is coming” for Europe and Biden because of Putin.
  • The National Interest derisively called “giving Europe a pass” on ratifying Nord Stream 2 as an outright victory for Putin.
  • Politico blatantly asked “will Putin attack?” when discussing the issue of supplying gas to Europe.
  • The New York Times called Nord Stream 2 a “security threat” and that Biden must stop Putin from achieving this victory.
  • Newsweek reported how many governmental officials in Washington are outright lamenting this issue as a “present to Putin” and an example of the White House enabling Putin while undermining Europe.

Very disconcerting language indeed, emblematic of the continued insistence in the West that it is de facto in a New Cold War with Russia. To all of this Putin has largely given a presumptive and decidedly dismissive geopolitical yawn. But underneath the typical cool bravado that Putin has always exhibited in the face of direct Western criticism, there must also be an obvious air of dissatisfaction and outright anger at what Russia sees as a consistent effort by Washington to portray it in the worst possible light.

First, Russia is quick to explain that recent soaring energy prices are not the result of some dastardly political scheme engineered inside the Kremlin, but instead connected to recovering energy demands as the world emerges from the COVID pandemic, particularly from Asia. To ignore this global economic fact in order to focus on a fabricated political design is the first hint to Russians that they are being held to a geopolitical double-standard that others do not face.

Second, powerful Washington opposition to the Nord Stream 2 pipeline, which runs under the Baltic Sea from Russia to Germany, is based not so much on any flaw in the pipeline or doubt that it would ease the energy needs of Europe. Rather, it is recognition that the pipeline makes Russia stronger, as it will allow it to directly supply gas to Europe, as opposed to its current main pipelines that run through Ukraine first. As everyone knows, the Russia-Ukraine relationship continues to be incredibly tense and unfriendly. Thus, seeking a way to work around that problem while still supplying a valuable natural asset is, in economic-geopolitical-security terms, completely rational and logical for Russia. Therefore, Washington’s opposition is seen by Putin for what it truly is: strategizing against Russia growing stronger, more prosperous, and influential.

Third, Russia, if anything, is always aware of all perceived slights when it comes to its position on the global stage. Some might even say it has a tendency to “over-perceive” such slights historically. In this particular case, the slights are quite obvious when Russian analysts look at how the rest of the major players in the global economy are treated when they engage in similar strategy. The fluctuations in the oil market, overall decided by OPEC but heavily influenced individually by Saudi Arabia, have over the decades rarely been purely altruistic. When it has been apparent that Saudi Arabia is taking advantage of its leveraged position, maximizing its own individual benefits to the detriment of all the other players, rarely has the United States gone straight for the geopolitical jugular, questioning whether or not Saudi Arabia is preparing for war by another name or is intending to “starve” the West of its innate energy needs. The same can be said for China, with all of its various machinations over the past two decades in terms of the currency, labor, real estate, and manufacturing markets. While criticism has always existed against both of these countries, those same criticisms have also recognized that the respective Saudi and Chinese maneuvers are understandable from objective geopolitical, economic, and security perspectives. It is not surprising, therefore, that Russia is not just aware of these parallel realities but also notices how unfavorably it is treated in comparison for the same behavior. Especially given that these countries, while not exactly the best-of-friends with the United States, are still given so-called passes deemed “dangerous” if given to Russia.

Taken together, these facts are what always drive Russians crazy and push Putin into his “dismissive arrogance” posture that he often assumes when irritated by members of the Western media. Luckily for Russian specialists, this is one of the most entertaining aspects of Putin’s personality, as this arrogance is one of the few times that his true opinions and feelings are on display for reporters. But underneath the arrogance is arguably an endemic frustration forming the base of it all. What the Kremlin is most tired of is having to answer questions that clearly (though obliviously when it comes to the reporters asking) imply that Russia is in the wrong if it pursues policies that maximize its economic strength, increase its geopolitical prestige and leverage, and/or does not improve its relationship with the United States. Putin often remarks about how his decision-making is based solely on what is good for Russia and best for Russians. These comments are usually dismissed by the West as platitudes. But he means them. The problem is not that he takes such objectives seriously. The problem is that too many in the West fail to envision a reality where Russia does not accept being put into a tightly controlled box built on what the United States considers appropriate. And this latter point is not affirmation of a New Cold War with the West; it is confirmation that the West is still stuck in the psychology of the old one.

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