Hello Everybody and Happy Monday!
First of all, thank you very much to all of you that attended our first event last week with AES solar! We are currently working hard to plan our next event which will be on the 27th of February at Wood Mackenzie’s Edinburgh offices, so stay tuned for that!
1. OIL PRICES: CONTAGION AND BLOCKADES AFFECT THE DEMAND AND SUPPLY OF OIL.
2. SOMETHING CLOSER TO HOME: SIR IAN WOOD UNVEILS PLANS FOR ABERDEEN ‘ENERGY TRANSITION ZONE’.
3. CLIMATE CHANGE AND FOSSIL FUELS WERE CENTER STAGE AT THE WORLD ECONOMIC FORUM’S 50 ANNUAL MEETING IN DAVOS.
OIL PRICES: CONTAGION AND BLOCKADES AFFECT THE DEMAND AND SUPPLY OF OIL
What happened? Crude oil witnessed its worst weekly decline in prices in over a year due to concern that the coronavirus’ spread across China will curb demands on fuel. Meanwhile, in Libya, a port blockade threatened to cut off the OPEC country’s entire oil production. What does this mean? The contagion has stopped and disrupted travel over the period of the Lunar New Year holiday when hundreds of millions are usually expected to travel home (this is the biggest yearly migration on the planet). As fewer people are travelling, demand for oil could be curbed by, as Goldman Sachs estimates, 260,000 barrels a day, driving prices down. These declines in prices are despite the supply side of the oil industry also taking a hit as a result of a port blockade in Libya that has threatened to cut off the whole of the OPEC country’s supply of oil. Why should I care? As mentioned in the last newsletter, a rise or decline in oil prices means that the cost of many goods fluctuates as well. This is because a lot of products are made using petroleum as a component. Oil prices will indirectly affect the cost of transport, heating and many goods that consumers purchase.
SOMETHING CLOSER TO HOME: SIR IAN WOOD UNVEILS PLANS FOR ABERDEEN ‘ENERGY TRANSITION ZONE’
What happened? Sir Ian Wood, a Scottish businessman who is largely known for his work in the North Sea oil industry as chief executive and then chairman of Wood Group, has unveiled ambitious plans to help Scotland’s northeast economy to capitalise on the energy transition by creating an “Energy Transition Zone”.
What does this mean? Economic development body Opportunity North East (One), backed by Sir Wood, aims to create an “Energy Transition Zone” near Aberdeen. If successful, it would be a world leader in this field. The scheme would be based close to the new harbour expansion and would be at the forefront of clean energy technologies such as offshore wind and carbon capture and storage. It is expected to cost about £60million and take 5 years to construct, beginning in mid- 2021. Local partners such as the city’s universities and the Oil and Gas Technology Centre will also be involved in the scheme. Why should I care? Sir Ian Wood has mentioned that, in the long term, the scheme is likely to generate thousands of jobs, helping to boost the areas’ and Scotland’s economy. Scotland also has a self-set legally binding target of net-zero carbon emissions by 2045, 5 years before the UK’s deadline. This scheme would considerably help Scotland reach this goal.
CLIMATE CHANGE AND FOSSIL FUELS WERE CENTER STAGE AT THE WORLD ECONOMIC FORUM’S 50 ANNUAL MEETING IN DAVOS
What happened? Each year the World Economic Forum hosts a conference where, as Bloomberg puts it, “the rich and powerful”, meet to discuss the state of the global economy. This year, climate change was at the top of the list of discussion points and dominated much of the conversations. The future of fossil fuels was also an important topic. What does this mean? The World Economic Forum conference at Davos, Switzerland, took place between the 20- 24th of January 2020. All the companies present at the conference were asked to commit to net-zero carbon emissions by 2050. There was a clear sense that energy providers and companies within the energy sector would have to adapt to the changes in the energy industry as, with the new decade, a transition away from fossil fuels is gathering traction. However, Amin Nasser, CEO of Saudi Aramco, the world’s largest oil exporter, believes that even in 20 years, demand for oil will be at its currency level. He says that the rising global middle class and the overall population increase will create more demand. He did mention that it would take collaboration between renewables and fossil fuels to meet the demand. Nasser and Joe Kaeser, president of Siemens, told the audience at Davos that they had agreed on a project to produce synthetic fuel from green hydrogen that brings down emissions to 40%-50%. Why should I care? At the conference, UN Secretary-General Antonio Guterres said: "We will be destroyed by climate change, not the planet. This will be for us a clear indication that we absolutely need to change course." He added, "humankind has declared a war on nature and nature is striking back in a very violent way". The Davos conference brings together world leaders who have to power to steer climate policy. The issues discussed at this conference have the potential to make real change in the energy industry. Unfortunately, most climate activists have called the conference a failure in addressing the climate issue.
27th January, 2020