Who is going to ask for Energy Change ? And why ? Does anything speak more clearly than the flow of money – whether as investment or tax-and-revenue spend ?
Policymakers, academics and “campaigning” non-governmental groups might form a cluster around a call for decarbonising the gas side of the energy system, but this call will not be anywhere near as potent as demands coming from other parts of the economy and society.
12. The Investment Community
Electricity is great, but converting everything to power is likely to be an uphill struggle, and take a very long time; and so it might be better policy just to accept that gas and liquid energy fuels are useful, and coalesce around a strategy that builds out the low carbon transition on the back of fast-growing Renewable Gas.
Deploying Renewable Gas and synthetic renewable fuels produced from Renewable Gas could grow several magnitudes faster than electrification; primarily because they would substitute directly for gases and fuels already in play. No need to change the equipment, vehicles or industrial plant very much – just roll with the low carbon fuel replacements.
To grow Renewable Gas requires a parallel growth in renewable electricity, as much Renewable Gas will be made as something-to-gas by the power of moving electrons, but Renewable Gas could be a significant multiplier of impact from renewable power on its own.
The second reason why Renewable Gas might accumulate energy market share quickly is that Renewable Gas can serve the chemicals industry as well as the energy sector.
Thirdly, Renewable Gas might attract investment significantly more rapidly than wind power and solar power because its production chain would follow the currently established model of chemistry and industry, where there is centralised and large scale output.
Fourth, Renewable Gas is likely to be “investable” and “bankable” because large industrial projects are an appropriate size for significant financing and investment. And in fact, for investment funds and pension funds, where fiduciary responsility is pushing fund managers to scout out safe hands with a view to building climate-friendly portfolios, business-to-business level holdings are very important, as they offer the prospect of being secure and good value.
Small private investors are likely to be interested in small green gas ventures; but when large private investors are looking to do something climatey, they will want to put their capital into the hands of large well-established industrial partners. Although the “green” investment by large chemicals and energy companies until now has been in terms of very small percentages, and this has rightly been accused of “greenwashing”, that does not need to remain the case if there is focus on growing syngas and synfuels with very low embedded and final product net carbon dioxide emissions.
The calls that will be significant could come from co-ordinated and highly public shareholder action – shareholder groups leading the vanguard for change as they learn the possibilities for the collective industrial-energy chemistry set.
Large institutional, national and aggregated funds may call for 100% carbon transition plans from the giant energy and chemical engineering firms. It isn’t enough for major oil and gas companies to buy a few wind farms or sell renewable electricity – they need to start transforming their core businesses to remove fossil carbon from their products.
It will be up to the financial markets to vote on individual company decarbonisation strategies. As knowledge about Renewable Chemistry improves, a big tick will go to holdings that adopt it.
Many investors hold property, as it is “safe as houses”. And yet, there is a large carbon risk attached to bricks and mortar, as it is very costly to properly insulate extant buildings that were erected without proper energy control features. It is in the interests of landlords, who are under pressure to go green, to ask the energy companies to go greener : green in, green out in terms of energy into homes.
Governments and their pet economists are always looking for something they can claim as a new economic stimulus. A “Green New Deal” where part public-part private capital investment in new energies and new technologies, and the concomitant new employment, might just provide this : and a large part of this could be Renewable Gas. Creating long-lasting Renewable Gas assets might appear to be a single round of investment with no repeaters for economic development, but creating sustainable assets will permit piggybacking for other economic movement, such as creating energy access for all around the world.
Yes, there will be a need to expend capital. But the returns for the global economy could pay back many times.
As for investment security, well, Renewable Gas, with its feed-in of renewable electricity, will eat up risks; not just the climate risks, but also threats to the survival of trading entities from poor economic conditions brought about by adherence to fossil fuels causing dangerous climate change.