Reliable, affordable, sustainable. – The Energy Trilemma
For me, energy sits at the centre of a Gregorian knot of humanity's problems. It's something I think about a lot.
The events unfolding in Ukraine have certainly brought renewed focus on the ‘energy trilemma - finding a balance between energy security, affordability & sustainability.
USA actions impact crude price benchmarks against which world oil sales are indexed. Biden must satisfy a domestic environmental lobby & increase US contribution to global energy supplies.
Oil and gas sales are an important source of Russian income but the US doesn’t import much.
A complete ban on EU oil imports wouldn’t help either & wouldn’t really impact Russia.
“They’d export less, but the price would go up” says US finance minister Janet Yellen candidly.
So, how do you reduce Russia’s proceeds from these sales without harming the entire world through high energy prices?
Joseph Majkut, director of energy security & climate change program at the Center for Strategic & International Studies says “The US is the world’s largest oil & gas producer; we guarantee energy security by producing more. Doing so without sacrificing quality climate outcomes requires careful planning, decent regulation & significant effort to reduce emissions.
But then there's the supply chain challenge to consider - the increased volume of gas out of US & Europe isn’t happening. This is a physical infrastructure limitation—the US doesn’t have more export terminals that can be turned online overnight. Everything is at max capacity & import capacity in Europe is also constrained.
So there's a twofold challenge here:
1) How do we help diversify energy - LNG (liquid natural gas) & gas in particular
2) How do we help reduce demand for gas overall?
A joint US-EU target of an additional 50bn m³/yr of LNG coming to Europe by 2025 is completely possible says Melanie Nakagawa, Special Assistant to the President & National Security Council Senior Director for Climate & Energy
“There's a real potential here for Europe to signal its demand for US LNG & for US LNG providers to provide that gas to them long-term.”
Given the existential threat that the Paris Agreement poses to upstream, to the non-native outsider like me, US oil & gas co's have a real opportunity here to secure a pragmatic approach to a sustainable transition
They can step into the void left by however long Russia's energy isolation lasts
How do you do that responsibly, in a way that’s “climate-aligned?”
In the short-term, reduce the greenhouse gas intensity of US gas & utilise hydrogen-ready infrastructure.
In the long-term, keep working on a smooth energy transition in a way that accelerates the deployment of clean energy technology & smart technologies that help reduce gas demand.
Produce more, responsibly and with lower emissions, whilst looking to reduce demand...