The energy transition: What does it mean? whether it’s actually underway at allThese are major points of conversation in recent years.  

How the transition — which can be seen as a shift away from fossil fuels to a system dominated by renewables — pans out remains to be seen.

The outcome depends on many factors, including technology and financial cooperation. All of these factors are crucial but also fraught with uncertainty and risks.

CNBC’s Dan Murphy moderated a discussion on the above subjects at the Atlantic Council’s Global Energy Forum, Dubai, Tuesday.

Leo Simonovich is Vice President and Global Head of Industrial Cyber and Digital Security at Siemens Energy, said.

He stated that 2 billion new devices will be created in the energy sector over the coming years.

Bad actors could exploit every one of these devices.”

Simonovich elaborated on the possible consequences of all the above. Simonovich explained that in an increasingly connected, digitized system with legacy assets which are still needed for digital assets, there could be cascading consequences.

“And we are not talking just about data loss, we really mean a safety concern, one which could bring down large parts of the grid, or as we saw with the Colonial Pipeline attack in the United StatesParts of [the]Gaz network

Simonovich said that cybersecurity was essential as both an opportunity to expedite the energy transition, if done correctly, because it builds trust but also as a significant source of risk, which is something Simonovich stressed very urgently.

Geopolitics

If the planet wants to transition to a low-carbon system of energy, then geopolitics is also important. Abdurrahman Khalidi was forcefully arguing this point. He’s chief technology officer at GE Gas Power EMEA.

Khalidi stated that it took several decades for the entire world, up to 2015, to reach a Paris consensus on global warming. We had a lot to discuss.

Khalidi mentions Paris in his reference to the Paris AgreementThe aims to keep global warming below 2., and preferably at 1.5 degrees Celsius, as compared with pre-industrial levels. It was approved in December 2015.

“For decarbonization to happen — as we saw in COP26 — you need … cooperative and collaborative world governments,” he said. “The danger I see now [is that]The world has become sharply divided and is now being divided by ‘with’ or ‘against.

Khalidi’s remarks come as Russia’s invasion in Ukraine highlights how dependent certain economies are upon Russian oil and gasoline.

Although the conflict in Ukraine caused geopolitical division and tension, there have been a few initiatives that were based on cooperation and common goals.  

For example, last week the U.S.A and European Commission issued a statement on energy securityIn which they also announced the formation of a joint taskforce on the topic.

Both parties stated that the U.S. would try to guarantee at least 15 Billion cubic meters extra of liquefied gas for the EU during this year. This would likely increase over time, they said.

President Joe Biden said the U.S. and EU would also “work together to take concrete measures to reduce dependence on natural gas — period — and to maximize … the availability and use of renewable energy.”

Smart investing

Due to the importance of fossil fuels in modern society, any change towards a low-carbon economy and energy system will take a large amount of money.

Kara Mangone (global head of climate strategy), addressed the issue of how to invest this money during Tuesday’s panel. Goldman Sachs. She stressed, among other things the importance of integration as well as commercial viability.

It will require anywhere between 100 trillion and 150 trillion, according to research. [dollars] in capital, about 3 to 5 trillion a year — just an astronomical amount, we’re nowhere near that today — to deliver on the goals that were set forth in the Paris Agreement,” she said.

Mangone stated that around half the capital needed to be devoted to renewables or technologies already on a commercial scale.

“But the other half, very importantly, will need to go into carbon capture, into hydrogen, into direct air capture, into sustainable aviation fuel, e-fuels — technologies that are not yet being adopted at commercial scale because they have not hit the price point where that can happen for a lot of companies.”

Mangone’s trillion-dollar numbers are covered in a report titled “Climate Finance Markets and the Real Economy”This report was released in the second quarter of 2020. Goldman Sachs stated that it has joined the Global Financial Markets Association Climate Finance Working Group in order to assist with the publication.

Mangone continued to outline how commercially feasible goals can be attained.

“We cannot pull out financing from … the oil and gas sector, metals and mining, real estate, agriculture — these sectors that are really crucial to transition, that actually need the capital, that need the support to be able to execute on that.”

Anna Shpitsberg (Deputy Assistant Secretary for Energy Transformation at the U.S. Department of State), made these comments Monday.

“We’ve always stood up for what we believe in and have said it repeatedly.” [the]Shpitsberg spoke during an interview moderated by Hadley Gamble of CNBC.  

She said, “They are important players in the energy sector. They are pushing for abatement options. But they will also be pushing hydrogen options.

They are some of the largest investors in clean energy and renewables, to be honest.”

Shpitsberg stated that the goals of methane efficiency reduction and efficiency will not be achieved if this “critical stakeholder” is not involved.

The message was that oil and gas companies should be part of the discussion. We want them to also be part of the discussion on the transition.”

The International Energy Agency announced earlier this month that 2021 was the year. energy-related carbon dioxide emissions rise to their highest level in history.The IEA reported that global energy-related CO2 emissions rose by 6% to record levels of 36.3 million metric tons in 2021.

According to its analysis, coal was the major driver of growth. The report said that coal was the main driver of more than 40% global CO2 emission growth last year. It reached a new record at 15.3 billion tonnes.

According to the IEA, “CO2 emissions of natural gas rose well above their 2019 levels at 7.5 billion tons.” They also noted that 10.7 billion metric tonnes was CO2 from oil.