Resurgence of Fossil Fuels – Fact or Myth?

November 28, 2013 by  
Filed under Strategy and Leaders

By Jovin Hurry

Singapore Energy Summit 2013

The Singapore Energy Summit 2013 was a high-level dialogue that was held earlier this November as part of the Singapore International Energy Week at the Marina Bay Sands Expo in Singapore. It brought together ministers, policymakers and business leaders to discuss global energy trends and solutions needed for the energy sector.

The Panel on “Resurgence of Fossil Fuels” was particularly engaging, with eminent speakers, namely Mark McArdle, Minister for Energy and Water Supply, Queensland Government, Australia; Adnan Z Amin, Director-General, International Renewable Energy Agency (IRENA); Alexander Bychkov, Deputy Director General and Head, Department of Nuclear Energy, International Atomic Energy Agency (IAEA); Le Tuan Phong, Deputy Director General, General Directorate of Energy, Ministry of Industry and Trade, Vietnam; and Joseph P. Marushack, President, Conoco Phillips Asia Pacific. It was elegantly moderated by Dr Weerawat Chantanakome, Chief Executive Officer, Brunei National Energy Research Institute (BNERI).

The panel examined the impact of the continued dominance of fossil fuels on policy, the future energy mix and alternative sources of energy such as renewables and nuclear.

To set the tone, Dr Weerawat commented on how new and previously unexpected discoveries of oil and gas resources have served to further emphasise the importance of fossil fuels in our energy mix. As these new supplies further mediate prices, fossil fuels will remain viable options to meet demand. Price competitiveness of coal continues to make it a critical energy source for developing economies. The prospect of lower priced fossil fuels challenges the viability of alternative energy sources.

The global financial crisis has underlined the need for financial prudence leading to a greater emphasis on the need for affordable energy and subsequently a re-evaluation of alternatives. The “age of austerity” will impact unsustainable subsidies and prompt realistic targets for gradual deployment of renewables to play a larger part in the global fuel mix. While some countries have put it back on the agenda, nuclear remains contentious, with 435 nuclear plants existing worldwide and 69 plants currently under construction.

Mr Amin kickstarted his comments by pressing us to think in the 30-40 year horizon. “Our mistake is predicting the future based on what we have today. This is wrong as we’re frequently facing transitions, and that at fast rates.” He further explained that we need to change our business models.

“Our bad conception is that renewables are expensive. However, solar prices are going down. Onshore wind energy is below coal and gas prices in South-Africa and Brazil.”

Mr Amin, from Kenya, has over 25 years of experience in multilateral diplomacy and direct engagement in promoting the global development and socio-economic agenda, including sustainable development. From his vast experience, he shared that the global dynamic is changing. It is important to look at the broader picture, and not to remain complacent on the idea that fossil fuels are resurging.

Several nods among the speakers were noticed on some general statements. For example, shale gas is only extending the timeline for the use of coal. The infrastructure built is putting at risk the renewables. Nuclear is seen as a safe option by many countries.

Subsidies are a distortion to a well-functioning market. “Where are the subsidies going?” was a common question. “The poor aren’t benefitting from the subsidies.” A need is felt for the subsidy structure to change across the board. More governments are looking at phasing out subsidies for renewables as solar PV becomes cost-competitive.

Finally, the panel ended on an optimistic note on where the renewables can leave us with a better and sustainable world. The challenges for renewables remain however, i.e. scale, infrastructure, financing and perception of risk, be it at the political or investment level.

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