For fossil fuels, 2021 will not be easy considering the uncertainty surrounding post-pandemic demand and pressure to shift towards renewable sources. Oil production will continue slowly declining through March 2021, and may rise modestly through year end. The pandemic-caused economic disruption will keep to negatively impact global demand for natural gas, especially from industry.
The next five years will see the energy transition reaching a tipping point. New build renewable energy will cost less than the marginal cost of fossil fuels. Carbon footprints will be viewed as socially unacceptable, within a larger trend for sustainability accelerated by the Covid-19 pandemic. Individuals, companies and countries will seek the quickest and most affordable ways to achieve net-zero, with initiatives such as C40Cities and the EU Green Deal already leading the way. This vector will unleash a wave of innovation aimed at both reducing and removing the world’s emissions.
The scientific machine learning that combines physics-based models with big data will lead to leaner designs, lower operating costs and ultimately clean, affordable energy for all. Carbon-heavy industries, such as oil and gas and industrial manufacturing, will use machine learning and AI technology to dramatically decarbonise their processes.
Many renewable energy projects, e.g. solar and wind, that were postponed by the pandemic are expected to come online in 2021 and lead to a rebound in renewable energy capacity. As a result, in 2021 capacity levels are expected to come close to pre-pandemic numbers. That being said, the combined renewables growth of 2020 and 2021 will be nearly 10% lower than was previously forecast.
Cyprus in particular plans to increase the share of renewable energy sources from 13.9% to 22.9% in the period 2021- 2030. The necessary investments until 2030 are estimated at €13.7 billion. Currently, the three pillars of the national energy strategy include opening the local electricity market by mid-2022; enhancing the electricity interconnection with neighbouring countries by the end of 2023; and restoring natural gas exploration and exploitation activities in Cyprus’ Exclusive Economic Zone. Currently, ExxonMobil and Qatar Petroleum and Total and Eni are revising their plans for their drills to take place in the second half of 2021, but no cancellations have been announced as of the end of 2020.
2021 should also see major advances in preparations for the EastMed gas pipeline connecting East Mediterranean energy resources to mainland Greece via Cyprus and Crete, to which the European Commission has already contributed over €34 million. Following a final investment decision between the countries in 2022, construction of the pipeline is scheduled for completion by 2025.
Another major project is the LNG import terminal in Vassiliko which will cost Cyprus about €290 million. The terminal, which will provide fuel for electricity plants in Cyprus, is expected to reduce the country’s carbon footprint by almost 30% and reduce energy costs by up to 15%. Interestingly, the EU Green Deal sees adopting net-zero emissions by 2050 through at least €1 trillion worth of public and private investment, and gas is no longer central to its future energy needs: to achieve these targets the EU will have to reduce its natural gas consumption by more than 80% by 2050. In November 2020, European Ombudsman Emily O’Reilly criticised that gas projects had been previously included on the European Commission’s list of priority energy projects, with EastMed being one of them.
To be continued
Sources: forbes.com, hrtrendinstitute.com, gtm-plus.com, cyprus-mail.com, bloombergquint.com, financialmirror.com, finch.com, nnip.com, unctad.org, oecd-ilibrary.org, globalwebindex.com, contactpigeon.com, virtualreality-news.net, eiu.com, statcdn.com, ec.europa.eu, www3.weforum.org, www.pwc.com.cy, zdnet.com, financesonline.com, rise.org.cy, dgepcd.gov.cy, bbc.com, enterprisesurveys.org, classeditori.it