What’s the state of play with energy security today, and what will it mean for clean energy and the energy transition, where industrial gas intersects with the energy market?
After a tumultuous first quarter, energy security is looking increasingly complex, following a series of moves shining a light on protectionism, free trade, supply chain security, critical infrastructure, economic stability and industrial strategy.
The shift in global dynamics has coincided with the arrival of the new US administration. US tariffs, which remain a work in progress, are set to redraw international trade flows, though the lasting consequences may not be understood for months or possibly years.
But there are broader challenges that attach. Economic pressures have led to increased scrutiny on Net Zero targets, in a world where cracks in different approaches are developing into chasms. Despite the universal desire to develop green energy, it’s fair to say the environment is playing second fiddle to economics in the current climate.
These two major issues alone – how to react to a fast-changing economic situation out of your control, and how fast or slow to transform workplace and industrial processes – create enormous instability for all.
For now, the political narratives are set; the US believes cheap, abundant energy delivers security, while the UK and EU insist that decarbonised energy delivers security. But the reality is messier than either position.
The UK government’s recent decision to step in and save the country’s Scunthorpe steel plant from closure brought energy policy, foreign control, and domestic security firmly to the fore – and illustrated the challenge of delivering on a green energy agenda when pragmatism gets in the way.
Faced with the prospect of plunging a steel-oriented town into economic oblivion, and the UK becoming the only G7 country without a major steel production facility, it wasn’t electrolysers being unloaded at Immingham port but coking coal and iron ore.
Some leaders may want to turn their backs on globalisation but the world remains tightly integrated – which presents challenges.
Power stations and electricity grids are no longer isolated pieces of kit but ‘cogs in a global network which are open to cyberattack’, to quote one columnist.
In this unpredictable new world order, what is clear is that energy security is going to underpin economic alliances.
Energy ministers and key energy sector decision makers from around the world will convene at the UK government and International Energy Agency’s Summit on the Future of Energy Security, co-hosted by the Energy Secretary Ed Miliband and IEA Executive Director Dr Fatih Birol, at Lancaster House in London, shortly after Easter (24 and 25 April).
“In recent years, energy security has risen up the global agenda as countries act to respond to today’s challenges and protect themselves from future energy shocks,” according to a UK government statement.
“The summit is an opportunity to cooperate on rising to the challenges the world faces on energy security and seizing the opportunities to act.”
And the UK has set an ambitious target of ‘clean electricity’ by 2030.
Ignacio Galán, Executive Chairman at global energy company Iberdrola, said energy security is the first step towards overall security.
“Digitalisation, big data, AI and the industries of the future rely on a secure power supply, driving demand growth not seen for decades, and network infrastructures are the backbone of a resilient power system,” he said.
Alistair Phillips-Davies, CEO of Scotland-based multinational firm SSE, said, “It has never been clearer that energy security equates to national security – and achieving it requires countries to focus both on developing their own homegrown energy sources and on international cooperation to ensure increased flexibility and resilience.”
For years, many have spoken about the energy trilemma: the balance between security, affordability, and sustainability. But think tank The Atlantic Council believes it’s time to reframe that debate – and focus on energy abundance.
“A decade ago, when the American shale revolution was beginning, the sheer enormity of gas production, combined with an inability at that time to export significant quantities, brought prices crashing down for US businesses and consumers,” it notes.
“Similarly, the global rollout of solar power has enabled the cost to be brought down to under 1% of what it was just a few years ago.”
“Abundance enables costs to come down. Abundance offers energy security. And abundance helps make space to decarbonise without penalising consumers … [T]he UK and Europe need to look at where they have the most abundant resources and allow the genius of innovators and industry to work to drive those costs down.”
It is one take on what will remain a complex picture. There is much that is still up for debate.
