The pace of change in today’s world is often fast and dizzying. Technologies that seem to be an integral part of our lives can become redundant and irrelevant in an instant.
Energy is a sector where innovation and new ideas matter a lot as countries and companies try to find ways to transition to a society based on renewable energy sources like wind and solar rather than fossil fuels like coal, oil and natural gas
During a panel discussion at the World Economic Forum last week in Davos, Switzerland, one analyst expressed concern that the market does not seem to have learned from other technological revolutions.
Thomas Hone-Sparbart, Head of Sustainability Research at Lombard Odier, highlighted the huge changes taking place in low and zero carbon technologies and, by extension, in society as a whole.
“We’ve seen past industrial revolutions, including past energy transitions,” Hone-Sparbort said. “What we’re really seeing now is a complete transformation of our entire economy.”
“The demand side of our economy, the way we power our vehicles, the way we heat our buildings, the way we use energy in industry all need to change.”
Hone-Sparbart said we are “looking at trillions of dollars in investment needs.”
When it comes to the energy transition, the sums being discussed are truly significant. Last year, the International Energy Agency’s World Energy Outlook to 2022 report said clean energy investments could target to exceed $2 trillion annually by 2030up more than 50% from today.
As the discussion in Davos, moderated by CNBC’s Jumana Berche, developed, Hone-Sparbort was asked whether clean energy is now available at the scale it needs to be.
He replied that the answer to that question “changes very quickly, and today I would say yes, it has become the cheapest source of energy.”
“I think the market as a whole is underestimating just the pace at which this transition is unfolding,” he added, explaining that there are lessons to be learned from history.
“We’ve done some work looking at past technological revolutions, whether it’s the adoption of steamships, mobile phones — any piece of significant new infrastructure technology.”
All such transitions, Hone-Sparbort argued, “followed a very similar pattern. They happened very slowly … and then the transition is completed within 10 to 20 years.”
“However, if you look at what the market is waiting for today — how long it will take us to electrify our buildings, electrify our fleets — the timeline is still much longer.”
For Hohne-Sparborth, that didn’t seem to pass, “when a new, better technology comes along that becomes cost-competitive, that deployment can happen very quickly.”
Also on the CNBC panel was Andres Glusky, CEO of the energy company AES.
“What we’ve faced … is a dramatic change,” he said, adding that renewable energy now represents “the cheapest form of energy in most cases.”
“The issue is capacity – how do you keep the lights on 24/7 – and that’s where you have to use lithium-ion batteries on a daily basis.”
Expanding on his point, he emphasized the importance of adopting different technologies.
“To really achieve full decarbonisation, we’re going to need green hydrogen, we’re probably going to need small modular nuclear weapons, etc.”
“And I also wholeheartedly agree that we need renewables to be more than just competitive — just better, to keep costs down, [and] equal in quality.”
“And that, frankly, is something that the corporate sector and a lot of consumers really want.”
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