What to expect from tomorrow's historic move for Britain. As the EU celebrated its 60th anniversary on Saturday, protests around London and Rome gained momentum over the looming trigger of Article 50 set to take place tomorrow on Wednesday, 29th of March, signaling the start of Britain’s exit from the European Union and an uncertain future for the energy industry. A study by The Royal Society has shown that the UK has been one of the “largest recipients of research funding in the EU”, benefitting from over €8.8 billion in 2007 – 2013, including the famous Horizon 2020 program to develop a “blueprint for smart, sustainable and inclusive growth and jobs” through research and innovation. One of the benefactors of this program is the European Atomic Energy Community (EURATOM), working closely with the UK for a total of 13 ongoing projects including: nuclear fusion research in International Thermonuclear Experimental Reactor (ITER), joint radioactive waste disposal and accident management strategies. Similarly, the massive Hinkley Point C Nuclear Power Plant project which, when operating, will be able to meet 7% of UK’s electricity demand, is not possible without the investment made by France’s state owned EDF and China’s state owned CGN. With the level of investment and expertise already (and will be) provided, the magnitude of the project should prevent Brexit adversely affecting the HPC project, with many in the field dubbing it “too big to fail”. In addition, regulation and policies developed by the EU has had time to integrate in the UK government such that should the UK separate from the EU, the industry could continue relatively unaffected. On the contrary, the coal industry has deteriorated rapidly over the past few years stemming from EU’s rather harmful policies on the supply of coal. As part of the Renewable Energy Directive set by the European Commission, the UK will phase out coal power stations, forcing complete closure by 2025 –transitioning to renewable energy. Over 16 GW worth of these coal stations have been closed from this directive and without replacements ready, this can potentially lead to a shortage of supply, the need for more energy imports, and blackouts, all of which may lead to a higher cost of electricity. These problems are already evident as the plans to mitigate blackouts have risen in cost from £35m to £150m so far and millions have been spent on subsidies just to allow coal plants to operate in winter - renewables just cannot provide enough to meet demand. With Brexit, and removing barriers set by the EU, the question is: will we revert back to higher emissions of greenhouse gasses? Regardless, withdrawing from the EU allows the UK to control its policies and tailor them to the UK energy market for a more economically sustainable and secure transition to low carbon sources of energy. The implications of a lack of free movement of labor and perhaps divergence in policy making could further introduce uncertainty, however a clear framework of UK's aims and policies in energy and trade post-brexit could allow market adaptation independent from a hard or soft Brexit and prevent a significant impact on the price of electricity and regressive attitudes towards a lower carbon future. Similarly, collaboration in research is likely to continue in growth as the challenge of addressing climate change is one that is shared globally and that no border separates. By: Javier Patria
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Saudi Arabia to invest $50 Billion in renewables by 2030. “Large jumbo jets don’t fly with single engine”, Khalid Al-Fallih, Minster of Energy, Industry, and Mineral Resources of Saudi Arabia, alluded to the need for diversification in an economy heavily dominated by the oil industry, during the Davos World Economic Forum earlier this year.
As part of the 2030 Vision, Saudi Arabia seeks to progressively decrease its economic and energy dependence on oil by investing in non-oil sectors from logistics, tourism, infrastructure, renewable and nuclear energy. The country will begin a multi-phase effort to increase renewable energy’s inclusion into its energy mix by streamlining the framework which allows private investment in renewable energy companies, liberalization of the fuels market, and creating a 9.5 GW target for renewable energy. This is set up under the King Salman Renewable Energy Initiative which is prepared to provide investment of $30-50 billion over the 15 year period, working close with the state-owned oil company, Saudi Aramco, and national utility, Saudi Electricity Co. to deliver a combined 100 MW renewable based power. Although this vision is unprecedented from the oil-based nation, Mr. Al-Falih confirmed that oil & gas will still be a primary source of energy for Saudi Arabia and the majority of the world for decades to come, as low carbon solutions including photovoltaics and wind turbines have yet to achieve the technological advancements required to allow competitive costs which rivals oil & gas. Nonetheless, he believes that someday oil reserves and production will plateau and hence a future problem which can be mitigated by working on it from today. Read more about the Saudi 2030 Vision here By Javier Patria |