Five global energy conversations to follow in 2023

In this blog post, editors Kate, Churchill, and Leopold identify five global energy conversations they will be following in 2023, which they believe will be of interest to you. Check out their picks to stay informed and engaged in these important discussions.

Africa: How will charging infrastructure dependence shape Kenya’s e-mobility transition?

As EVs become more mainstream in the global transport transition, Africa’s mobility sector is ripe for transitioning in light of volatile fuel costs, rising air pollution in most cities, and as governments develop ambitious plans to decarbonize the transport sector. One sector where this transition is cocooning is Kenya’s public transport, specifically buses and two wheelers. There are currently over 30 companies working in electric mobility in the country alone, with two thirds focusing in two/three wheelers and the remainder on buses and cars. Generally, fleet size ownership is still low with the largest fleet ownership per company for two wheelers being ca. 200 bikes (only 3 companies), while others have a fleet size of less than 100. Bus fleet ownership is still lower ca. 20 buses. As the sector emerges, charging infrastructure development will be important. Surprisingly, there are currently varied interdependencies of these technologies with charging infrastructure. Charging for instance is much less of a challenge for two wheelers because their business model typically relies on battery swapping. This introduces significant charging flexibility for fleet owners and customers, which can circumvent issues such as power shortages and customer range anxiety. Buses on the other hand will likely rely on traditional charging mainly through the main grid, and will therefore largely depend on the extent to which the state owned power utility is willing to build out additional power infrastructure. On the other hand, two wheelers bring with them the challenge of infrastructure placement uncertainty. Commercial use (the main use case for two wheelers) is largely unpredictable particularly around charging times, frequency of charging, charging routes and the optimal ratio of bikes to batteries. Buses on the other hand have much more predictability since Public Service Vehicles (PSV) typically operate on the same routes. With these challenges, policymakers might need to develop technology specific charging infrastructure policies to accommodate the diverse charging needs of two wheelers and buses. 

*Thanks to Warren Ondanje MD of the Africa E-mobility Alliance for sharing insights into e-mobility in Kenya. 

Americas: Will the momentum for just transition keep building or begin to falter?

Meeting global climate change goals requires decarbonizing energy systems; however, there are increasing demands that the energy transition must not only result in low-carbon systems, but also ones that are just. The idea of a just transition advocates for a transition that leads to “fair” outcomes. The precise definition continues to be debated but often refers to ensuring decent work and quality jobs and ensuring equality of opportunity to participate in a low-carbon society and that “no one is left behind”. Notable policy packages including the European Union Just Transition Mechanism and the American Justice40 Initiative.

While the European and American policies were introduced without much noise, a proposed Canadian legislative bill for a just transition has met some significant push-back. The government of oil-and-gas producing province Alberta recently argued against the bill saying that a just transition was a “non-starter” since it would limit the province’s fossil fuel exploitation and eliminate jobs. Other voices, including that of a local academic and the federal environment minister, have been quick to point out that a green transition is actually expected to increase jobs in Alberta; as such, it is possible that the conflict is ultimately upon the questions of identity and self-determination rather than ones of pure economic opportunity. 

At this stage, it is unclear whether the Albertan push-back is truly due to different visions of energy justice or simply another chapter in its climate denialism and longstanding disagreements with the federal government. Nonetheless, the maelstrom over the proposed legislation may indicate incoming headwinds for other energy justice initiatives, especially in similarly fossil fuel dependent regions.  

Asia: How will Pakistan keep the lights on?

A major power outage hit Pakistan in January, causing around 220 million people, or 95% of the population, to lose electricity access. While the country is no stranger to power outages – Pakistan has one of the world’s least reliable power systems – the scale of the January outage does highlight the importance of improving the power grid to stave off an ever-worsening economic crisis. 

Pakistan does have various options for handling its chronic energy supply shortages. Developing the country’s significant coal reserves would mitigate the high cost of relying on fossil fuel imports in the highly fossil fuel dependent nation; on the other hand, further fossil fuel development would only worsen the country’s air quality, which is already the worst across South Asia. Pakistan also has considerable renewables potential in the form of wind, solar, and small hydro, the development of which is currently being supported by the Asian Development Bank and Chinese Belt and Road Initiative. However, making the most out of these resources will also require significant organizational reform and upgrades to the existing electricity grid.

All-in-all, it is clear that Pakistan desperately needs energy sector development: the open questions are how quickly this development can occur and whether it will come alongside or at the expense of a clean energy transition.  

Europe: What are the challenges and opportunities for the EU in localizing its supply chains for critical products?

In times where the debate no longer circles around “should we do something against the climate crisis” but more around “how, how fast and who should fight the climate crisis”, the economic potential of low-carbon technologies is highly sought after. However, throughout the last few years, the world has been hit by a number of crises: semiconductor crisis, corona pandemic or the Russian war, to name only a few. While these truly global crises had global consequences, the superadditive effect of these seemed to have triggered a mentality shift in Europe.

The brutal demonstration that heavily globalized supply chains can have tangible detrimental consequences when the very foundation of the globalization-house-of-cards is shaking (may it be for epidemiological or political reasons) catalyzed the “supply chain localization” rationale. The argument to localize industries and to have products “made in the EU” was made particularly for “critical products”, ranging from face masks to batteries.

The EU, however, surely is not alone when it comes to capitalizing low-carbon technologies. What some perceived as the best message in a long time for the fight against the climate crisis may just be the Sword of Damocles falling onto European competitiveness. The recently announced $370 billion US green industrialization package, also known as the Inflation Reduction Act (IRA), puts stringent local content requirements as a condition for massive subsidies. Add this to the paralyzing high EU energy prices and there goes the EU industrial competitiveness for energy-intensive industries, e.g. batteries. An example of this is the recent announcement of Tesla to scale back the planned battery production near Berlin due to the US subsidy package. The EU, first baffled by the close-to-foul move from its most important political ally, is about to react with carrots (building political compromises) and sticks (rolling out state aids).

In any case, the (re)localization of almost locally extinct (e.g., mining and refining) and nascent (e.g., battery) industries is not exactly a no-brainer: it will likely entail local pollution, political disputes – on both global (e.g., EU vs. US) and local (e.g., not-in-my-backyard) levels – and bears the risk of burning taxpayers money for economic stillbirths. The outcome of this balancing act will certainly not be finalized during 2023 but we must keep an open eye for the tracks being set in these uncertain times.

Oceania: Where does Australia stand in the global hydrogen race?

The race for hydrogen dominance is on, with new hydrogen strategies seemingly published every week (Missed them? Check out the British, European, German, Japanese, American, Canadian, Brazilian, South African, and Australian strategies for a sample). The interest in hydrogen stems from the expected market growth for low-carbon hydrogen needed to decarbonize heavy industry and to provide a flexible energy storage technology. Though estimates for market growth vary wildly, there is an acknowledged need for developing low-carbon hydrogen. 

Australia offers a particularly interesting case. The country has an emissions-intensive industrial sector, a newly pro-climate government, and vast solar photovoltaic resource potential to support great hydrogen production at a reasonable cost. It is also located closer to Asian demand centers than potential competitor regions, like North Africa and South Africa, respectively, and has greater production potential than other regional producers. The sparsely populated country’s thin electricity network is also notoriously variable and would benefit from a flexible energy technology. 

Australian hydrogen development plans often fly under the radar in favor of European projects, which currently account for 80% of planned hydrogen projects. However, Australia has ambitions to supply roughly one-quarter of global hydrogen exports by 2030 and has a targeted development scheme in its Regional Hydrogen Hubs program. The country’s relative isolation is a wildcard in its hydrogen development plans: it has fewer partners than the similar European Hydrogen Backbone project which may prove disadvantageous in terms of cost sharing but advantageous in terms of coordinating action. Realizing the country’s hydrogen ambitions requires access to sufficient low-carbon electricity, a challenge that many projects have already accounted for but that has also already sent one Tasmanian hydrogen project to an early grave.

Unlike many of the countries touting their hydrogen strategies, Australia actually has the potential to become a hydrogen production powerhouse. We will be following whether Australian ambitions translate to additional on-the-ground uptake and help the country gain an edge in hydrogen development.