Urgent demand for new energy From Experts from the International Monetary Fund

The following is the Urgent demand for new energy From Experts from the International Monetary Fund recommended by recordtrend.com. And this article belongs to the classification: new energy.

The conflict between Russia and Ukraine highlights the “danger and opportunity” of energy transformation

It is difficult to see any opportunities from the crisis of the conflict between Russia and Ukraine. We are still in the midst of a crisis – a crisis that makes the situation even more serious and may have long-term economic and political implications.

It is also obvious that the saying of “opportunity” has advantages and disadvantages. Vested interests usually benefit most from political measures that are quickly introduced to further safeguard the status quo. In the face of high energy prices, many lawmakers tend to directly reduce prices, but this approach is not correct – it suppresses the motivation of high prices to encourage people to reduce the use of fossil fuels.

Affordable energy

Compared with the soaring energy prices in the past, a major difference at present is that we have access to cheap and available alternative energy to replace the current (mainly fossil fuel) infrastructure. The International Energy Agency correctly stated in 2020 that “for high-quality energy projects with low-cost financing, solar energy (photovoltaic energy) is currently the cheapest source of electricity in history”. This is still true at present.

In the past two years, the price of solar photovoltaic energy has increased, which makes “greeninflation” a financial term. But in the overall view, “fossil inflation” is still dominant. The increase of fossil energy electricity price exceeds the relatively small increase of solar photovoltaic electricity price, which further reduces the photovoltaic electricity price, including the power generation capacity and the actual power generation price. Overall, the system price has fallen sharply over the years, halving in ten years and three quarters in 40 years. Of course, solar photovoltaic is not the only example.

Importantly, the prices of batteries and electric vehicles have also fallen rapidly, which has led to their rapid promotion. In 2016, BP’s energy outlook predicted that by 2035, the world will have more than 70million electric vehicles. At present, this figure can be achieved in 2025, which is 10 years shorter than the 20 years previously predicted. Of course, any such figure also shows how much way to go. The global photovoltaic market accounts for about 3% of the total energy market, while the market share of electric vehicles is less than 2%. Even if the number of electric vehicles can reach 70million, it is less than 6% of the current total number of global vehicles (about 1.2 billion).

In dealing with the challenges brought by the current fossil fuel war, photovoltaic energy and electric vehicles do not play a great role. In terms of short-term measures, in order to get rid of the EU’s dependence on Russian oil and gas, it should focus on reducing demand and finding alternatives to Russian energy. This means increasing oil and gas production in other regions. This also means that some short-term measures need to be taken, such as avoiding Germany’s withdrawal from nuclear power in December 2022, and making other difficult compromises, such as increasing coal power generation in Europe in the short term. (ironically, a large part of the coal used by the European Union also comes from Russia, which makes the challenge more serious.)

Assess risks

The current conflicts, coupled with the world’s response, have also revealed another more fundamental problem: the limited ability of economic analysis and broader energy policy analysis to help policy makers make decisions and help us solve the various crises we are facing – especially the overlapping crises.

First of all, before the conflict between Russia and Ukraine, no rigorous analysis had imagined that Russia would completely cut off its natural gas supply to the EU. People once thought it impossible for the EU to deliberately stop importing natural gas from Russia. For example, the European gas transmission system operator network (entsog, which is responsible for the pressure testing of the European gas network) has never even considered this possibility. In the latest pressure test, entsog envisaged the consequences of Russia stopping gas supply through Belarus or Ukraine. It has never considered the complete cessation of gas supply in Russia. They believe that this situation is obviously beyond imagination, or this assumption is too radical, which will make the stress test appear wrong. Under this assumption, the pressure on the system is too great.

The economic model used at that time also had limitations. Economists of the European Central Bank have widely quoted an analysis, which has a good looking Title: “natural gas dependence and risks of economic activities in the eurozone”. Its main conclusion is that a 10% natural gas supply shock will reduce the GDP of the euro zone by 0.7%. Which departments have been hardest hit? Power, natural gas, steam and air conditioning supply industries – these industries most rely on natural gas as direct inputs. Under the impact of 10% natural gas supply, the output of these industries will also decline by nearly 10%. At first glance, this conclusion is reasonable, and this research method depends on the standard and mature input-output method. But the problem is that this kind of analysis is static, which leads to the current situation bias.

Benefits and costs

Heat pump heating technology represents the most promising low-carbon technology. It can replace the oil and gas furnace and is more efficient. In fact, heat pump heating technology is very efficient. Even if all electricity comes from natural gas power generation, its final carbon emissions will still be lower than burning natural gas directly in a domestic gas stove. Heat pump heating is essentially a reverse running air conditioner. Then why does the air conditioning Department suffer losses when natural gas is reduced? The demand for heat pump heating will increase significantly, which is obvious all over Europe at present, and the supply chain congestion has exacerbated the inflationary pressure.

But this does not mean that getting rid of Russian natural gas will bring economic prosperity. On the contrary, the cost is real. It’s hard to make a change. But cost also means opportunity. The subtitle of McKinsey’s report on net zero emissions transformation brings hope – “what is the cost? What will it bring?”. In short, the analysis of the report shows that if the global economy shifts from the current path to the path of zero carbon emissions by the middle of this century, it will cost about $25trillion in the next 30 years. From a social perspective, these investments will cover their own costs and obtain many times the benefits, because the external losses caused by the use of fossil energy are higher than the added value of GDP.

Therefore, policy is the key. The most important thing is: to realize the real zero net emission transformation, we need to quickly deploy new low-carbon technologies and promote more important systematic changes.

More reading: 36kr: 2018 new energy vehicle industry report (with download) Caixin media: China new energy vehicle index in December 2017 (with download) Caixin &bbd: China new energy vehicle index in February 2018 (with download) 2018 new energy consumers: new ways to achieve agile operation (with download) Roland Berger: building a new energy service industry analysis ride Association: in June 2022, the national new energy market in-depth analysis report U.S. Department of energy: in 2022, the U.S. Department of energy invested 2.91 billion U.S. dollars to promote the development of local power battery industry IEA: 2019 global electric vehicle report, the global battery industry will be dominated by China, and the market value will reach 240billion U.S. dollars. China Automobile Association: in 2020, Q1 new energy vehicle sales fell by more than 50%. Zhilian Research Institute: talent demand in the new energy industry Seeking development environment IEA: it is expected that the new installed capacity of renewable energy will decline in 2020 or for the first time in 20 years. Passenger Association: the wholesale sales of new energy passenger vehicles will reach 196000 in May 2021, with a year-on-year increase of 174.2% Doe: the new installed capacity of wind power in the United States will reach a new high in 2020, which is more than any other energy. ISE: in 2019, the share of renewable energy power generation in Germany will exceed that of fossil fuels by 46%

If you want to get the full report, you can contact us by leaving us the comment. If you think the information here might be helpful to others, please actively share it. If you want others to see your attitude towards this report, please actively comment and discuss it. Please stay tuned to us, we will keep updating as much as possible to record future development trends.

RecordTrend.com is a website that focuses on future technologies, markets and user trends. We are responsible for collecting the latest research data, authority data, industry research and analysis reports. We are committed to becoming a data and report sharing platform for professionals and decision makers. We look forward to working with you to record the development trends of today’s economy, technology, industrial chain and business model.Welcome to follow, comment and bookmark us, and hope to share the future with you, and look forward to your success with our help.