World Energy Outlook 2022 13 key findings: A look from the perspective of Latin America and Costa Rica.

 

World Energy Outlook WEO 2022, a 524 pages Report, https://youtu.be/40eu5sDxw0k. While governments around the world are discussing projects and taking action in Costa Rica under file 23,168, the Energy Commission of the Legislative Assembly began its ordinary session on Thursdays at 9 in the morning last July of this year. In its first session, it had no projects available - the call for projects corresponds to the Executive Power in the current session -, so the legislators dedicated themselves to talking outside the minutes about possible files that could make up the schedule. To say the name of the Costa Rican energy commission, one must first take a deep breath: «Special commission of the national energy sector and its relationship with the Regional Electricity Market, in charge of the analysis, investigation, study, opinion, and evaluation of pertinent recommendations and projects of law on energy, so that modern legislation is promoted, under with new developments and strengthens the sector, seeks to reduce rates and allows the country to advance on the path to sustainable development, competitiveness, and economic reactivation».

Will it be a setback for clean energy transitions or a catalyst for greater action? How might government responses shape energy markets? Which energy security risks lie ahead on the path to net zero emissions?

 
From 11:00:00 AM CEST until 11:59:13, IEA Executive Director Fatih Birol and the co-lead authors of the report, Laura Cozzi and Tim Gould presented the report’s key findings during a live-streamed press event, https://www.iea.org/reports/world-energy-outlook-2022/key-findings.

 

1.- The global energy crisis sparked by Russia’s invasion of Ukraine is having far-reaching implications for households, businesses and entire economies, prompting short-term responses from governments as well as a deeper debate about the ways to reduce the risk of future disruptions and promote energy security. This is a global crisis, but Europe is the main theatre in which it is playing out, and natural gas is centre stage – especially during the coming northern hemisphere winter.  It seems to me that this view leaves all the countries of the South out.
 

2.- High energy prices are causing a huge transfer of wealth from consumers to producers, back to the levels seen in 2014 for oil, but entirely unprecedented for natural gas. High fuel prices account for 90% of the rise in the average costs of electricity generation worldwide, natural gas alone for more than 50%. The costs of renewables and carbon dioxide have played only a marginal role, underscoring that this is a crisis where energy transitions are the solution, rather than the problem. Oil cannot be consumed unprocessed, so many of the profits do not belong to oil producers but to oil refiners. Central America is a net importer of refined products and is also very vulnerable to climate change. Hence the importance of understanding that the problem is not Europe, it is not oil and it is not natural gas either, the problem is a global energy crisis.
 

3.- Price and economic pressures mean that the number of people without access to modern energy is rising for the first time in a decade. Around 75 million people who recently gained access to electricity are likely to lose the ability to pay for it, and 100 million people may revert to the use of traditional biomass for cooking. The energy crisis plus the pandemic has accentuated the difference between rich and poor people and countries. The rise of the dollar is an aggravating factor for developing or underdeveloped countries, which see their poverty and unemployment increase even more in a structural way.
 

4.- There remain huge uncertainties over how this energy crisis will evolve and for how long fossil fuel prices will remain elevated, and the risks of further energy disruption and geopolitical fragmentation are high. In all our scenarios, price pressures and a dim near-term outlook for the global economy feed through into lower energy demand than in last year’s Outlook. This is the reason why OPEC+ recently reduced its supply by two million barrels per day.
 

5.- The crisis provides a short-term boost to demand for oil and coal as consumers scramble for alternatives to high-priced gas. But the lasting gains from the crisis accrue to low-emissions sources, mainly renewables, but also nuclear in some cases, alongside faster progress with efficiency and electrification, e.g. electric vehicles. I do not agree with the higher demand for oil, but it is clear that many countries have returned to coal as the data says. Not all countries can go nuclear, at least in the South.
 

6.- In the Stated Policies Scenario (STEPS), global energy demand growth of around 1% per year to 2030 is met in aggregate almost entirely by renewables. Emerging markets and developing economies, such as India, see increases across a broader range of fuels and technologies, while the only sources to show growth in advanced economies to 2030 are low emissions. Brazil and Latin America are conspicuous by their absence.
 

7.- The cost advantages of mature clean energy technologies and the prospects for new ones, such as low-emissions hydrogen, are boosted by the Inflation Reduction Act in the United States, Europe’s increased push for clean energy, and other major new policies. The result is to turbo-charge the emerging global clean energy economy. None of these policies has been successful so far, the world is becoming more carbonized every day.
 

8.- The STEPS in this Outlook is the first World Energy Outlook (WEO) scenario based on prevailing policy settings that sees a definitive peak in global demand for fossil fuels. Coal demand peaks in the next few years, natural gas demand reaches a plateau by the end of the decade, and oil demand reaches a high point in the mid-2030s before falling slightly. From 80% today – a level that has been constant for decades – the share of fossil fuels in the global energy mix falls to less than 75% by 2030 and to just above 60% by mid‑century. In the Announced Pledges Scenario (APS), the drive to meet climate pledges in full sends demand for all fossil fuels into decline by 2030.  For as long as I can remember, and I am over sixty years old, a peak has been predicted, the reality is that no one has a crystal ball to guarantee the decade, much less the year when it will occur. That is why countries rich in oil and gas, like my native Venezuela, have a window for their development. That is why OPEC now considers the opinion of more countries and makes decisions together in OPEC+.
 

9.- With the loss of its largest export market in Europe, Russia faces the prospect of a much-diminished role in international energy affairs. 2021 proves to be a high-water mark for Russian export flows. Its share of internationally traded gas, which stood at 30% in 2021, falls to 15% by 2030 in the STEPS and to 10% in the APS. Importers in China have been actively contracting for liquefied natural gas, and there is no room in China’s projected gas balance for another large-scale pipeline from Russia.  As an oil expert with 40 years of experience, I disagree. Many countries that belong to OPEC + can make agreements with Russia and with its clients such as China and India, to name just two. More important than the oil-producing countries are the oil refiners. Modern refineries, in addition to being more environmentally friendly, are more flexible in their diet. Costa Rica lost a great opportunity to have a modern refinery in association with China due to the energy populism of the last four administrations.
 

10.- Energy-related CO2 emissions rebounded to 36.6 Gt in 2021, the largest ever annual rise in emissions. In the STEPS, they reach a plateau of around 37 Gt before falling slowly to 32 Gt in 2050, a trajectory that would lead to a 2.5 °C rise in global average temperatures by 2100. This is around 1 °C lower than implied by the baseline trajectory prior to the Paris Agreement, indicating the progress that has been made since then. But much more needs to be done. In the APS, emissions peak in the mid‑2020s and fall to 12 Gt in 2050, resulting in a projected global median temperature rise in 2100 of 1.7 °C. In the Net Zero Emissions by 2050 (NZE) Scenario, CO2 emissions fall to 23 Gt in 2030 and to zero in 2050, a trajectory consistent with limiting the temperature increase to less than 1.5 °C in 2100. The increase in emissions in air and water pollution should be addressed more because of its relationship with the health of humanity and many species that are disappearing, such as insects and especially bees. In Costa Rica, there is a disproportionate increase in cases of children from zero to two years of age who are having respiratory problems with no apparent explanation. Meanwhile, Costa Rica's air quality standards are equivalent to Euro 5, while in advanced countries the Euro 7 standard is being discussed.
 

11.- Planned increases in global clean energy manufacturing capacity provide a leading indicator of the potential for rapid increases in deployment. In the case of heat pumps, the current and planned manufacturing capacity is below the deployment levels projected in the APS. But announced global manufacturing capacity for electrolysers and solar PV modules in 2030 is sufficient not only to reach APS deployment levels but to go beyond them. Again it seems that the analysis applies more from the perspective of the developed countries of the North, and not of those of the South.
 

12.- One point common to each scenario is the rising share of electricity in global final energy consumption. From 20% today, this increases in each scenario, reaching more than 50% by mid-century in the NZE Scenario. This is associated with a huge overall increase in global electricity demand – with the bulk of this growth coming from emerging markets and developing economies – and the need for constant vigilance from policymakers to a range of risks to electricity security, in particular the ever-increasing need for flexible operation of power systems. Latin America, including Central America, is wasting the great potential of generating electricity and exporting it. In Costa Rica, a country that generates almost all of its electricity in a green way, hydroelectric power has been increased to the detriment of less problematic ones, such as geothermal, wind, and solar. Some pioneers see an opportunity to use surplus electricity that would be lost in mining cryptocurrencies like bitcoin (BTC).
 

13.- The world has not been investing enough in energy in recent years, a fact that left the energy system much more vulnerable to the sort of shocks seen in 2022. A smooth and secure energy transition will require a major uptick in clean energy investment flows. Getting on track for the NZE Scenario will require a tripling in spending on clean energy and infrastructure by 2030, alongside a shift towards much higher investment in emerging markets and developing economies. What is more serious was that refining capacity was disinvested globally and now inflation has taken over the world. If the RECOPE-SORESCO project had continued in Costa Rica, the 60 mbd refinery in the Province of Limón would have been paid for much sooner, and we Costa Ricans would be earning a refining margin that has ranged between 10 to 30 dollars per barrel. For this reason, on February 2, 2015, I presented a proposal to the Rector of the University of Costa Rica, Dr. Henning Jensen Pennington, to lower fuel prices and increase energy security. To this day, 7 years, 8 months, and 25 days, a total of 2,824 days, I am still waiting for the answer. The worst thing about Costa Rica is its Judicial Power. The second worst has been its populist presidents in energy and health, and the third worst has been many of its deputies. Still, we are the country PURA VIDA.

 

Read all the WEO 2022  IEA publication nine chapters, https://iea.blob.core.windows.net/assets/75cd37b8-e50a-4680-bfd7-0424e04a1968/WorldEnergyOutlook2022.pdf. Rafael Vilagut, San Jose - Costa Rica Wednesday, October 26, 2022, Entrepreneur, kindle-amazon Author 💰 investor, professor 💎 Travel lover 🌍 https://linktr.ee/ravilagut