Energy Trilemma
In the last decade we frequently heard numerous narratives and initiatives on Green Energy as a countermeasure for the impending risk of worldwide carbon emission.
As most of us would have thought that the Green Agenda would bring the Fossil fuel industries into a sunset, yet we had seen the Oil, gas, and coal companies profited heavily during the period after covid-19, Ukraine-Russia War, and Israel-Palestine conflict.
Renewable energy failed to shift the dominance of fossil fuels in 2022, despite a massive growth in wind and solar capacity. European Union Governments spent more than €900 billion on fossil fuel subsidies in 2022, the highest figure ever recorded.
This brings us to retrospect of what is causing the world heading into wrong direction, and to see this within a perspective of Energy Trilemma.
Energy Trilemma refers to energy security, energy affordability/equity and energy sustainability.
Energy security
Energy security is nation’s capacity to meet its current and future energy demand, as well as nation’s ability to bounce back from the disruption of energy supplies.
Energy Affordability
Nation’s ability to provide universal access to reliable, affordable energy for domestic and commercial use.
Energy Sustainability
Country’s energy system in mitigating and avoiding potential environmental harm.
In the era of energy transition, it is challenging for an organization or a nation to equally balance each of those parameters. The data of Total Final Energy Consumption by Source, 2011, 2019 and 2021 (Renewables 2023 Global Status Report) shows increasing worldwide energy consumption. Contribution of Renewables energy sources steadily increasing, yet not in an exponential rate.
Fossil fuels still hold the biggest percentage of energy consumption, as they are still considered to be the cheapest and easily accessible energy source, though it is shrinking in percentage.
So why can’t we switch to using more renewable energy sources ? eventually the biggest obstacle of the development and application of renewable energy technologies is the Cost and logistical barrier.
Say we are looking to develop a solar panel as an energy source for a small village. First we have to think about the upfront cost installing batteries, solar panels, and other equipment. Installing solar panel also needs large areas in which has minimum requirement.
Second, we have to observe and utilize the infrastructure around the village. Many rural areas lack the necessary grid, connectivity, and transmission lines to distribute electricity effectively, hence to bring the most out of the Solar Panel, the infrastructure has to be developed first, such as road, transmission lines and electrical substations.
Third we have to consider on how to bring people with technical expertise to install and maintain the systems. lacking this might result to hindering effective supply of electricity and an increase cost of repair.
The aforementioned aspects seem to be within the range of possibility to overcome, but the biggest challenge lies in the same old story, Money and financing.
Organization or a nation surely desires a quick and high Return on Investment from developing energy sources. producing electricity from solar panels is 2 to 3 times more expensive than from hydro, coal, or nuclear energy sources, and Solar panel field mostly runs at 15% capacity while a coal plant runs at 80% capacity. But on the bright side with the development of more advance technologies, solar panels efficiency is expected to increase in coming years.
Another example of renewable energy is wind. Wind energy is one of the most cost-effective sources of electricity, it also has a low operating cost, it also doesn’t require too much maintenance, but it requires large areas and often in remote location such as hills, mountain gaps, and offshore at the sea, therefore transmission lines are an additional piece of infrastructure that must be built.
Switching from one energy source with an already established infrastructure will take some time as new infrastructure are introduced. Companies will need to re evaluate how they generate money from the new technologies, and it will require the whole part of society to adjust.
We may see how the energy disruption impacted Germany during Russia -Ukraine War. Germany loses access to Russia’s cheap natural Gas, needed to power factories as they had sourced 40% of the fuel from Moscow. In this situation, The German Government asked Evonik (a second largest Chemical Company in German) to re-run the coal-fired power plant despite the fact that the company had already moved away from the plant to reach carbon neutral by 2030, making the retirement of coal-fired power plant delayed.
Despite the crisis, experts and Germany Government hope that energy transition will speed up, as in 2022 the Greenhouse gas emission fell around 2% due to higher energy prices pushed the industrial production down.
In Indonesia, government and state owned enterprises have taken initiatives in renewable energy project, mainly focusing on Geothermal as Indonesia is home to 40% of the world’s geothermal resources. Indonesia’s General Plan for National Energy targeted to reach 7.24 Gigawatts of geothermal power by 2025, and 9.3 Gigawatts by 2035. But in June 2020, Energy and Mineral Resource Ministry stated that the ambitious goal would be delayed into 2030. Even though the development of Indonesia’s geothermal project has not progressed according to the plan, Indonesia is still the largest geothermal energy producer in the world with 2.28 Gigawatts installed.
Referring back to Energy Trilemma, for obvious reason we may know which of those parameters from 3 Elements of Energy Trilemma a nation is willing to put at risk during the impending situation that causes high energy demand. It is very unlikely to see a nation compromising its energy supply and security for energy transition, because they are the core to keep the nation’s economic engine moving.
Gaps between Ambition and Reality
The Paris Agreement, held by UN Climate Change Conference in 12 December 2015, is an international treaty, vows to mitigate increasing carbon emission and its environmental impacts.
The agreement set long term goals to all countries in the world to:
- reduce global greenhouse gas emissions to maintain global temperature increase to well below 2°C above pre-industrial levels and pursue efforts to limit it to 1.5°C above pre-industrial levels
- periodically assess the collective progress of achieving the purpose of this agreement
- provide financing to developing countries to mitigate climate change
Every five years each country has to submit its progress, known as Nationally Determined Contribution, to outline and communicate its climate action. in 2020, five years after 2015, countries should have updated their NDCs, but as we know that the climate crisis was overshadowed by global Covid-19 pandemic at the time, so it was postponed into 2021.
In reality, energy transition is accelerating, but not fast enough to meet the Paris Agreement. There are many reasons on why we have not reached the intended goals, but they mostly can be defined into 2 major problems: Geoplitical Turmoil and Macroeconomic headwinds. We also have to acknowledge that either Goverment and Private Sector has not lived up to the commitment of Paris Agreement.
The data on Global GHG emission shows that we are missing the targeted track of Paris Agreement Climate Target. Most countries are falling short of their emission target to meet even a 2 degree celcius warming goals.
S&P Global commodity insights analyis, as seen on the chart, suggest we are on track to miss the goal of keeping the temperature increase below 1.5°C. by more than 41 Billion metric tons of CO2 equivalent by 2050.
To go back on track, to meet the Paris Agreement, renewable energy sources need to increase to 31% in 2050, a tenfold increase from current 3%, and fossil fuel has to be only 33% in energy mixture by 2050, instead of currently 80%.
Despite the fact that we are missing the intended target due to crisis, if we look past the current crisis and hurdles, the transition to lower emission is accelerating, but not enoght to meet the Paris Agreement.
The top 3 largest energy energy consumers and green house emitters are : China, United States and European Union. China’s green house emission are the most above 2 degree target, while United States and EU are on steady decline.
They all have put significant energy policies such as :
China : Uses its manufactiring might for clean energy manufacturing amd supply chain. in 2022 China 546 Billion USD for clean energy such as Solar, wind and EV batteries.
United States: Issuing Inflation Reduction Act to provide 370 Billion USD federal fund to incentivizes clean energy.
European Union : Implementing the Renewable Energy EU plan, during the Ukraine — Russia conflict, despite short term coal and LNG usage.
Aa global citizen we have to support the energy transition for a better Planet earth. With all the challanges and hurdles we have faced, so far the most plausible attempt to reach the intended goals is to develop better and more efficient technologies for Renewable Energy sources, but it surely will take some times. In the meantime, to mitigate shortage of energy supply, maximizing the utilization of existing energy sources, such as oil, gas, and coal is vital so that a nation can thrive.
