Sunday, June 26 2022 Sign In   |    Register
 

News Quick Search


 

News


Front Page
Power News
Today's News
Yesterday's News
Week of Jun 20
Week of Jun 13
Week of Jun 06
Week of May 30
Week of May 23
By Topic
By News Partner
Gas News
News Customization
Feedback

 

Pro Plus(+)


Add on products to your professional subscription.
  • Energy Archive News
  •  



    Home > News > Power News > News Article

    Share by Email E-mail Printer Friendly Print

    How the War in Ukraine Could Slow Texas’ Energy Transition


    May 9, 2022 - The Texas Observer

     

      While oil and gas still rule Texas, the state has an increasingly diverse energy sector. As the effects of climate change reach a fever pitch, many in the industry are recognizing that a global transition to cleaner sources of energy is underway, whether the state’s business and political leaders like it or not. Texas already generates more wind power than any other state, and the second-most solar power. The state also has the most new renewable energy capacity commissioned or under construction.

      This spring, however, Russia’s invasion of Ukraine abruptly scrambled the world’s energy markets. Russia has already cut off Poland and Bulgaria from its gas supply, and on Wednesday the European Union proposed banning imports of Russian oil. Europe is suddenly demanding fuel from the United States instead, and President Biden has pledged to send 15 billion cubic meters of liquified natural gas (LNG) this year—enough to replace all the liquified gas that Europe imported from Russia in 2021.

      Texas oil and gas companies are eagerly heeding this call to arms. The U.S. Energy Information Administration recently predicted that American LNG exports could increase 25 percent in 2022 over last year. Right now, export terminals in Texas and other states are working at full capacity, and companies are simply diverting their gas supply from Asia to Europe. But Biden has also authorized additional LNG exports from facilities still under construction in Texas and Louisiana, encouraging the growth of the industry—despite his administration’s previous commitments to addressing climate change and to alleviating the unequal burden of pollution that communities of color face from fossil fuel facilities.

      Jim Krane, an energy research fellow at Houston’s Rice University, studies oil-producing countries and the geopolitics of the energy transition. He began his career as a journalist, including reporting on Iraq and the Persian Gulf states in the aftermath of the 2003 U.S.-led invasion of Iraq. These days, Krane has turned his attention to the war in Ukraine and its fallout on international energy markets.

      He recently spoke with the Texas Observer about the war’s effects on our state’s energy industry. This interview has been edited for length and clarity.

      Texas Observer: Before Russia invaded Ukraine, where was the Texas energy industry headed?

      Jim Krane: Texas’s energy industry is diverse. Houston has started calling itself the energy transition capital of the world, rather than just the energy capital.

      Five or six major sources of power go into our power grid. Oil and gas is still the big player. None of the other sources of energy are as profitable, especially at times like this, when the oil price is so high and gas prices are creeping up. Renewable companies are not as free-spending on universities and think tanks and political campaigns. We’re not going to have stadiums named after renewable companies, because they don’t have those extraordinary profits that allow them to build their influence in the same way that oil and gas companies can.

      Renewable companies generally have to gain influence based on their compelling case for decarbonizing society. We have to do that for the good of humanity and for the other living creatures on Earth. It’s an argument about keeping our climate comfortable for us and our offspring. For the fossil fuel firms, that’s their big Achilles heel. Two-thirds of the emissions that are causing changes in the climate are coming from fossil fuel combustion.

      TO: Despite that profit challenge, are renewables still managing to gain ground in Texas?

      JK: They’re gaining ground all the time. There is an incredible amount of new renewable capacity in the development pipeline, and it is outstripping the transmission capacity. There’s no shortage of investment capital and willingness to develop more renewables. The hurdle now is just moving that power, getting enough power lines built to bring it from the windy and sunny parts of the state to the places where people live.

      TO: Do you think this war and this push for more liquified natural gas exports will significantly change the trajectory of the state’s energy industry?

      JK: Yes. Europe is in a really tight spot. There’s a huge overseas demand for natural gas, and basically for the energy of all sorts, as long as it doesn’t come from Russia. I think it’s really uncomfortable to be turning on a light switch or lighting your stove, knowing that what you pay for that fund’s missiles that are blowing up apartment buildings in Kyiv. So the European public and policymakers are dead set on swapping out Russia’s energy exports. And they are looking to us in Texas to help.

      The U.S.—and Texas specifically—has the cost advantage, the experience, the infrastructure, the brainpower, etc. to get that gas out of the ground, move it to the coast and liquefy it, and get that to Europe fairly quickly. This process of exporting more gas was already underway, and the war is supercharging it. We’re seeing more and more interest in investment in LNG exports. You can see that in the share prices of the companies that are doing it. Their share prices have just gone way, way, way up.

      TO: Is it actually feasible to meet Europe’s need right now with liquified natural gas from the United States?

      JK: They’re not going to be able to replace Russia overnight. Russia’s providing about 40 percent of Europe’s natural gas. Now, if Russia cuts off exports to the EU, it [finding an immediate replacement] is going to be necessary. And there is that risk—that it’s not Europe that’s going to embargo Russia, it’s Russia that’s going to embargo Europe. That’s concentrating minds on how to get off of Russian energy really quickly.

      U.S. LNG can be part of that, but it’s not the only solution. Some of it’s going to be taking a step backward, and using coal plants that have been idle. Some of it’s going to be energy efficiency. There might even be rationing of energy involved, unfortunately. There’s going to be higher prices.

      Even if the U.S. were able to send over that much LNG, they need more import capacity. In some cases, you can do it with a ship. There are the floating storage and regasification units (FSRU), these ships that you can rent. They’re not cheap, but you can rent a ship and park in your port and build a pipeline that connects it to your natural gas grid.

      TO: Climate experts talk a lot about the risks of locking in new fossil fuel infrastructure and the effect that’s going to have on climate change. What might be some of the long-term consequences of all this new gas production and transport?

      JK: Nobody wants to invest in a new power plant or an LNG terminal and then shut it down before its investment horizon has elapsed. They want to get their return out of it. So yes, there’s a [future] dependence on decisions we’re making now. They’re going to be set in place for 20 or 30 or 40 years. These are long-term decisions that we’re making in an emergency context. We need to be cognizant of this and be aware that we don’t lock in emissions-heavy technologies that are really inappropriate for the age we’re in.

      Maybe rather than building permanent LNG import capacity everywhere, we use some temporary capacity that we can take offline more easily. Maybe the FSRU might be a preferred solution, to provide more gas for about five years until we’ve got enough wind, solar, nuclear, and hydro capacity. Or until we can switch building heating systems to electric heat pumps and do a better job insulating our buildings.

      There’s an energy security aspect, too. Europe has been learning this lesson over and over. There’s way too much political risk in any system that relies on 24/7/365 deliveries of fuel. That’s one of the big advantages that renewables hold over fossil fuels: there’s no fuel. Once your wind farm or your solar array is connected to the grid, there is no more supply chain that feeds them. They don’t need any more deliveries of anything to be producing power for the next 20 or 30 years. That is a pretty attractive proposition right now. When you’ve got an energy system that’s dependent on natural gas deliveries across multiple international borders, renewables start to look pretty good—and pretty reassuring. That was our original inspiration for going renewable in the U.S. under Jimmy Carter. In 1979 [during the oil crisis following the Iranian Revolution] there was his famous quote: “No one can embargo the sun.” The first push into solar power in the U.S. was not based on climate change or the environment, it was based on energy security. That whole issue has really come roaring back.

      The post How the War in Ukraine Could Slow Texas’ Energy Transition appeared first on The Texas Observer.


      The views expressed in content distributed by Newstex and its re-distributors (collectively, "Newstex Authoritative Content") are solely those of the respective author(s) and not necessarily the views of Newstex et al. It is provided as general information only on an "AS IS" basis, without warranties and conferring no rights, which should not be relied upon as professional advice. Newstex et al. make no claims, promises or guarantees regarding its accuracy or completeness, nor as to the quality of the opinions and commentary contained therein.

    TOP

    Other Articles - International


    TOP

       Home  -  Feedback  -  Contact Us  -  Safe Sender  -  About Energy Central   
    Copyright © 1996-2022 by CyberTech, Inc. All rights reserved.
    Energy Central® and Energy Central Professional® are registered trademarks of CyberTech, Incorporated. Data and information is provided for informational purposes only, and is not intended for trading purposes. CyberTech does not warrant that the information or services of Energy Central will meet any specific requirements; nor will it be error free or uninterrupted; nor shall CyberTech be liable for any indirect, incidental or consequential damages (including lost data, information or profits) sustained or incurred in connection with the use of, operation of, or inability to use Energy Central. Other terms of use may apply. Membership information is confidential and subject to our privacy agreement.