Yesterday marked the start of CERAWeek 2024 by S&P Global, and for the rest of this week Morgan Lewis partners Kirstin Gibbs and Felipe Alice will be reporting back on the key themes and ideas they are uncovering as the conference unfolds.
In their first Power & Pipes blog post of the week, Kirstin and Felipe highlight the role of natural gas in the decarbonization movement, the use of artificial intelligence in creating energy efficiencies, and potential issues identified with hydrogen and battery storage. US Secretary of Energy Jennifer Granholm was the keynote speaker for the day, and some key facets of her speech are highlighted below.
Global Decarbonization and Natural Gas
- Carbon knows no boundaries—effective decarbonization can only be achieved through global cooperation and partnerships.
- Global decarbonization will be about energy affordability, energy reliability, and energy sustainability.
- Natural gas will continue to play a significant role in global decarbonization, but buyers are looking for long-term contracts of “green” natural gas/LNG (e.g., with carbon capture).
- The “mood has changed” in Europe regarding natural gas following recent global conflict, and European nations now consider natural gas as a needed reliable source.
- Natural gas plays a role in transitioning developing nations away from coal to gas-fired generation. Population growth across the globe, especially in Asia, will continue to fuel global energy demand, which will rely on natural gas.
The Role of AI in the Energy Industry
- AI will play a role in creating energy efficiencies and tools for decarbonization.
- The energy company of tomorrow will be the one that uses technology, value chain integration, and project execution skills to produce the energy that the world needs today. The industry must continue to integrate technology into the energy systems today to develop the energy company of tomorrow.
Hydrogen
- While green hydrogen can be part of the solution, costs to produce it remain high, and the market has yet to fully develop.
- To stimulate hydrogen growth, we should move away from the color wheel of hydrogen products (e.g., green hydrogen vs. blue hydrogen). Ideally, the best technology should win, with the market picking the winners, rather than the government.
Battery Storage
- Currently, battery storage is not a complete solution because there is not grid-scale capability, i.e., the grid still needs the backup of other products and technologies, such as natural gas.
Highlights from Secretary Granholm’s Speech
- Secretary Granholm began by noting that the world will need supplies of traditional and new energies for the foreseeable future, but the global economy is on a path toward repowering itself on clean energy. While the momentum of the clean energy transition is undeniable, it is important to note that this is happening while the United States is the largest producer of natural gas and the largest exporter of LNG.
- With respect to the pause on LNG export authorizations, Secretary Granholm predicted that by next year the pause “will be well within the rearview mirror.”
- When discussing what keeps her up at night, Secretary Granholm noted that while energy demand had been flat thanks to new efficiencies, we are seeing a huge increase in electricity demand due to the development of data centers, new factories building electric vehicles (EVs), bitcoin mining, and more. Furthermore, these businesses are demanding clean power because they have their own net-zero goals. So, how are we going to supply these customers? It may be a situation where if you want to build a new data center, you may need to bring your own clean power with you.
- Secretary Granholm also announced a new “Liftoff Report” related to commercialization of geothermal projects. You can find all the Liftoff Reports here.
- Secretary Granholm also announced the creation of the Regional Energy Democracy Initiative to be piloted in the US Gulf South.
Check back every day this week for more insights from CERAWeek.