Page 32 - Impiantistica industriale
P. 32

ENERGY & FORECASTS






                            ogy-producing countries are not participating in   existing or recently decommissioned assets. This
                            sanctions against Russia and could retain access   is not because renewable alternatives are not
                            to supplies, potentially leading to uncertainty in   economical or available or cannot be deployed.
                            cost impacts for their trading partners. Likewise,   Rather, these alternatives would take time to de-
                            the prospect of the ongoing shortages is already   ploy, and the rise in energy prices poses an im-
                            spurring a wave of prospecting for alternative   mediate economic and political crisis that must
                            sources, which would likely have a positive impact   be addressed. Furthermore, a move to diversify
                            in the medium term.                       sources of fossil-fuel imports is likely, in the in-
                            Finally, it is important to note the near-term impact   terest of both price and energy security, although
                            on a critical but often overlooked natural resource   diversifying away from Russian gas would require
                            for the net-zero transition: land. In addition to their   time to overcome logistical hurdles, contract ne-
                            role in exporting a wide range of minerals, Ukraine   gotiation, pipeline-capacity restrictions, and im-
                            and Russia are important producers of key ag-  port-facility development, as demonstrated by
                            ricultural commodities. Shortages resulting from   Europe’s purchase of more than $46 billion in
                            sanctions and destruction of Ukrainian production   Russian gas since the invasion of Ukraine. Finally,
                            centers are likely to reduce the availability of key   where lowering price is not possible via increased
                            agricultural commodities including wheat and fer-  domestic production or source diversification,
                            tilizer. Additionally, climate forecasts for 2022 indi-  a shift back toward cheaper but more emissive
                            cate it could be a below-average period for bread-  fuels,  such  as  coal,  is  likely,  and  already  being
                            baskets globally, resulting in an additional reduction   observed in, for example, Germany. As for paral-
                            in supply. Supply shortages and price increases in   lel investments in accelerating the deployment of
                            agricultural markets could lead to conversion of ad-  net-zero technologies, there may be a contention
                            ditional land to agricultural production across the   for resources with other immediate needs such
                            globe, which would increase deforestation rates   as defense, mitigation of the most regressive im-
                            and agricultural emissions.               pacts of energy price increases, and humanitar-
                                                                      ian action.
                                In the near term, the impact on       In the United States, the near-term trend is also
                                effective economic and societal       likely toward increasing fossil-fuel production to
                                                                      address domestic price rises and to support the
                           “adjustments would vary across             diversification of European supply. The medium-
                                 geographies                          to long-term trend is less certain. Given abundant
                                                                      domestic fossil-fuel reserves,  the United States
                                                                      is less susceptible to energy price increases, but
                            The economic and social adjustments needed to   equally exposed to shortages of key net-zero ma-
                            reach net zero in a more orderly manner depend   terials. The economics of transition may not im-
                            on management of demand shifts and unit costs,   prove as much in the United States as they could
                            compensating mechanisms  to address  the  so-  in Europe, nor would the concerns about energy
                            cioeconomic impacts of transition, and effective   security be as severe. One potential impact on
                            capital allocation and financing structures. In the   the medium-term energy landscape in the United
                            near term, management of demand shifts and unit   States could be an acceleration of the displace-
                            costs could be positively affected, as increased   ment of more expensive and more carbon-in-
                            energy costs move forward the break-even point   tensive oil on the global market with Permian oil
                            for decarbonization solutions for many hard-  from the US Southwest, which is a key step for
                            to-abate industries, and commodity shortages   a successful net-zero transition, given that some
                            boost movement toward increased recycling.   level of oil demand will remain through to the late
                            However, the war in Ukraine has introduced new   stages of the transition. We would also note that
                            domestic priorities in many countries—including   the United States also faces a unique opportunity
                            increasing defense spending, blunting the regres-  to reduce its fossil-fuel consumption through the
                            sive impacts of rising energy prices—and provid-  implementation of broad energy-efficiency policy,
                            ing humanitarian aid. This could negatively affect   discussed in more detail below, which could low-
                            compensating mechanisms, particularly with re-  er costs for consumers, improve energy security,
                            spect to the flow of capital from the Global North   and make progress toward its climate goals.
                            to Global South. Even before the war, the flow of   Finally, in Asia there is a risk of a shift back to
                            capital to developing nations was already almost   coal in the near term. If sanctions reduce access
                            20 percent below the developed nations’ pledge   to  the  pipelines  Russia primarily  uses  to  trans-
                            of $100 billion in annual aid by 2020.    port oil and gas to Europe, it will take time for
                            Overall, we believe that the dominant near-term   Russia to build alternative pipelines to tap the
                            impact on economic and social adjustments   Asian market. With the market for natural gas
                            would be a shift in capital allocation and financing   likely to tighten substantially, the resulting price
                            structures toward increased fossil-fuel produc-  rise  could  push  less  economically  robust  con-
                            tion in response to rising prices.        sumers in Asia out of the market and back to-
                            In Europe, rising energy prices would drive an in-  ward coal, which is abundant, cheap, and more
                            crease in short-term capital allocation to fossil-fu-  lightly regulated.
                            el production and consumption, particularly from


       28 28  Impiantistica Italiana - Luglio-Agosto 2022
   27   28   29   30   31   32   33   34   35   36   37