The investment strategy specialist and journalist, Edward Chancellor, and the director of the Energy and Climate Program of the Roy They have been the protagonists of the nineteenth edition of the cycle of high level energy prospective conferences organized by Fundación Naturgy and IES Business School with the objective of discussing climate policy and geostrategy in the changing current geopolitical context.
Edward Chancellor focused his speech on the economic and financial aspects associated with the energy transition. In his opinion, around clean energies, there is a kind of overvaluation bubble that has already been experienced on previous occasions in other areas of activity, such as the financial bubble. According to Chancellor, “both have a series of common features, such as excessive growth promises, too optimistic forecasts, institutional support and a strong emotional burden.”
It also related the evolution of clean energies with the greater or lesser degree of development of clean energy, “when interest rates were low, solar or wind energy projects seemed very attractive. But now, with higher types, what really are, capital intensive investments that are no longer as viable as they seemed,” is revealed.
In addition, from his experience as a financial historian, “it is assumed that the transition will be fast, when the historical reality of the adoption of new technologies is usually slow.”
Geostrategic context
For its part, the director of the Energy and Climate Program of the Royal Institute Elcano, Gonzalo Escribano He addressed the geostrategic context in which the energy transition is being developed underlining the need to distinguish between perceptions and political realities and highlighted the role of Europe in an international environment characterized by a growing strategic competence.
“We are in a world of growing geopolitical rivalry, which clearly opts in energy rivalry, so, despite the fact that the global presence of the European Union is significant, there are operational limitations that must be taken into account in the formulation of long -term energy policies.”
Both Chancellor and Escribano agreed on the importance of adopting a realistic and well -founded approach to the energy transition. “If we want a real and sustainable energy transition, it cannot be based on speculative bubbles,” said Chancellor, while for notary “the ecological preferences of citizens are maintained, but their priorities are evolving based on the current economic and energy context.”
Technological bubbles
Edward Chancellor also warned about the risks of governments promoting certain energy technologies through market grants, as this can generate unsustainable technological bubbles. “Many subsidies have been allocated to technologies not yet robust, which has meant huge losses without achieving an effective energy transition.”
In addition, the expert criticizes the dependence of sources such as coal and oil in the production of renewable technologies and highlights the vulnerability that this can generate, both economically and geopolitally, especially when there are no effective backup systems.
Finally, Chancellor has highlighted how political pressure to decarbonize energy has led to a politicization on this issuemore expensive electricity supply, deindustrializing countries such as the United Kingdom and generating losses in employment.
Gonzalo Escribano defended that Spain has advanced in its energy transition, moving from 30% decarbonized energies and reaching 80% in the country’s energy mix. “We are on the path of energy transition, but we need to maintain backup systems and reduce geopolitical risks derived from the dependence on critical materials.”
Energy as axis of global development
As host of the meeting, Francisco Reynés, Naturgy executive president placed the emphasis on the great challenge of solving the energy trilemawhich demands to balance three fundamental objectives: decarbonization, the affordability of prices and supply security. “The recent geopolitical situation, such as the war in Ukraine or conflicts in the Middle East, has evidenced the fragility of the energy system and its strong exposure to external factors, with direct impacts on prices, such as the case of gas that multiply its value by ten.”
Besides, Reynés, stressed the need to ensure the competitiveness of the European industry. “It is essential to guarantee affordable prices, as the Draghi and Letta reports underline. However, decarbonizing cannot be reduced only to electrifying, since there are industrial processes that today do not have viable electrification alternatives.”
For its part, Professor Emeritus of the IESE Financial Directorate Department, José Luis Suárez, He affirmed that “nationalism, protectionism and wars we are seeing in recent months are leading to a much more fragmented world, and this reflects the direct relationship between climatic policy and geostrategy.”