Dal Poz, previously head of the Advisory Board at oil giant Equinor, was asked for his opinion on the European energy crisis on an episode of Conversations on Climate, the climate change podcast produced by United Renewables and the London Business School Alumni Energy Club.
‘There will be tough choices’
‘There's a big balance between security, and price, and the green energy transition,’ particularly following the invasion of Ukraine, said Chris Caldwell, clean energy entrepreneur and host of the podcast. ‘How do you balance all of those issues up?’
Dal Poz – who now works as a consultant with energy firms making the transition to net-zero – responded with a clear warning to anyone who felt there would be an easy solution for energy markets. ‘My take is that there is no optimum space in the middle. This is an inherently unstable system where you have to keep resolving those trade-offs as you go along. And there will be tough choices along the way.’
Energy crisis not slowing down in 2022
Europe’s energy crisis has only worsened this year, as supply-chain issues following the pandemic collided with Russia’s invasion of Ukraine and subsequent sanctions. With natural gas imports through the Nord Stream pipeline seriously restricted by the conflict, and global competition for ship-borne gas supplies increasing from Asia, Europe’s benchmark gas price hit a record peak of $341/MWh earlier this year.
There are already fears that wholesale prices could spike by another 60% this winter. As a result, European countries such as Germany, Austria and Italy are turning their old coal-powered stations back on, despite pledging to move away from dirtier fuels.
To Dal Poz, this is an expected outcome of Europe’s energy problems – with roots that pre-date the invasion of Ukraine. ‘If you have price spikes because you have a cost to your firm of one or another source of energy, you run the risk of the public backlash against some of the energy transition measures that you're taking – against the whole idea of net zero – because “we can't afford that,”’ he explained. Alongside a return to secure domestic energy sources, Dal Poz also expects further government intervention in market pricing, such as changes to fuel taxes.
Renewables offer ‘insulation’ from market chaos
Dal Poz does see a path through these problems – but only with a radical change in Europe’s energy mix. ‘My theory – and I think that this is an inherent part of the journey – is that more and more countries will look at renewables as a way to solve some of those issues,’ he declared. ‘If you have a bigger share of renewable production, basically, you're also insulating yourself from some of the global commodity markets,’ allowing countries to ride out external crises with domestic production.
In his conversation with Caldwell – himself an expert in renewable energy production – Dal Poz recognised there would be challenges, from retrofitting infrastructure to dealing with intermittency and storage. But he remains hopeful that clean energy offers a way out of the trilemma, because ‘all those things can be solved, and that is the exciting part of the industry these days – there is a lot of innovation.’
The Conversations on Climate podcast invites leading thinkers, business leaders and academic experts to offer their expertise to the clean energy debate. Hosted by United Renewables founder and CEO Chris Caldwell, it has previously hosted guests such as Paul Beijer and Professor Jean-Pierre Benoit.
