Zest in the news: Will 2023 be the year of transformation for energy?
Jeffrey Beyer joined Asharq Business with Bloomberg to look at what's driving the energy transition in 2023
Beyer was joined on the panel by Wessam El-Baz, CEO of Nexum Analytica and Tareq Zahw, Managing Consultant at Guidehouse, and led by Asharq Business anchor Nour Amache.
The energy crisis that gripped the world in 2022 has changed the energy landscape permanently. It is likely that 2023 will be a year of transformation.
The trajectory of 2023 will build on a raft of significant new renewable energy policies that were announced in 2022:
Europe’s Fit for 55 policy aimed for 40% renewables by 2030, but the REPowerEU plan, released in response to the war in Europe, increases that ambition to 45% renewables by 2030
The US Inflation Reduction Act will raise $738 billion and authorize $391 billion in spending on energy and climate change, unleashing an American juggernaut
China continues to drive renewable energy growth and is forecast to install about half of all renewables from 2022-2027
In the Gulf:
Saudi Arabia announced plans for almost 60GW of renewable power by 2030, up from 1GW today
The UAE’s Masdar will grow its renewables portfolio from 15GW to 100GW by 2030
Oman has dedicated huge tracts of land for renewables and is auctioning capacity throughout 2023 and beyond
There is also a renewed focus on energy security following the Russian conflict, attacks on Nord Stream 2 energy infrastructure, and sky-high prices for gas and raw materials for renewables. This is leading to a rebalancing of the 'energy trilemma', where priorities shift among affordability, sustainability and security.
From an investment perspective, 2022 has set the scene for enormous extra investment in clean power, though as yet, it is insufficient to meet climate change goals. Investment is expected to grow to $2 trillion / year by 2030, up from $1 trillion today. But this is still fall short of the $4 trillion needed to meet net zero.
Energy supply continues to grow substantially:
The world set to add as much renewable power in the next 5 years as it did in the past 20
Renewables are set to account for over 90% of global electricity expansion over the next five years, overtaking coal to become the largest source of global electricity by early 2025.
Demand growth also continues apace:
2022 was a record year for wind and solar, but also for coal and oil use, with oil topping 100 million barrels per day, the highest ever
The world’s appetite for energy seems insatiable, especially in emerging and developing economies where industrialisation and a growing middle class is pushing up demand.
The future of hydrogen continues to excite markets, investors and developers:
Hydrogen will begin to show its true potential in 2023 as announcements and Memorandums of Understanding turn into real, approved projects with orders placed and contracts signed
The industry will work closely with investors, including dedicated funds and like H24 and new innovations like the proposed European Hydrogen Bank to overcome risks that are limiting finance.