MARK SHAPLAND: A pragmatic plan is needed to end our dependence on fossil fuels once the new sources are good and cheap enough to replace them
Perhaps the eco-warriors are on the right side of the story. Generations to come might look back on our consumer economy and our reliance on fossil fuels in utter bewilderment.
“Certainly not,” they may say. “They extracted resources from the earth’s core and burned them knowing the world was melting – really? “Net zero by 2050 as a target is necessary to set an aspiration, even if it is too ambitious. Indian Prime Minister Narendra Modi admitted this in Glasgow.
What is up for debate is how to get there. Whether climate change evangelists like it or not, the world as it is works thanks to Big Oil. Besides the question of the transition to cleaner energy, there are also implications for the financial world.
The future in our hands: What the energy crisis has shown in the UK is that the current strategy to switch to renewables is chaotic and fails
The petrodollar trade between the United States and the states of the Middle East is one of the largest in the financial field, amounting to billions of dollars a year.
Weaning bankers, traders and investors from Big Oil will take years: there is simply too much money to be made. What the energy crisis has shown in the UK is that the current strategy to switch to renewables is chaotic and failing.
The race to build wind and solar farms with the help of state subsidies while stopping oil and gas exploration makes us vulnerable. If we are wrong about the timing of the transition, it could be catastrophic.
Analysts and commentators are reluctant to speak publicly for fear of being labeled climate change deniers. But there is a clear concern that we are replacing current energy sources with ones that are less controllable or reliable, like solar and wind power. “Reckless and ridiculous” is the point of view of a specialist. What we need is a pragmatic plan that will end our dependence on fossil fuels once the new sources are good enough and cheap enough to replace them.
Instead of goals, real incentives are needed. Oil and gas majors are expected to continue exploring and extracting, for now. If Shell and BP don’t, other operators, perhaps less responsible, will. And these activities will generate billions of profits to finance the green energy revolution.
But we have to see an increasing percentage of the profits each year going to the development of cleaner technologies. Ultimately, all profits must be invested in green energy. As a first step, the profits could be channeled to top universities, oil companies’ own R&D departments and green energy start-ups. Fund managers need to make sure the oil majors keep their word.
This approach could mean that investors keep the dividends and the global energy system continues to operate until fossil fuels are redundant. Ensuring that the money goes to universities and science-driven start-ups could also provide the necessary game changer: a spark of genius to act as a catalyst.
The problem with technologies like solar is that the sun doesn’t always shine, while, given our geological fragility, fracking is unlikely to ever get the green light. Nuclear power, which should be part of the mix, is at a standstill and hydrogen is still in its infancy.
Who knows, maybe we could find some technology that will save us all.
Few would like Antonio Horta-Osorio’s cleanup job at Credit Suisse caused by the fallout from Greensill and Archegos.
While Antonio is in Zurich, his daughter Maria walks with David Cameron, one of the architects of the Greensill collapse. They work together at technology company Afiniti AI, headquartered in sunny Bermuda, and both could receive big salaries if the company were to eventually float.
I bet father / daughter whatsapps are interesting!