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Released March 22, 2023 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The short-term energy future rests on innovative countries, and here the United States wins with liquefied natural gas (LNG), but the lack of essential battery materials and a globally adverse public means its power may fade long term, an energy survey from Shell plc (NYSE:SHEL) (London, England) suggested.
Shell in early 2021 started proposing various scenarios for the energy future as the world was moving to a post-vaccine stage of the COVID-19 pandemic. But Russia's decision in early 2022 upset many of those forecasts as the world's major powers scrambled to their respective corners, taking parts of the energy sector with them.
"As the security mindset begins to take hold and national interests take precedence within political agendas, a tension emerges between what was promised to the world at COP26 in Glasgow and what nations must do to address immediate energy concerns," the report read.
Parties to the Glasgow agreement opted to "phase down" their use of coal and move to a cleaner future where lower emissions avoid a climate catastrophe. But from BP's (NYSE:BP) (London, England) Chief Executive Bernard Looney to U.S. President Joe Biden, the transition will take time and fossil fuels will remain necessary to keep the world running for the foreseeable future.
For this, Shell said that "innovation wins." In theory, the rich deposits of oil and gas in the United States makes it energy independent, where exports are greater than imports. Those exports became essential for a European economy looking to break the energy shackles of Russia after the start of the war in Ukraine.
"Suddenly, U.S. shale gas in the form of liquefied natural gas looks very attractive to importers, especially when additional supply can be delivered at scale within two or three years," Shell's report read.
If it isn't already, the United States is widely expected to pass Australia and Qatar to become the world leader in LNG exports this year. On the receiving end, economies such as Germany's are quickly building up the infrastructure necessary to use that resource on the grid with floating terminals in place only a few short months after sabotage closed Russia's Nord Stream pipeline in the Baltic Sea.
"Such a rapid response allows U.S. LNG to be marketed as an answer to energy supply security while the new low-carbon energy system grows," Shell found.
But an investor focus on shareholder returns, capital discipline and activist pressure means new drilling is facing headwinds, suggesting U.S. energy reserves will not be a long-term panacea that resolves global concerns.
Looking beyond the bridge fuel of natural gas and Shell finds that the critical minerals necessary for batteries -- lithium, nickel, cobalt, manganese, and graphite -- are in sufficient quantities to power the world of tomorrow. But like crude oil and natural gas, supplies are inextricably tied to geopolitical issues.
"In a world where a security mindset dominates, this could become problematic," Shell warned.
Parts of the bipartisan Inflation Reduction Act that passed last year try to address that by incentivizing a domestic base through incentives, but as recently as 2021, the U.S. economy was "completely dependent" on imports for 14 of the 35 critical minerals and much of that dependency is on China, which is flexing its geopolitical muscles in the Middle East and in the Kremlin.
"Finding and exploiting new deposits in other parts of the world is now a U.S. priority, but this will take time to deliver," Shell suggested.
One area that avoids some of the geopolitical risks tied to supply chains and fossil fuels is renewable energy and Shell finds that solar and wind "pushes the market share of fossil fuels into retreat."
Here, the United States is playing catch up, particularly with offshore wind. Auctions, however, are set for the wind energy developments in the Gulf of Mexico and renewables are slowly, but surely, displacing some fossil fuels in the U.S. economy.
U.S. federal data show natural gas dominates the market share for electricity generation short-term, losing only 2% of its hold from 2022-2024. Renewables, meanwhile, increase from 22% of the mix last year to 26% in 2024, while CO2 emissions decline by nearly 3% over that time span.
There's an internal element to that, however, with trade groups and lawmakers alike pushing for more fossil fuels.
"Willow represents economic security," U.S. Sen. Lisa Murkowski, R-Alaska, said of the newly approved oil project in the Alaskan tundra. "It represents energy security, and it represents national security."
Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can click here for the full reports.
An aging U.S. President Joe Biden may regret that decision as younger voters rile against it. Activists supported by the so-called People v. Fossil Fuels coalition demonstrated this week in front of the federal Department of Interior to protest the decision.
Shell, meanwhile, sees a new generation of voters disconnected from global events.
"Consequently, voters are no longer willing to support and fund the country's role as the global order's police force," Shell warned. "The overall effect leads the USA into a new era of isolationism."
Shell warned that it does not have a crystal ball to the future. While the Intergovernmental Panel on Climate Change is warning that mankind is on "thin ice" in terms of the climate, energy has a geopolitical component that's too big to ignore.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Shell in early 2021 started proposing various scenarios for the energy future as the world was moving to a post-vaccine stage of the COVID-19 pandemic. But Russia's decision in early 2022 upset many of those forecasts as the world's major powers scrambled to their respective corners, taking parts of the energy sector with them.
"As the security mindset begins to take hold and national interests take precedence within political agendas, a tension emerges between what was promised to the world at COP26 in Glasgow and what nations must do to address immediate energy concerns," the report read.
Parties to the Glasgow agreement opted to "phase down" their use of coal and move to a cleaner future where lower emissions avoid a climate catastrophe. But from BP's (NYSE:BP) (London, England) Chief Executive Bernard Looney to U.S. President Joe Biden, the transition will take time and fossil fuels will remain necessary to keep the world running for the foreseeable future.
For this, Shell said that "innovation wins." In theory, the rich deposits of oil and gas in the United States makes it energy independent, where exports are greater than imports. Those exports became essential for a European economy looking to break the energy shackles of Russia after the start of the war in Ukraine.
"Suddenly, U.S. shale gas in the form of liquefied natural gas looks very attractive to importers, especially when additional supply can be delivered at scale within two or three years," Shell's report read.
If it isn't already, the United States is widely expected to pass Australia and Qatar to become the world leader in LNG exports this year. On the receiving end, economies such as Germany's are quickly building up the infrastructure necessary to use that resource on the grid with floating terminals in place only a few short months after sabotage closed Russia's Nord Stream pipeline in the Baltic Sea.
"Such a rapid response allows U.S. LNG to be marketed as an answer to energy supply security while the new low-carbon energy system grows," Shell found.
But an investor focus on shareholder returns, capital discipline and activist pressure means new drilling is facing headwinds, suggesting U.S. energy reserves will not be a long-term panacea that resolves global concerns.
Looking beyond the bridge fuel of natural gas and Shell finds that the critical minerals necessary for batteries -- lithium, nickel, cobalt, manganese, and graphite -- are in sufficient quantities to power the world of tomorrow. But like crude oil and natural gas, supplies are inextricably tied to geopolitical issues.
"In a world where a security mindset dominates, this could become problematic," Shell warned.
Parts of the bipartisan Inflation Reduction Act that passed last year try to address that by incentivizing a domestic base through incentives, but as recently as 2021, the U.S. economy was "completely dependent" on imports for 14 of the 35 critical minerals and much of that dependency is on China, which is flexing its geopolitical muscles in the Middle East and in the Kremlin.
"Finding and exploiting new deposits in other parts of the world is now a U.S. priority, but this will take time to deliver," Shell suggested.
One area that avoids some of the geopolitical risks tied to supply chains and fossil fuels is renewable energy and Shell finds that solar and wind "pushes the market share of fossil fuels into retreat."
Here, the United States is playing catch up, particularly with offshore wind. Auctions, however, are set for the wind energy developments in the Gulf of Mexico and renewables are slowly, but surely, displacing some fossil fuels in the U.S. economy.
U.S. federal data show natural gas dominates the market share for electricity generation short-term, losing only 2% of its hold from 2022-2024. Renewables, meanwhile, increase from 22% of the mix last year to 26% in 2024, while CO2 emissions decline by nearly 3% over that time span.
There's an internal element to that, however, with trade groups and lawmakers alike pushing for more fossil fuels.
"Willow represents economic security," U.S. Sen. Lisa Murkowski, R-Alaska, said of the newly approved oil project in the Alaskan tundra. "It represents energy security, and it represents national security."
Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can click here for the full reports.
An aging U.S. President Joe Biden may regret that decision as younger voters rile against it. Activists supported by the so-called People v. Fossil Fuels coalition demonstrated this week in front of the federal Department of Interior to protest the decision.
Shell, meanwhile, sees a new generation of voters disconnected from global events.
"Consequently, voters are no longer willing to support and fund the country's role as the global order's police force," Shell warned. "The overall effect leads the USA into a new era of isolationism."
Shell warned that it does not have a crystal ball to the future. While the Intergovernmental Panel on Climate Change is warning that mankind is on "thin ice" in terms of the climate, energy has a geopolitical component that's too big to ignore.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
