By DAI Jingjing
After a tumultuous year, the international energy market appears to be entering a phase of relative calm. However, significant uncertainty remains, along with concerns of a resurgence of the energy crisis.
This year’s COP28 at the beginning of November is the first formal stock take of action under the Paris Agreement.
In a recent interview with Jiemian News, Roberto Bocca, a member of the World Economic Forum’s (WEF) Executive Committee, emphasized the complexity of energy transition and the crucial role of the private sector in climate negotiations.
He underscored pragmatism, suggesting that addressing current problems requires new technology to tackle problems while reducing energy consumption. The conversation has been edited and trimmed.
Jiemian News: Last year, energy security became a crucial topic everywhere. As winter approaches, do you think the world, especially Europe, will experience another energy crisis?
Roberto Bocca: Reading the future is difficult. Many factors influence the energy landscape in Europe and beyond. The war in Ukraine certainly has had an impact. It has brought considerable uncertainty, increasing the focus on energy efficiency.
Another aspect is the economy. I believe some oil price fluctuations may stem from concerns about long-term economic development. Multiple factors affect future energy prices. Energy security is top of the agenda for many people.
(After the interview, on October 7, the Israeli-Palestinian conflict escalated, leading to significant fluctuations in international oil and gas prices.)
Jiemian News: What are your expectations for the upcoming COP28? Do you anticipate any progress in the phase-out of fossil fuels?
Roberto Bocca: I expect that the fossil fuel industry, or rather industry in general, will be more present at this COP.
At present, 82 percent of the energy system relies on fossil fuels. So, involving the industry is critical. The key question is whether this 82 percent is ready to genuinely accelerate the transition.
My hope is definitely that we all come together to solve the issue, as opposed to fighting each other on an ideological basis.
Jiemian News: Last year, the United States enacted the Inflation Reduction Act, while the EU introduced the Green Deal industry plan. How do you assess these policies?
Roberto Bocca: Energy transition is not just the transition from fossil fuel to renewables. It’s really a transition of the energy system.
A new energy system is now unfolding. Every country realizes that if you look at the long term you want to be positioned in the new energy system, particularly because it isn’t limited to regions with fossil fuel reserves.
Access to energy is both a security issue and an opportunity for growth. The outcome of the energy transition is not only sustainability but also affordability and security. It is a challenge for policymakers to balance these three dimensions.
The key is to avoid a lot of constraints. We need to be mindful of the finite nature of resources and embrace circularity through recycling, energy efficiency, and reducing energy intensity to avoid shortages. Innovation should drive the exploration of alternative solutions and materials. It’s particularly good… well actually it isn’t, not “particularly.” It’s just good.
In terms of policy, obtaining approval and developing mineral resources is a lengthy process, and shortages are a real risk. WEF has released risk assessments of this matter. As these issues have been foreseen, the global community has a chance to take proactive measures.
Jiemian News: Nuclear is always controversial. How does nuclear power fit into the energy transition system?
Roberto Bocca: Nuclear power is controversial in every country. However, the world is also optimistic about new-generation small modular reactors and solutions such as using nuclear waste as a fuel source. The primal demand is ensuring safety. I’m very hopeful.
Jiemian News: China has many coal-power plans l to ensure energy security. And coal power capacity is increasing significantly. Do you have any suggestions for China?
Roberto Bocca: Considering economic growth, coal today is indispensable for China. The question lies in how to reduce fossil fuel emissions through carbon capture and other advanced technologies, enabling the optimization of existing energy systems rather than abandonment.
Jiemian News: What potential value do you see in the developments of hydrogen and carbon capture and storage (CCS) in China?
Roberto Bocca: China has cut costs for solar, wind and batteries. So my hope is that China will take the battle to hydrogen and CCS and drive down the cost.
Replacing over 80 percent of fossil fuels in the short term isn’t realistic, so alternative solutions are required, such as direct carbon capture.
More investments or subsidies will help reduce CCS costs. If carbon taxes were imposed globally today, CCS might be more feasible.
Clean hydrogen requires clean power, depending on grid deployment, with scaling challenges and uncertain cost reductions. Hopefully, many countries will be investing in that.
Jiemian News: What’s the outlook for the electricity market in China?
Roberto Bocca: Renewable energy is a part of electrifying economic development, demanding substantial investment in transmission and distribution.
To address the intermittency of renewable energy, sophisticated smart systems will assist in reducing energy intensity.
Establishing price signals enhances efficiency, and can also urge industries to reduce energy consumption and innovate production processes.
Countries, including China, have set carbon neutrality goals, requiring substantial investment, which may lead to increased energy prices. However, consumers vary, and subsidies can be provided to those in need.
