However, Asia is also the region that, according to the International Energy Agency (IEA), has two growth engines: China and India, which are leading the continent’s renewable adaptation campaign. Southeast Asian countries also possess immense potential. Should the region double down on green sources to future-proof its energy security and economic outlook?

Rana Adib, the Executive Director of REN21, the global network of diverse stakeholders that enables the necessary changes to build the renewables economy for prosperous lives and societies, shared her insights on Asia’s renewable pursuit in an exclusive interview with International Finance.

An engineer by training, Rana Adib has worked in the private sector and applied research in the fields of renewable energy, energy access, waste management, and the biomethane sector. With her cross-functional profile, she likes to provide solutions that pave the way for a world built on renewable energy. She is also the chair of SLOCAT, an international multi-stakeholder partnership enabling knowledge and action for sustainable, low-carbon transport.

Here are the excerpts from the interview

With crude oil staying above $100 and disruptions in the Gulf, how do you see the global economy coping with this prolonged energy crisis?

In the short term, countries are focused on securing supply and managing demand through measures such as stock releases, subsidies and supply diversification. These can help cushion the immediate impact, but they do not address the underlying structural exposure. With around 20% of global oil trade passing through the Strait of Hormuz, disruptions quickly translate into higher energy prices, inflationary pressure and impacts on industrial competitiveness, particularly in import-dependent economies across Asia and Europe.

This situation highlights a broader point: systems that rely heavily on traded fossil fuels remain inherently exposed to geopolitical risks and price volatility.

After repeated energy shocks since 2022, do you think renewables are shifting from an option to a necessity?

Yes — increasingly, this shift is being driven by affordability, efficiency and resilience. Renewables are now among the lowest-cost sources of new power in many regions and offer greater price stability, unlike fossil fuels, whose costs are subject to global market fluctuations. As prices rise, households and industries are directly affected, while renewables combined with electrification can reduce long-term exposure to these shocks.

At the same time, energy efficiency is becoming more central. Electrified solutions such as electric vehicles and heat pumps are significantly more efficient than combustion-based systems, meaning less energy is required to deliver the same services — helping to lower costs and reduce vulnerability. Countries that rely heavily on imported fossil fuels remain structurally exposed. By contrast, systems built on renewables, electrification, efficiency and flexibility can improve resilience over time. In this context, renewables are increasingly seen not only as a climate solution, but as a key component of economic stability and energy security.

What is the likelihood of Asian governments accelerating the transition to alternatives beyond petrol, diesel, and gas?

In many cases, the current context is likely to reinforce this direction, although the transition may not be linear. Some governments may adopt short-term measures involving fossil fuels to manage immediate pressures. At the same time, the crisis is strengthening the case for electric mobility, public transport, clean electricity, storage and heat pumps, as well as for expanding domestic renewable energy supply. Given Asia’s significant reliance on imported fuels, there is a growing incentive to reduce exposure through electrification, energy efficiency and locally available renewable resources.

With global EV sales reaching 1.1 million units in February 2026, do you expect this growth to sustain or peak soon?

The outlook is likely to be more nuanced rather than indicating a clear peak. Overall, car sales may face downward pressure due to weaker consumer spending and broader economic uncertainty. However, the key trend is that the share of EVs within total car sales continues to increase. EVs represented over 20% of global car sales in 2024 and are on track to exceed 25% in 2025. In leading markets, shares are already significantly higher, including around 50% in China, while others such as South Korea (around 10%), Japan (around 2%–3%) and India (around 3%) remain at earlier stages, highlighting significant room for growth.

This suggests that accelerating investment in EVs, charging infrastructure and enabling policies could play an important role in reducing fuel import dependence and strengthening energy security.

Should automakers prioritise affordability to meet rising EV demand?

Affordability is now central to the next phase of EV adoption. Automakers are already shifting in this direction, driven by weaker consumer demand, geopolitical pressures and rising competition. At the same time, EV economics have improved significantly. In many markets, EVs are already cheaper to own and operate over their lifetime, and upfront costs are moving toward parity. The challenge is therefore no longer technology, but access — ensuring affordable options, financing and scale for mass-market adoption.

With countries like China, India, and Japan leading renewable adoption, should other Asian economies follow more aggressively?

The broader regional trend suggests increasing momentum, but the current crisis also shows that the transition is not always linear. In the short term, many countries are focused on securing fuel supply and managing demand, including subsidies, diversification, and emergency measures. However, this situation is already reinforcing the case for accelerating renewables, electrification and energy efficiency as more durable solutions.

China and India continue to drive large-scale renewable deployment, while Japan is expanding within a more constrained system. South Korea is also pursuing more ambitious renewable expansion plans, particularly in solar and offshore wind. At the same time, other Asian economies remain at earlier stages, highlighting significant room for growth. Countries that have already expanded domestic renewable capacity are generally less exposed to price volatility, which is becoming an increasingly important consideration.

Scaling up renewables, electrification, and efficiency can help reduce exposure to volatile fuel import costs, in addition to improving resilience to external shocks, supporting domestic economic development and new industries. In this context, accelerating the transition is increasingly seen not only as a climate priority, but as a strategic economic and energy security decision.

Despite leading Asia’s renewable adoption charge, Japan and South Korea are feeling the brunt of the global energy crisis, given their dependence on imported fuel. Should these nations take a hard look at their energy sourcing practices?

The current crisis underscores the structural dependence of both countries on imported fuels. Japan sources the vast majority of its crude oil (around 90%) from the Middle East, while South Korea imports roughly two-thirds from the same region, with much of this supply transiting through key chokepoints, such as the Strait of Hormuz. While both maintain strategic reserves, these provide only a short-term buffer.

Reducing this exposure over time will depend on accelerating domestic renewables, electrification, grid and storage infrastructure, and energy efficiency. More broadly, this reflects a shift in how energy security is being understood, from securing fuel supply to reducing reliance on imported fuels altogether.

Japan, after the 2011 Fukushima disaster, took a backseat in expanding its nuclear industry. Do you see things changing in this front post-Gulf crisis?

Japan’s energy policy had already begun evolving before the current crisis, with a more balanced approach that includes both renewable expansion and a gradual return of nuclear power. The current context may reinforce discussions around nuclear energy in terms of energy security. However, nuclear developments typically involve long timelines and remain subject to public acceptance considerations. In the near term, measures such as accelerating renewables, electrification and energy efficiency are likely to play a more immediate role in strengthening energy resilience.

The post Renewable shift is being driven by affordability, efficiency and resilience: Rana Adib appeared first on International Finance.

Thanks to the “Go Green” theme of the 21st-century global economy, investors are now eager to spend trillions on energy transition, but at the same time, too much money is piling into mature projects, with high-risk innovations struggling to attract backing. Will there be enough money in the world to save the planet? It is an urgent question that has a complicated answer.

Big-picture forecasters identify the enormous amounts required to fund a more environmentally friendly future, as well as the equally intimidating gaps in obtaining them. According to European financier Allianz, to meet the globally agreed-upon 2030 emissions targets, investment in the energy transition must more than double to $4.05 trillion annually. In a 2023 report, the Boston Consulting Group (BCG), a United States-based firm, projects a net-zero “capital gap” of $18 trillion.

The situation looks even more dire for 2025. With his promise to “drill, baby, drill” for oil and gas, United States President Donald Trump has reclaimed the presidency and will eliminate the generous green subsidies that his predecessor, Joe Biden, had advanced through the Inflation Reduction Act (IRA). High energy costs and farmer protests are undermining support for Europe’s ambitious transition agenda, while Canada is about to repeal its historic carbon tax.

In financial markets, the cost of capital-intensive energy infrastructure is continuing to rise due to persistently high interest rates. A return to reliance on fossil fuels is being prompted by the AI-driven surge in data centre construction, which is driving up electricity demand estimates.

According to Richard de los Reyes, a portfolio manager at T. Rowe Price’s New Era Fund, one of these data centres can consume as much electricity as a small city. The need for natural gas to meet demand is increasingly recognised.

Mismatched realities

However, practitioners in the financial trenches who are raising capital and structuring deals have a very different perspective. They are concerned about pursuing too few green investments with too much capital.

According to Alex Leung, head of infrastructure research and strategy at UBS Asset Management, “I continue to firmly believe that the megatrends of decarbonisation and digitalisation will revolutionise our way of life. However, these sectors are becoming increasingly crowded. The world of renewable energy is becoming more and more fragmented from a financial standpoint. How can both be true? Capital is plentiful, but it is largely concentrated in a small number of established green technologies, while more creative or untested industries have difficulty obtaining funding.”

On the one hand, investors can support well-established, reasonably priced technologies with the realistic hope of a consistent, multi-decade payout. Since economies of scale and a boom in Chinese equipment have driven the costs of solar and onshore wind power below those of fossil fuels, they have entered this category. Then there are technologies like offshore wind that have high costs and unknown risks, or technologies like carbon capture or green hydrogen that show promise but have not yet turned a profit. For these projects to become commercially viable, they still need government assistance or wealthy corporate backers.

Antoine Saint Olive, global head of infrastructure and energy finance at Natixis Capital and Investment Banking in Paris, said, “Everyone wants to be part of the energy transition on paper. But when you have a real deal on your desk, in many cases, you are talking about new technologies.”

As investors lament over crowded trades, this mismatch, between a surplus of capital for proven projects and a shortage for riskier innovations, helps explain why trillions are still required. The most important agreements arguably lie in the intersection of established and emerging technologies: rapidly evolving solar and wind energy storage systems and the modifications to grids required to transmit them. Without improved customer delivery, renewable energy investments will eventually reach a ceiling, and in certain locations, they may have already.

According to Rebecca Fitz, a partner at BCG and a founding member of the company’s Centre for Energy Impact, current grids can generally handle renewable energy until it accounts for 15% of their input. She said that there is “a bottleneck in power market design” in some regions of Europe where the percentage is higher than 50%.

Stef Beusmans, an associate partner at Sustainable Capital Group in Amsterdam, said, “Moving green energy from where it’s best produced—Spain and Portugal for solar, the Netherlands for wind—to where it’s needed is particularly challenging due to Europe’s patchwork of national grids and regulators. Europe finds it more difficult to really accelerate the deployment of clean energy due to different national support schemes.”

Energy finance at a crossroads

The venerable, obscure world of infrastructure finance, which accounts for roughly 4% of global capital, faces both opportunities and challenges as a result of the energy transition’s immense scope and complexity, according to UBS. In this area, plain vanilla deals are uncommon. Infrastructure investors must structure transactions individually and frequently bear the risk over an extended period of time, but bond underwriters and traders have access to rating agencies and liquid markets to help them manage risk.

According to Leung, “It could take up to a year to structure and close a deal. After that, active management is necessary for many infrastructure assets. This goes beyond simply cutting a coupon.”

As per Marta Perez, who leads the Americas infrastructure debt team at Allianz Capital Partners, green investments present a more complex scenario. She clarifies that established project finance models, originally devised for predictable long-term assets like traditional fossil fuel power plants, must undergo transformation to cater to the variability and often decentralised attributes of renewable energy systems.

Climate activists prioritise a variety of issues, such as building insulation and tree planting. However, electricity is the main issue for investors. According to BCG, approximately 90% of the $18 trillion net-zero capital gap is attributable to electric vehicles and other “end uses” of electricity.

Allianz reports that in 2023, “electrified transport” and renewable energy production each accounted for over $600 billion in global spending. Batteries and other energy-related components ranked fourth at $135 billion, while power grid upgrades came in third at $310 billion.

These figures will only rise due to the haste to construct AI data centres, which are huge energy users. According to UBS, the United States will generate an astounding 20% more electricity per year between 2023 and 2026. Leung claims that because the AI craze will require more power from fossil fuels, it will be “slightly negative for decarbonisation in the short term.”

However, AI also draws the world’s renowned tech companies further into the energy transition. Amazon, Microsoft, Alphabet (the parent company of Google), and other hyperscalers that run data centres are still “among the most committed to net-zero,” according to Leung, despite recent conciliation with Trump. They might have to pay more for clean power.

The AI-driven power surge is increasing the role of regulated utilities, which can raise rates to cover their costs. For energy-transition investments, this might offer one of the safest financing options. But public opposition to higher taxes, particularly those aimed at financing Big Tech’s energy appetite, might prove to be a significant barrier.

BCG claims that North American utilities will supply the remaining 35% of the anticipated increases in power demand from natural gas and 60% from renewable sources.

Infrastructure experts believe that Trump is one threat that may be overrated. The length of energy investments— much longer than a single presidential term—makes changes in policy less significant. As per UBS research, Trump will also have difficulty dismantling or repealing the IRA.

Leung and his associates point out that about 70% of the US renewable projects currently in development are in “red” states that supported Trump. In the House of Representatives, 18 Republicans have already signed a letter opposing repeal, which is more than enough to make a difference in the closely divided chamber. It is difficult to determine the exact impact of this resistance, though, because Trump has been avoiding Congress on a regular basis.

Despite being politically conservative, Texas leads the United States in solar and wind energy. More than 70% of Americans nationwide favour increased use of solar and wind power, according to Pew Research.

In the worst-case scenario, according to UBS, Trump will make changes to the IRA rather than abolish it, enabling Republican-led states to finish short-term renewable projects while still giving the President a political win.

China dominates green investing

The largest economy in the world, the US, does not lead the way in green investment. According to CarbonCredits.com, China holds that distinction, investing $818 billion in clean energy in 2024, more than the US, European Union (EU), and the United Kingdom combined. In 2024, the People’s Republic saw a 45.2% increase in solar capacity.

China is also far ahead in its nuclear power plant programme, which may lead to a resurgence in the US, if not Europe. Although nuclear power has other known hazards, it does not emit carbon. Since China is primarily funding its renewable energy advancements domestically, private capital from around the world is looking elsewhere. Europe is still dedicated to a surge in renewable energy to partially replace Russian natural gas imports, which Russian President Vladimir Putin stopped due to sanctions pertaining to Ukraine.

According to the European Investment Bank (EIB), the EU is still investing ten times as much in renewable energy as it is in fossil fuels, despite also placing bets on more liquefied natural gas. To reach the 2030 carbon reduction targets, the bloc’s overall energy-transition investment is predicted to continue increasing, having increased by a third in 2023 to $360 billion.

Other countries are joining in as well. With plans to triple by 2030, India’s renewable capacity jumped to almost half of the US level last year. In India, six significant solar developers have “attracted investments from diverse sources, including foreign institutional investors from North America, Europe, and the Middle East,” according to S&P Global.

Nearly 85% of the record 10.9 GW of power capacity added by Brazil in 2024 came from renewable sources. With an investment of $8.4 billion promised, Saudi Arabia is backing the biggest and most ambitious green hydrogen project in the world, close to Neom, the Kingdom’s “city of the future,” according to Neom.

The objective is to use electric current generated from renewable sources to split water molecules into their hydrogen and oxygen components, then store the hydrogen for use as fuel. Following closely behind, the United Arab Emirates (UAE), Saudi Arabia’s neighbour, is using its plentiful sunshine to power massive renewable energy projects.

Green energy draws investors

Big-ticket investors worldwide remain driven by environmental, social, and governance (ESG) principles, as indicated by Saint Olive of Natixis. Banks still wish to “greenify their balance sheets,” even though they contribute at least as much to infrastructure as institutional investors. Banks outside of the United States do, at least.

Saint Olive noted that banks and sponsors around the world still have ESG ambitions, and the change of a single country’s president will not make them fall apart.

The EIB estimated that private equity investments in green energy would reach $26 billion globally, up from almost nothing before the COVID-19 pandemic. The amount at stake could be many times that amount, given the private equity model’s practice of leveraging up equity holdings.

According to Fitz of BCG, as solar energy gains popularity and Texas lawmakers push legislation that favours fossil fuels, private equity firms in the US are paying special attention to onshore wind generation.

She said, “Private equity is paying more for wind assets. Going forward, they see wind as an essential component of the energy picture.”

One of the biggest obstacles still facing the world is financing the energy transition. When the US Department of Transportation completed the interstate highway system in 1991, it cost $129 billion, making it one of the largest infrastructure projects of the 20th century. The capital requirements for green power in a single year are a tiny portion of that. Utilising tried-and-true technology, the US highway system was funded by the federal government.

Aside from China, governments face significant pressure to transfer as much of the financial burden as possible to the private sector, given the social responsibilities of the 21st century. Saint Olive emphasises that many estimates of the renewable energy transition underestimate the significant costs involved in mining the metals required for constructing batteries, electrical grids, and turbines.

He argues that mining is a “fully merchant business” reliant on fluctuating prices that hinder fixed, infrastructure-style returns, and that it faces no favourable treatment from regulators or the public. He claims that many banks have a negative view of the mining industry from an ESG standpoint. They prefer to let others pay for it.

Nevertheless, despite the White House’s rhetoric, the global energy transition is not only continuing but also accelerating. However, investors in infrastructure are also accustomed to creating custom solutions for a project’s evolving environment.

For construction in the United States, you might have bank loans before looking to the capital markets. European plants could rely on power purchase agreements that last for ten years. Very long-term financing, such as construction plus 25 years, is available in the Middle East.

“Whether the transition will occur quickly enough to prevent ecological disaster is more important than whether it will occur at all. If governments and engineers can work together to produce profitable investments, private finance appears ready to play a role. More capital will come in if projects are generating 20% returns. Although it’s not always discussed, economic viability plays a significant role in the equation,” Leung noted.

Green energy investment is growing, but money flows mostly to proven technologies. Riskier innovations still struggle for funding. If governments and investors collaborate wisely, the world can accelerate the energy transition while keeping projects profitable and sustainable.

The post Big money investors bet on renewables appeared first on International Finance.

To solve the above challenge, a young start-up called XL Batteries has come up with a new take on the chemistry that it says should be cheaper, safer, and more durable than previous organic batteries and, crucially, lithium-ion batteries themselves. And most importantly, in the words of Tom Sisto, co-founder and CEO of XL Batteries, “The capital cost should be ultra-low.”

In today’s episode of the “start-up of the week,” International Finance will talk in detail about XL Batteries, which is targeting grid-scale storage, which cares more about scale, cost, and safety than weight or density, in terms of storing electricity through a “bulkier liquid.” The scale of XL Batteries’ installations can easily get extra-large.

Knowing Things In Detail

Founded in 2019 by the chemists who discovered the start-up’s revolutionary chemistry at Columbia University, XL Batteries technology has incredible potential to give humanity a powerful tool to achieve “Net Zero 50” (United Kingdom’s climate goal to reach net zero by 2050), by offering safe, reliable and lowest cost grid-scale solutions for every power need. The technology will enable the transition of the grid from fossil fuels to renewable sources.

“We aim to build a global company with a product that can meet any energy storage need. As XL grows, our planet will move closer to carbon-neutral power. Transforming the grid requires durable, reliable and inexpensive energy storage. Using the unique principles of organic chemistry, XL Batteries has designed energy storage technology that can cost-effectively enable 100% renewable power generation,” the start-up added.

The company has commissioned a demonstration unit for Stolthaven Terminals, a company that specialises in petrochemical storage. The first unit will be small, but once the Start-up works out the rough patches around its technology, the company will be able to quickly build larger batteries, said Sisto. A key component of the battery is nothing more than a storage tank.

“If we took two of [Stolthaven’s] biggest tanks, it’d be a 700 megawatt-hour battery. I believe they have 400 tanks on their site in Houston,” Sisto told TechCrunch while adding that the product will be easily able to power around 25,000 homes for an entire day.

XL Batteries is building what are known as flow batteries, consisting of two tanks connected to pumps that flow two fluids past a membrane. Charging the battery pushes ions up a metaphorical hill, storing them in one of the fluids. When discharging, those ions flow back to the other side, releasing electrons in the process.

Flow batteries are an old technology, first invented in the late 1800s. However, their bulk and relatively low energy storage serve as two drawbacks preventing their widespread adoption. Newer models have helped boost energy storage, still, they are relatively expensive because the fluids they use are corrosive, necessitating costly materials for the pumps and other equipment.

“Organic batteries have been posited for a while, but they have proven elusive because when most organic molecules are laden with extra electrons, they tend to quickly break apart. Those that have lasted longer have required refrigeration, and even then, they fall apart in a couple of months,” Sisto said.

Even with a more stable molecule, Sisto knew that XL Batteries had to be cheaper if XL Batteries were to succeed. He got a potential breakthrough during his research at Columbia University when an organic compound he was investigating broke the record for the highest number of electrons accepted into a single molecule.

“At the time, that molecule had to be suspended in an organic solvent, which was pricey and flammable. Eventually, he and his collaborators were able to make it stable in pH-neutral water. At that point, he knew they could build a company around it,” TechCrunch reported.

Since 2019, the start-up has enlisted some of the best and brightest people in industry and academia to work as a team towards fulfilling Sisto’s dream of generating 100% renewables on the grid via a single storage solution. The start-up claims to have demonstrated the fundamental elements to give confidence that its pH-neutral chemistry can be used in flow batteries to achieve their potential, with the resulting systems being durable, reliable and inexpensive. XL Batteries expects to exceed the United States’ Department of Energy target levelized cost of storage goal of <$0.05/kWh by the end of the decade while also meeting the performance demands required of grid-scale storage. Here Is The Key Technology

One of XL Batteries’ installations consists of three parts: One 40-foot shipping container and two tanks. The start-up’s proprietary membrane and other components fit the shipping container, and one or more of those is then hooked up to the storage tanks. The size of the tanks dictates the battery’s capacity, while the number of shipping containers dictates how quickly the battery can charge or discharge.

Because the company is using so much off-the-shelf technology, Sisto says that XL Batteries can start building larger batteries soon. He remarks, “The commercial design is significantly done. The company is working with an engineering firm that has designed other flow batteries before. They have all those pieces in place.”

XL Batteries is also looking to work with independent power producers to build batteries to support the grid, particularly in Texas where such installations have quickly become commonplace.

“Current energy storage technologies are too expensive to fully displace fossil fuel-based power. XL Batteries’ technology solves this problem. To succeed at grid scale, energy storage must be an inexpensive and fast response to provide 10 – 100-plus hours of power at an MW level. XL Batteries’ technology delivers both,” the start-up explained.

As the result of a breakthrough discovery at Columbia University in 2019, XL Batteries’ leadership realised they had found organic molecules that are fundamentally stable in their charged and discharged states. Unlike metal or elemental battery technologies, organic compounds can be modified at the molecular level. This has allowed XL to design unique attributes such as solubility in pH-neutral water.

Deployed broadly, XL’s Organic Flow Batteries will enable the expansion of renewable power generation, reduce dependence on foreign oil and mitigate the effects of burning fossil fuels for energy generation.

The start-up’s patented organic molecules are soluble and stable in pH-neutral salt water and do not pass through the membrane. This solves key challenges faced by metal and elemental-based battery chemistries. Because these molecules are soluble in pH-neutral water, there is no need for complex engineering systems and expensive corrosion-resistant materials. Also, XL’s battery cells achieve nearly 100% electrochemical efficiency, ensuring that energy is stored and released with minimal waste.

“Our Organic Flow Batteries use low-cost materials and inexpensive, high-throughput manufacturing processes designed to scale rapidly. Our molecules are produced from inexpensive chemical feedstocks that are available at commodity pricing and the highest volumes in the world,” the start-up noted.

Since the core chemistry governing XL’s Organic Flow Battery operation is fundamentally stable, it eliminates the safety-related hazards, thereby making the product further attractive, if we bring its other attributes such as low cost into play. The start-up expects XL Organic Flow Batteries to last much longer than the 20-year industry standard.

Image Credits: XL Batteries

The post Start-up of the Week: XL Batteries powers the path to ‘Net Zero 50’ with chemistry appeared first on International Finance.

The Kingdom hopes to reach a 40-gigawatt solar energy capacity by 2030 as part of its ambitious “National Renewable Energy Programme,” which holds enormous promise for the market in the years to come. As several facilities come online, the Kingdom’s solar market is expected to increase at a compound annual growth rate of 51% between 2024 and 2029, according to market research firm Mordor Intelligence.

Embracing the sun

Saudi Arabia is now at the vanguard of cutting-edge solar technologies meant to maximise energy efficiency and sustainability in the region, according to Christopher Decker, partner in energy and natural resources at Oliver Wyman, covering India, the Middle East, and Africa.

“The Dumat Al-Jandal Concentrated Solar Power plant is a noteworthy innovation that uses solar energy to heat liquid for thermal energy storage, allowing energy availability even in the absence of sunlight,” he said.

“Furthermore, the Sakaka Solar Plant uses bifacial solar panels, which greatly increase solar efficiency by utilising the reflectivity of the nearby sand. Waterless robotic cleaning technologies, which ensure high efficiency and lower operating costs, have been used in projects like the Noor Energy 1 facility in NEOM to maintain optimal performance,” Decker continued.

The Oliver Wyman representative also noted that, by anticipating energy demand and weather patterns, smart grids and artificial intelligence technology can optimise solar energy generation while reducing waste.

The NEOM Green Hydrogen project exemplifies a commitment to sustainable energy solutions by utilising solar energy to produce green hydrogen and, consequently, green ammonia. These innovations collectively position Saudi Arabia as a leader in solar energy advancements, highlighting a significant shift towards a more sustainable energy future, as noted by Decker.

According to Adnan Merhaba, partner and energy and utilities practice lead at Arthur D. Little Middle East, the increasing efficiency of solar cells and economies of scale are driving cost reductions in mature solar technologies, with developers suggesting innovations like bifacial solar cells to further boost yields.

Kingdom-based research institutes are investing in the next generation of solar cells that are more efficient, such as tandem perovskite cells, which can make a significant difference in efficiency improvements.

The King Abdullah University of Science and Technology exemplifies Saudi Arabia’s expanding solar sector. The university is leading research and development in cutting-edge photovoltaic technologies.

Stefaan De Wolf, professor of material science and engineering in the Physical Science and Engineering Division, said, “The combination of silicon and perovskite photovoltaics (PV) is one of the major advancements we are making, as it greatly improves solar power efficiency over conventional technologies. Even in Saudi Arabia’s challenging environment, which includes high temperatures and dust, this hybrid technique has the potential to produce solar cells with ultra-high efficiency.”

“To further increase energy yield, we are also investigating the creation of bifacial solar panels, which can produce electricity from both sides. These developments are intended to assist Saudi Arabia in maximising its solar energy potential and advancing sustainable energy solutions globally,” he continued.

The fact that industry participants are actively looking for cutting-edge thermal management methods to lower the operating temperatures of PV systems installed in the Kingdom was clarified by Qiaoqiang Gan, a professor of material science and engineering at the same division.

Due to the high temperatures in the region, this problem is urgent for Middle Eastern nations.

Qiaoqiang Gan said, “We need more dependable materials and equipment at the microscopic level, along with sophisticated operational temperature management techniques, to address this problem.”

Projects like the Sudair Solar PV, which uses bifacial panels and sun-tracking systems to optimise efficiency, are prime examples of Saudi Arabia’s dedication to cutting-edge technologies, according to Shihab El-Borai, a partner with Strategy & Middle East.

“Saudi Arabia is using cutting-edge solar energy innovations to generate electricity and establish a sustainable model for the entire region,” El-Borai noted.

“With multipurpose solar panels that capture dispersed sunlight and offer adjustable shading, businesses like Mirai Solar are also making progress. These developments show how Saudi Arabia can use cutting-edge technology to lower its carbon footprint and establish itself as a global leader in solar energy,” he continued.

Contribution of solar industry

The solar sector is aligned with the “Vision 2030” objectives and is essential to the country’s economic diversification. Saudi Arabia is stimulating the development of new industries, attracting foreign investments, and nurturing an innovative culture by improving its solar power infrastructure.

Decker of Oliver Wyman, said, “The Kingdom is now positioned as a regional leader in renewable energy thanks to this growth, which not only supports local manufacturing and supply chains but also creates job opportunities and improves human capital development.”

“Solar energy contributes to a robust and diversified energy mix in terms of energy security. Saudi Arabia can improve the adaptability and reliability of its electrical infrastructure by integrating smart grids, energy storage, and cutting-edge solar technologies,” he continued.

The Oliver Wyman partner emphasised that solar-powered projects, such as the manufacturing of green hydrogen, ensure the Kingdom adds another energy export source, opening up new revenue streams and promoting environmental sustainability.

The Kingdom’s demand for electricity is steadily rising, largely due to the country’s giga-scale expansions, as well as demographic and economic growth. Widespread solar project deployment can also support related industries, including green hydrogen production, smart grid technologies, and battery storage.

Stefaan De Wolf, speaking on behalf of KAUST, explained that the Kingdom is lowering its reliance on fossil fuels and creating a more robust and sustainable economy by investing in renewable energy, particularly solar power.

According to Qiaoqiang Gan, Saudi Arabia has a clear advantage in terms of the amount of sunlight that can be used as an energy source due to its geographic location, which allows it to produce more solar energy than many wealthy nations.

High temperatures, however, pose a significant challenge since they can cause semiconductor solar cells to overheat. Developing customised solutions that consider the specific local weather and environmental conditions is crucial for the successful installation of PV systems in Saudi Arabia.

Qiaoqiang Gan stated that such solutions must minimise the negative effects on PV performance while optimising the use of abundant solar energy.

He added that further research and development will be needed to create these specialised solutions, which will present both opportunities and challenges in achieving energy security objectives.

In order to reduce its reliance on imports and establish itself as a hub for clean energy technologies, Saudi Arabia is focusing on generating renewable energy components locally. With solar energy driving the electrolysis process, the Kingdom hopes to produce 1.2 million tonnes of green hydrogen annually by 2030.

Challenges facing Kingdom’s solar sector

The challenges primarily relate to localising the value chain and addressing environmental issues such as dust and extreme heat. Infrastructure constraints and regulatory difficulties are among the many obstacles.

To overcome these, the Kingdom is investing in updating its grid infrastructure with energy storage and smart grid technology, which will improve the management of intermittent solar output. Efforts are also underway to streamline regulatory procedures and introduce incentive schemes, such as public-private partnerships and favourable tariffs, to encourage private sector investment.

Concerns have also been raised about disruptions to international trade, the localisation and human resources required to ensure the growth of a strong and competitive solar value chain industry in the Kingdom, and the availability of enough engineers and technicians to meet the industry’s expanding demand. However, the nation is well-positioned to successfully address these challenges thanks to its robust policies and strategies, which include national industrial and localisation plans, as well as other efforts.

Under “Vision 2030,” Saudi Arabia aims to generate about 58.7 GW of renewable energy by 2030, with 40 GW coming from solar energy.

To achieve this, policies must be made to encourage private sector participation. For example, power purchase agreements should be established to guarantee investors long-term profits. Tariffs and subsidies should be put in place to make renewable energy more competitive, and licensing procedures should be streamlined to make solar projects easier to manage. The Saudi government is also aggressively supporting foreign direct investment and public-private partnerships to propel the expansion of solar power projects.

Christopher Decker, partner in energy and natural resources at Oliver Wyman, said, “One important initiative that aims to secure $30–50 billion in investments for renewable energy projects is the National Renewable Energy Programme, introduced under Vision 2030.”

Saudi Arabia, however, remains committed to maximising its oil and gas production through efficiency gains and technological developments to ensure the industry remains profitable, while research and development activities continue in the renewable sector.

According to Adnan Merhaba, partner and energy and utilities practice lead at Arthur D. Little Middle East, the Kingdom has undergone a significant transformation in its energy and economic landscape in recent years. It has accelerated solar deployment and ushered in the age of renewable energy.

In addition to accelerating the development of national champions throughout the solar value chain, the extremely ambitious goal of achieving 50% renewable adoption by 2030—currently under consideration for an upward revision—has resulted in the construction of massive solar projects at historically low prices.

De Wolf, a KAUST representative, reaffirmed that Vision 2030 has facilitated an environment conducive to investment and growth, with the Kingdom’s energy mix being shaped by ambitious renewable energy goals.

Similarly, Qiaoqiang Gan emphasised that Vision 2030 has created favourable conditions for the growth of solar energy through laws that encourage public-private partnerships and significant investments in renewable energy infrastructure.

El-Borai clarified that the National Renewable Energy Programme is essential to this, from PwC’s perspective.

“With the help of large financial commitments, including the proposed $266 billion investment in cleaner energy sources, including solar, Saudi Arabia aims to achieve Net Zero status by 2060,” he remarked.

To reach its goal of 100 GW to 130 GW of clean energy by 2030, the Kingdom is aggressively developing projects with an annual capacity of 20 GW. With initiatives like the Public Investment Fund’s partnership with Chinese solar manufacturers to develop 30 GW of solar PV production capacity, this strategic framework also emphasises localising the manufacturing of renewable energy. In addition to producing renewable energy, the NREP aims to secure the Kingdom’s energy future and reduce its reliance on fossil fuels, according to the PwC partner.

What lies ahead

The report titled “Saudi Arabia Onshore Floating Solar Market, By Region, Competition, Forecast & Opportunities, 2019-2029F,” found the Kingdom’s Onshore Floating Solar Market valued at $17.9 million in 2023 and projected to grow robustly, with a CAGR of 27.5% through 2029.

“The Saudi Arabia Onshore Floating Solar Market is experiencing a notable upswing as the Kingdom strategically endeavours to diversify its energy portfolio. In a concerted effort to reduce dependence on conventional fossil fuels and mitigate environmental impact, the government has increasingly turned its attention to renewable energy sources. The unique geography of Saudi Arabia, characterised by expansive desert landscapes and abundant sunlight, makes onshore floating solar installations particularly attractive,” the report stated.

Saudi Arabia’s approach to deploying solar energy is not only capitalising on the vast available land but also addressing the country’s water scarcity challenges. With an ambitious commitment to sustainable energy goals, the onshore floating solar market is poised to witness heightened investment, technological advancements, and growing collaboration between public and private sectors, positioning the Kingdom at the forefront of the global shift toward clean and renewable energy solutions.

As the technology matures and gains wider acceptance, small pilot projects will scale to larger and more ambitious initiatives. Utility-scale projects will offer economies of scale, enabling more efficient use of resources and driving down the overall cost of solar energy production.

“This trend reflects the industry’s confidence in the scalability and long-term viability of onshore floating solar as a key contributor to the Kingdom’s renewable energy portfolio,” the report noted.

Manufacturers and developers are investing in research and development to enhance the efficiency, durability, and adaptability of floating solar structures. This includes the development of modular and customisable floating platforms tailored to specific water bodies, optimising the deployment of solar panels.

“Additionally, improvements in materials and design contribute to the resilience of floating platforms in challenging environmental conditions. The emphasis on technological advancements reflects the industry’s commitment to overcoming technical challenges and ensuring the long-term success of onshore floating solar projects in Saudi Arabia,” the study observed.

Collaboration and partnerships among government entities, private companies, and international players will play a key role in determining the future direction of the Saudi Arabia Onshore Floating Solar Market. Recognising the complexity and scale of renewable energy projects, stakeholders are joining forces to leverage collective expertise, resources, and funding.

“Public-private partnerships facilitate the sharing of risks and responsibilities, creating a conducive environment for investment and project development. International collaborations bring in global best practices and technological know-how, further accelerating the growth of the onshore floating solar market. This trend reflects a holistic approach to sustainable development, aligning with Saudi Arabia’s commitment to fostering a collaborative ecosystem for the successful implementation of renewable energy initiatives,” the report revealed.

Saudi Arabia’s solar energy sector is poised for significant growth, driven by innovative technologies and ambitious goals. The Kingdom is making substantial progress toward diversifying its energy mix with a focus on renewable sources, particularly solar power, as part of its Vision 2030. Cutting-edge projects, like the Dumat Al-Jandal and Sakaka solar plants, along with advanced research at institutions such as KAUST, reflect the nation’s commitment to sustainable energy solutions. With strategic investments and a favourable regulatory environment, Saudi Arabia is positioning itself as a regional leader in clean energy. As the solar industry continues to evolve, it will play a crucial role in reducing reliance on fossil fuels, driving economic diversification, and contributing to the Kingdom’s long-term energy security and environmental sustainability goals.

The post Using the sun: Solar revolution in Saudi Arabia appeared first on International Finance.

Bruce Huber, a Professor of Law at the University of Notre Dame, has studied the fossil fuel sector extensively. His work reveals the deep-rooted complexities that underpin these subsidies and the formidable challenges that governments face when attempting to reduce or eliminate them. Let’s explore the mechanisms of fossil fuel subsidies, why they persist, and what the world is trying to do to reform them.

What is a subsidy?

A subsidy is essentially a financial benefit provided by a government to a particular entity or industry. Subsidies come in many forms and can range from obvious direct cash payments or tax incentives to more nuanced mechanisms like tariff protection or relaxed regulations that favour certain industries. These benefits are provided for various reasons: to stimulate economic activity, protect nascent industries, or assist established ones during times of crisis.

While some subsidies are explicit and easy to recognise, such as publicly funded crop insurance or grants for research, others are less visible. For instance, when a government fails to charge industries for the environmental damage they cause, such as air or water pollution, this is also a form of subsidy. By not requiring companies to pay for the full cost of their environmental impact, governments indirectly subsidise their activities.

Subsidies are a widespread feature of the global economy, benefiting many industries beyond fossil fuels. However, the subsidies granted to the fossil fuel sector are uniquely impactful, not only because of their economic scale but also due to their significant consequences for the planet’s climate and environment.

How are fossil fuels subsidised?

Fossil fuel subsidies can take a wide variety of forms, from consumer price support to tax incentives for producers. In many countries, fuel prices are set by the government rather than allowing market forces to dictate them.

For instance, Saudi Arabia caps gasoline prices to make energy more affordable for its citizens. To offset the cost, the government uses revenues from oil exports, which far exceed domestic energy consumption. In the United States, oil companies are allowed to deduct a significant portion of their drilling costs from their taxes. This kind of tax break makes fossil fuel production more attractive by effectively lowering the cost of doing business. In countries like Indonesia, the government sets energy prices below market levels and then compensates state-owned energy companies for the losses they incur.

This form of support ensures that energy remains affordable, particularly for low-income citizens. Some subsidies are less direct. For example, governments often underprice permits for extracting fossil fuels or fail to collect all the taxes owed by producers. The complexity of these subsidies makes it challenging to provide a precise estimate of their total value.

According to a 2022 report by the Organisation for Economic Cooperation and Development (OECD), the annual value of global fossil fuel subsidies was estimated to be around $1.5 trillion. However, the International Monetary Fund (IMF) provided a much higher estimate, placing the value closer to $7 trillion. The discrepancy between these numbers arises from different definitions of what constitutes a subsidy.

The IMF’s definition is broader, including not only direct financial support but also the environmental and social costs that are not reflected in the price of fossil fuels. For instance, the damage caused by greenhouse gas emissions, the health impacts of local air pollution, and even the economic costs associated with traffic congestion are considered implicit subsidies. In contrast, the OECD’s narrower definition includes only direct financial support, which results in a lower estimate.

Regardless of the specific figure, it is clear that subsidies for fossil fuels have a dramatic effect on the prices paid by consumers. By artificially lowering the cost of fossil fuels, these subsidies encourage their continued use and, by extension, the emissions that contribute to climate change.

Why are these subsidies hard to eliminate?

Despite the widespread recognition that fossil fuel subsidies undermine efforts to combat climate change, eliminating them has proven exceedingly difficult. Several reasons contribute to this challenge. Subsidies are politically popular. By keeping energy prices low, governments can avoid public discontent and gain support from voters.

For instance, when energy prices rise, governments often face protests and unrest. In Nigeria, for example, the removal of gasoline subsidies in 2024 led to widespread protests and even clashes with police. Such public backlash makes policymakers reluctant to cut subsidies, even when they acknowledge the environmental benefits of doing so.

Fossil fuel subsidies have a direct impact on the cost of living. Because fossil fuels are integral to nearly every sector of the economy, reducing subsidies tends to increase prices across the board. This can lead to inflationary pressure, making goods and services more expensive. For lower-income populations, these price increases can be especially painful, as they spend a larger proportion of their income on necessities like transportation and heating. The fossil fuel industry is a powerful lobby with significant influence over government policy. Many fossil fuel companies have strong financial and political connections, making it difficult for governments to reduce or eliminate subsidies.

These companies argue that subsidies are necessary for maintaining energy security, preserving jobs, and ensuring economic stability. Energy security is another key factor that complicates subsidy reform. Governments are wary of being overly dependent on foreign energy sources, particularly in times of geopolitical tension.

By subsidising domestic fossil fuel production, countries can reduce their reliance on imported energy, thereby improving their energy security. This consideration often outweighs environmental concerns when governments make policy decisions.

The cost of inaction

The persistence of fossil fuel subsidies has serious implications for the environment and human health. Fossil fuels are the leading source of greenhouse gas emissions, which are the primary driver of global warming. By keeping fossil fuel prices artificially low, subsidies encourage overconsumption and wasteful use, which in turn exacerbates climate change.

The cost of inaction is too great to be overlooked by the global community. In addition to their climate impact, fossil fuel subsidies have significant economic costs. By diverting public funds to support fossil fuel industries, governments have less money to invest in other areas, such as education, healthcare, and renewable energy. This opportunity cost is particularly problematic in developing countries, where resources are limited and the need for public investment is high.

Redirecting funds from fossil fuel subsidies to education and health could dramatically improve the quality of life in developing countries. Currently, vast public resources are spent maintaining artificially low fuel prices, which primarily benefit wealthier consumers and industries.

By redirecting these funds to education, governments could improve literacy, increase school attendance, and equip the next generation with the skills necessary for economic growth. Investment in healthcare could ensure better access to medical services, reduce child mortality, and increase life expectancy.

These changes would create a healthier, more educated population capable of contributing to a diversified and resilient economy. Such investments would break the cycle of poverty, empowering individuals to pursue opportunities beyond survival. By addressing basic human needs, countries can move toward a more sustainable and equitable development path, improving overall well-being and prospects for millions of people.

Global efforts to reform subsidies

Recognising the need to address fossil fuel subsidies, global leaders have made several commitments to reform them. In 2009, the G20, which includes many of the world’s largest economies, pledged to “rationalise and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” The Asia-Pacific Economic Cooperation (APEC) forum made a similar commitment later that year.

In 2010, the Friends of Fossil Fuel Subsidy Reform group was formed by 10 countries, including the Netherlands and New Zealand. The group’s goal is to build political consensus on the importance of fossil fuel subsidy reform. Despite these pledges, progress has been limited. A major study of 157 countries found that between 2003 and 2015, governments made little or no progress toward reducing subsidies.

The recent spike in fossil fuel subsidies in 2021 and 2022 highlights the challenges of reform. Following Russia’s invasion of Ukraine, energy prices surged throughout Europe. In response, European governments provided substantial financial support to offset the impact on consumers. This led to the largest fossil fuel subsidies in Europe’s history, as leaders prioritised affordable energy over climate goals.

Economists argue that increasing the price of fossil fuels can lower demand, thereby reducing emissions and mitigating the impacts of climate change. This principle was evident during the recent energy price surge: higher prices led to reduced consumption and a temporary decline in emissions.

The IMF has suggested that periods of high energy prices provide an ideal opportunity for reform. When energy prices are already elevated, governments can phase out subsidies without causing additional price shocks for consumers. By locking in higher prices, governments can encourage the adoption of cleaner energy sources and reduce their reliance on fossil fuels.

Another potential avenue for reform is the use of targeted subsidies to support low-income households during the transition. By providing direct financial assistance to those who are most affected by rising energy prices, governments can mitigate the regressive impacts of subsidy reform. This approach can help build public support for reform while ensuring that vulnerable populations are protected.

There is no doubt that by continuing to subsidise fossil fuels, governments are not only undermining efforts to combat climate change but also missing out on opportunities to invest in cleaner, more sustainable energy sources.

While the path to reform is challenging, it is not impossible. With the right combination of political will, public support, and targeted assistance, it is possible to phase out fossil fuel subsidies and pave the way for a cleaner, more sustainable future.

The recent surge in energy prices offers a unique opportunity to make meaningful progress on subsidy reform. By taking advantage of this moment, governments can reduce their reliance on fossil fuels, support the transition to renewable energy, and help mitigate the impacts of climate change. The stakes are high, but the potential rewards—for the environment, the economy, and future generations—are even higher.

The post Why do countries still subsidise fossil fuels? appeared first on International Finance.

But Rangely faces an existential threat. An oil boom during World War II led to the town’s location. More than half of the county’s current economic production comes from the oil and gas sector. In the United States, the world’s largest producer of natural gas and oil, Rangely is not alone. Many communities nationwide rely on the conventional energy sector for well-paying jobs and public funds for essential services like schools.

It’s dangerous to rely too much on any one industry, and there are often booms and busts in the oil sector. However, the use of natural gas and oil fuels climate change, which poses a particular threat to the economics of towns depending on these resources. Any effective plan to stop global warming must include measures that will gradually drastically lower the demand for all fossil fuels.

The global agreement in 2023 to “transition away from fossil fuels” and the increasing popularity of electric vehicles, which are beginning to replace gasoline, and diesel-powered automobiles, trucks, and buses, are two early indicators of this shift.

During the Barack Obama and early Joe Biden administrations, the White House tried to develop comprehensive plans to lower greenhouse gas emissions and assist low-income neighbourhoods. However, they lacked a strategy to get oil and gas communities like Rangely ready for upcoming economic difficulties.

Why do oil and gas towns get ignored?

In recent legislation, Congress has given top priority to helping small communities. Nonetheless, there were three main reasons why towns that relied heavily on gas and oil were mostly left out of these plans.

First, there seems to be less urgency. Communities that depend on coal have received disproportionately more attention when it comes to a “fair transition” as the country moves away from fossil fuels. After 15 years of reduction in American coal production, a sustained move away from coal seems both inevitable and imminent.

On the other hand, the United States is still producing more natural gas and oil. Certain oil and gas communities are undoubtedly having difficulties already. However, moving away from oil and gas may seem like an issue for decades to come due to the vast economic concerns involved.

The majority of Republicans, including many local officials in towns that depend heavily on oil and gas, have no plans whatsoever for a future drop in the output of these resources. The majority of Democratic legislators would rather emphasise how addressing climate change might spur future economic expansion.

“When I think about climate change, I think jobs,” is a quote that Biden frequently uses.

His emphasis on the financial benefits of climate solutions is valid. However, there is rarely a direct substitute for the well-paying positions in the oil and gas sector and the tax income those businesses generate for local communities. This is especially true of renewable energy jobs.

Third, the policy instruments available to economists are ill-adapted to the problems that the oil and gas industries face. Strategies for promoting local economic development typically centre on helping persistently struggling local economies by implementing policies like wage subsidies, which can quickly increase employment rates.

Communities dependent on oil and gas, which are not often facing hardships at the moment, require a distinct treatment plan. The 15 years leading up to the COVID pandemic saw average annual GDP growth in US counties producing oil and gas of 2.4%, while the national average was 1.9%.

Most oil and gas communities can get by without urgent economic stimulus plans. They require comprehensive approaches to economic growth that can foster new sectors while leveraging their current advantages to ensure their continued prosperity.

Ways to assist towns in becoming ready

Harvard economist Ricardo Hausmann likens the difficulty of creating new economic capacities to the game of Scrabble, in which the appearance of a new letter allows for the formation of a larger word. He uses the economy of Finland as an example. From gathering lumber to creating wood-cutting instruments to creating automated cutting machines, it changed with time. From there, it developed into highly automated devices, some of which are employed by multinational companies like the enormous telecom company Nokia.

These economic developments need to be customised to the unique qualities of each location. However, identifying the issue and making an investment in remedies is the first step.

Southwest Colorado is home to the Southern Ute Indian Tribe. It allocates oil and gas income to two funds: a “Growth Fund” that invests in a variety of businesses to diversify the tribe’s revenue streams and a “Permanent Fund” that ensures the tribe’s assets are in line with its long-term financial goals, thereby promoting fiscal sustainability.

To assist areas facing serious economic risks, such as a potential decrease in oil and gas prices, a recent nationwide Academies panel recommended the establishment of a federally chartered organisation on a nationwide scale. This company might finance programmes that provide access to employment opportunities, vital public infrastructure, and displaced people.

The state Office of Just Transition in Colorado has begun to carry out this function. At the moment, its exclusive focus is on moving away from coal, to assist workers in finding new employment possibilities and communities in creating new economic opportunities. However, its purpose can grow in the future. In fact, because of the neighbouring coal shutdown, Rangely is already getting some support.

No concrete answer

Rangely provides an example of how regions dependent on oil and gas will require specific strategies based on the advantages and disadvantages of their particular locations. There’s no pre-made playbook available.

To guarantee that policymakers know the necessary to assist communities that rely heavily on fossil fuels in successfully navigating the energy transition, universities, research institutes, and charitable organisations launched the Resilient Energy Economies initiative.

Preparing an economy for resilience is best done ahead of a catastrophe. The narrative of Joseph, whose visions predicted seven years of plenty for Egypt followed by seven years of famine, is well-known to everyone who has read the Bible or seen Broadway. Following Joseph’s vision, the pharaoh used the boom to get ready for the bust.

Today, the United States is producing a lot of gas and oil. Lawmakers are aware that risks will arise. However, the nation is currently failing to get communities ready for more difficult times ahead.

While currently stable due to robust oil and gas production, these communities face looming economic risks as global efforts to reduce fossil fuel dependency intensify. The urgency to prepare for this shift is often overlooked because the immediate economic pressures are not yet fully felt.

However, the economic foundations of these towns will face growing challenges as a result of the unavoidable decline in fossil fuel use, which is a result of climate change mitigation policies and the growth of renewable energy.

Transitioning these economies requires tailored strategies that leverage their existing strengths while fostering new industries, much like the evolution of the Finnish economy from lumber to advanced technologies.

The creation of federal and state-level initiatives, such as Colorado’s “Office of Just Transition” and the proposed federally chartered corporation, can provide support for displaced workers and critical infrastructure, helping these towns diversify their economic base.

However, there is no one-size-fits-all solution. The approach needs to be as varied as the regions themselves, and proactive investment in education, innovation, and local industries will be key to ensuring their long-term resilience.

As the energy transition accelerates, the time to prepare for a post-oil economy is now, ensuring that communities like Rangely can thrive in the future, regardless of the fate of the oil and gas industry. This foresight is critical for avoiding economic hardship and securing a sustainable and diversified future for such towns.

The post Is Rangely ready for end of oil boom? appeared first on International Finance.

The meeting’s main goal was to address the opportunities and challenges of the energy transition by advancing energy generation through cutting-edge technologies.

To lower carbon emissions from fossil fuels, expanding renewable energy and green hydrogen projects were major topics of conversation. It also investigated how digital transformation might improve asset performance and data value to satisfy rising energy demands.

In attendance at the meeting to discuss the Burullus power plant project were Gaber Desouky, Chairperson of the Egyptian Electricity Holding Company, and Sabah Mashaly, Deputy Minister of Energy.

The goal of this project is to use co-firing technology with a hydrogen production unit that uses desalinated water to operate two gas units with a 30% hydrogen and natural gas mix.

Egypt will be positioned as a leader in low-carbon hydrogen thanks to this initiative, which bolsters the government’s commitment to a green hydrogen economy. The use of salt water for power generation and determining the project’s most economical geographic locations were other topics covered in the meeting.

According to Mahmoud Esmat, the industry is adhering to the new energy strategy, which is centred on grid development, low-carbon generation, energy efficiency, renewable energy utilisation, and emission reduction. One of the strategies is to make the grid smarter to manage high capacities with little loss.

Praising efforts to achieve sustainable development and environmental protection, he highlighted the role played by the private sector in renewable energy projects. Mahmoud Esmat reaffirmed the state’s commitment to growing green hydrogen and renewable energy projects, bringing the electrical equipment industry local, and raising operational and service standards.

The partnership with Siemens Germany spans multiple projects, including the building of three combined cycle power plants in Burullus, Beni Suef, and the New Administrative Capital, with a combined capacity of 14,400 megawatts. Elsewedy and Orascom, local companies, will also be involved in this project.

The post Egypt explores partnership with Siemens Energy for emissions reduction appeared first on International Finance.

Commercial aviation, shipping and automobile sectors emit over 9,100 million tonnes of CO2 on an annual basis. CAPHENIA’s operational principle is simple here: to play an active hand in reducing CO2 emissions from the concerned industries by offering renewable synthetic fuels at competitive prices.

“CAPHENIA follows nature’s example by making CO2 usable. Using a globally patented power and biogas to liquid (PBtL) process, CAPHENIA converts CO2 and biogas into renewable synthetic fuels. These fuels can power existing engines and engines, so no complex conversions or new infrastructure are required. The electricity required for the conversion process is generated from renewable energies, to whose fluctuating availability the CAPHENIA process can react flexibly,” the venture remarked.

What’s The Vision?

Achieving mobility and environmental protection through the usage of climate-neutral fuels. As per the company, the key lies in the CO2 cycle. If the CO2 required to produce synthetic fuels comes from CO2 recycling, the combustion of the fuels in aircraft and ships will become climate-neutral.

To fulfil its vision of “Climate-Neutral Mobility,” CAPHENIA’s game-changing tool is synthetic fuels that are particularly suitable for aviation and shipping. Since they have an extremely high energy density, they can be used to cover long distances. The fuels also play an important role in agriculture, transport and construction.

“Every year, over 3,900 billion litres of fossil fuels are used for global mobility. This results in emissions of over 9,100 million tons of CO2. In a world focused on sustainability, fossil fuels are being replaced by synthetic fuels, hydrogen and electricity from renewable energies,” the venture remarked further.

CAPHENIA’s synthetic fuels follow the ‘SAS’ formula: sustainable, affordable and scalable. We will talk about it in detail.

Knowing The Technology

At the core of CAPHENIA’s operational ecosystem, we have “Maximum Input Material Utilisation,” a technology where various process stages related to synthetic fuel production are carried out in a unique and patented three-in-one zone reactor. The reactor does not require any catalysts and achieves a selectivity of 100% thanks to the intelligent process design. And since no by-products are produced, there are no material or energy losses.

“The energy efficiency for producing the synthesis gas is 86%. If the synthesis gas is reused in Fischer-Tropsch fuel synthesis, an efficiency of 72% sets a new industry benchmark. In comparison, the classic power-to-liquid process achieves an efficiency of 40%. CAPHENIA’s Power and Biogas to Liquid process enables a CO2 reduction of 92%, an industrial record, using wind power,” the venture stated further.

Talking about the “CAPHENIA 3-in-1 Zone Reactor,” the mechanism has four working stages (or zones). Let’s start with the “Plasma Zone,” where at temperatures of around 2000°C, methane (CH4) is broken down into a carbon aerosol (C) and hydrogen (H2). Then comes the “Boudouard Zone,” where the carbon aerosol (C) gets combined with carbon dioxide (CO2) and converted to carbon monoxide (CO). The conversion is based on the well-known Boudouard reaction, which takes place at temperatures of around 1000°C. In this reaction, the high thermal energy of the gas from the plasma zone is used to the maximum and converted into chemical binding energy.

Next is the “HetWGS Zone” or the “Heterogeneous Water Gas Shift Zone,” where the remaining carbon aerosols (C) react with added water vapour (H2O) to form carbon monoxide (CO) and hydrogen (H2). The composition of the synthesis gas (CO + H2) can be flexibly controlled. The final stage is a process named “Synthesis Gas Converter,” which is also the starting material for a variety of CAPHENIA’s products.

“Synthetic fuels are not only climate-friendly, but also have a much higher degree of purity than fossil fuels. This means that their combustion produces significantly less sulphur dioxide and particulate matter,” the start-up continued further.

Conventional processes require many reactors and many units to produce synthesis gas. CAPHENIA zone reactor simplifies the whole process and makes it faster and more cost-effective, by using significantly less electricity. CAPHENIA can produce synthetic fuels quickly in large quantities thanks to its scalable reactor design. CAPHENIA uses biogas, CO2, water and electricity to produce synthesis gas, which serves as an intermediate product from which synthetic fuels or other chemical products can be manufactured.

In synthesis gas production, the CAPHENIA process achieves a record efficiency of 86%. The Synthetic fuels produced from the CAPHENIA’s operational ecosystem have a CO2 reduction of up to 92% compared to fossil fuels. This means that the CAPHENIA process comes closer to CO2 neutrality than any other fuel production route.

Solutions For Transportation Sector

Due to its energy efficiency, the railway has emerged as the climate-friendly mode of transport par excellence. However, CAPHENIA sees the sector to be even more environmentally friendly and attractive, by saying goodbye to fossil diesel.

While battery and hydrogen trains are merging as possible climate-friendly alternatives, purchasing them may not always be economical or sustainable for the operators. In freight and heavy goods transport, the performance of classic combustion engines cannot be dispensed with at all for the time being.

Therefore, climate-friendly alternatives to diesel operation are necessary. One of these alternatives is the renewable fuel HVO diesel (hydro-treated vegetable oil). Operating with HVO significantly reduces CO2 emissions and enables combustion engines to be operated in a climate-friendly manner without having to make extensive conversions. HVO has already established itself as one of the important bridging technologies in rail transport (Climate Diesel). Since its use, it has led to a saving of around 90% in CO2 emissions compared to fossil fuels and is therefore an important step towards sustainable mobility.

However, since HVO is made exclusively from used cooking oils and high-quality organic oils, it becomes difficult to obtain sufficient quantities of raw materials. CAPHENIA is offering a sustainable complement to HVO diesel by relying on CO2 recycling and biogas as raw materials, making the production volume of the start-up’s products like Sustainable Aviation Fuel (SAF) infinitely scalable. This solution is also coming in handy for the aviation industry, a sector which is currently facing the steep challenge of replacing large quantities of fossil fuels in a record quick time.

“The inevitable byproduct of SAF production is renewable diesel, which can be used as a climate-friendly alternative in rail transport, thus enabling maximum and immediate CO2 savings by using existing infrastructure,” the venture stated further.

Remaining committed to innovation and sustainability, CAPHENIA will build a pilot plant for the production of renewable fuels using the power and biogas-to-liquid process (PBtL) in Germany’s Höchst industrial park in the coming days. The chemical park offers an excellent infrastructure and supply of biogas and green electricity.

CAPHENIA’s PBtL technology has already impressed in research and achieved a record efficiency of 86% in synthesis gas production. The pilot plant will show that the PBtL process is also efficient and economically viable in practice.

“Due to its proximity to Frankfurt Airport and the local demand for SAF (Sustainable Aviation Fuel), our pilot plant will also play an important role in meeting this demand and thus make a valuable contribution to CO2 neutrality in air transport,” the start-up observed.

CAPHENIA In News

On June 28, 2024, CAPHENIA and German airline Condor reached an agreement on the future purchase of Sustainable Aviation Fuel (SAF). As a partner, Condor will support the further development of the process to market maturity and at the same time, has secured access to agreed purchase quantities as soon as production begins on an industrial scale, which will likely happen in 2027.

Continuing the momentum, CAPHENIA signed a letter of intent with the USA-based Emerging Fuels Technology, to integrate each other’s technologies for the production of SAF and renewable diesel. This collaboration combines CAPHENIA’s leading Plasma Boudouard Reactor (PBR) technology with EFT’s Fischer-Tropsch Technology Platform to significantly improve the efficiency and scalability of SAF production. The letter of intent also provides for CAPHENIA to acquire license rights to combine its syngas technology with EFT’s Technology Platform for multiple projects.

The post Start-up of the Week: Through renewable synthetic fuels, CAPHENIA eyes ‘Green Transportation’ appeared first on International Finance.

“Turmoil in the biomass-based diesel sector, an umbrella term for renewable diesel and biodiesel, could become a roadblock to future investments in biofuels, the US Energy Information Administration (EIA) said this year (2024). That could potentially stall the transition away from traditional fossil fuels,” stated Reuters in its report.

The United States Energy Information Administration (EIA) warned in 2024 that unrest in the biomass-based diesel industry, which includes biodiesel and renewable diesel, may prevent further investments in biofuels. That might put a stop to the move away from conventional fossil fuels.

A number of these biofuel manufacturers have already closed their doors this year, and industry insiders predict that more will follow suit before the year is up.

After the COVID-19 pandemic, the ability of the United States to produce renewable diesel almost doubled, from 791 million gallons annually in 2021 to 3 billion gallons by 2023, as refiners looked for ways to withstand the shift away from their petroleum-based goods.

By 2023, the combined output capacity of biomass-based diesel and biodiesel in the United States will have exceeded 5 billion gallons. Because biodiesel can only be used as a blend, renewable diesel is a complete replacement for diesel, which makes the former more appealing to producers.

Their demand is nearly entirely dependent on government blending mandates and tax subsidies. Both are more expensive to generate than petroleum-based diesel and compete for the same feedstock, biomass, such as spent cooking oil and vegetable oils.

However, according to Scott Irwin, a professor at the University of Illinois, blending targets for biomass-based diesel, set under the United States Environmental Protection Agency’s Renewable Fuel Standards (RFS) programme, produce a combined demand of just up to 4.5 billion gallons every year until 2025.

That, even before accounting for imports, is less than the current level of domestic production. Irwin projects that the United States’ potential to produce renewable fuel and biodiesel will surpass 7 billion gallons by 2025. The main issue is that market players persuaded themselves that the EPA would require it if they built it. That was untrue, Irwin claimed.

The excess supply has resulted in the lowest pricing in five years for Renewable Identification Numbers (RINs), which are credits that refiners receive under the RFS for manufacturing or importing biofuels. For the first time since 2019, D4 RINs associated with biodiesel and renewable fuel dropped below 40 cents per gallon in February.

Last week, the price per gallon was approximately 44.50 cents, a decrease from the average of $1.50 between 2021 and 2023.

Industry reaction

In certain areas of their renewable fuels businesses, refiners are struggling. Renewable fuel margins for independent refiner Valero dropped 21.5% year over year to $1.02 per gallon in the first quarter.

The renewables segment of rival HF Sinclair saw an adjusted loss of $18.6 million before interest, tax, depreciation, and amortisation in the first quarter, compared to a $3 million profit the previous year, due to reduced credit pricing, the company said.

With the expectation of continuing macroeconomic headwinds for biofuel until the end of the year, Vertex Energy intends to revert its 8,000 barrels per day (bpd) renewable diesel facility in Alabama to the production of fossil fuels. Less than a year had passed since it started selling renewable diesel from this plant.

According to Zander Capozzola, vice president of renewable fuels at consulting firm AEGIS Hedging, other new facilities are operating at about 50% capacity.

The big American oil company Chevron said in March that it had closed two biodiesel units due to adverse market conditions. In addition to competing with renewable diesel as a feedstock, the manufacture of biodiesel produces fewer RINs, further undermining its position in the wake of the renewable diesel boom.

Despite the excess supply, major manufacturers of renewable diesel are holding their ground, believing they can sustain reduced profit margins until smaller competitors are forced out of the market, Capozzola claims.

Trail ahead

According to market players, US refiners with extra renewable diesel are likely to look for alternative markets in Canada and Europe. Local producers, however, will present fierce competition for them.

Reuters noted that the Imperial Oil of Canada is moving on with plans to construct a 20,000-bpd renewable diesel facility close to Edmonton. This plant will be able to manufacture the fuel at a lower cost than it would have to import it from the United States.

Braya Renewable Fuels, which started producing renewable diesel at the Come-by-Chance refinery in Newfoundland and Labrador in February, thinks that operational problems would probably cause a delay in the addition of new supplies.

At its plant, Braya produces up to 18,000 barrels per day of renewable fuel, which it distributes via a marketing partner.

But the largest boost to the US renewable diesel business is probably going to come next year when the Clean Fuel Production Tax Credit (PTC) replaces the biomass-based Diesel Blender’s Tax Credit (BTC).

According to Irwin, BTC exacerbates the domestic oversupply by enabling importers to claim the same tax benefits as domestic manufacturers. When PTC takes effect the following year, imports will be less attractive and the supply side of the market will at the very least marginally improve.

The EIA data pointed out that the United States imported approximately 900 million gallons of biodiesel and renewable fuel in the previous year.

Imports will probably increase during the remainder of the year as importers try to take advantage of the final few tax incentives available. In the first two months of this year, imports were approximately 200 million gallons, Irwin asserted.

“Next year, things don’t seem as dire, but things will undoubtedly become much worse before they get better,” he added.

Expansion despite profit concerns

As of February 6, the US Energy Information Administration’s most recent Short-Term Energy Outlook indicates that the government anticipates a 30% annual rise in renewable diesel production in both 2024 and 2025.

According to the STEO, the EIA currently projects that the daily average production of renewable diesel will be about 230,000 barrels in 2024 and 290,000 barrels in 2025. By the end of 2023, production was averaging about 200,000 barrels per day.

In the STEO, the EIA also disclosed that, in response to rumours that Phillips 66 intends to permanently cease processing crude oil at its Rodeo refinery in California, it is lowering its prediction for US crude oil refining capacity by 120,000 barrels per day starting in March 2024.

The Rodeo facility used to produce around 60,000 barrels of distillate fuel and 65,000 barrels of motor gasoline per day, according to the EIA. Phillips 66 is converting the facility to create renewable diesel. Once the project is completed, the Rodeo biorefinery is expected to produce about 50,000 barrels of renewable diesel per day.

The capacity to produce renewable diesel has increased dramatically in recent years. According to EIA data, capacity increased from 1.75 billion gallons annually in January 2022 to 3.857 billion gallons by November 2023.

Meanwhile, in the Southeast US, Gateway Terminals, Terminal Investment Corp., Colonial Oil Industries Inc., and Neste are bringing renewable diesel to the southeastern US for commercial trucks at the Port of Savannah.

Due to increased West Coast demand, sourcing renewable diesel in the US and East Coast has been difficult, Joanne Caldwell, head of risk management and sustainability at Georgia Ports Authority, told Transport Topics.

“GPA is pleased that TICO, through Colonial Oil, secured Neste’s renewable diesel,” she added.

TICO supplies GPA with jockey trucks, fuel, and equipment to dray containers, Caldwell said. TICO commenced container operations at the Port of Savannah 50 years ago.

Caldwell said TICO had a contract with Colonial Oil to buy Neste renewable diesel fuel. Jockey trucks at GPA’s Garden City Terminal use biofuel. Gateway Terminals LLC Savannah operates high-performance container terminals.

She noted that the GPA and TICO’s recent change from normal diesel to renewable fuel did not affect their financial contract. Renewable diesel reduces production and refining emissions by using animal fats and waste oils. By switching to renewable fuel, GPA, Georgia, and the world minimise carbon dioxide emissions.

Caldwell said GPA is studying ways to power port equipment using renewables and other alternative fuels. Colonial Oil Industries, one of the major US independent oil and gas firms, established a renewable diesel supply collaboration with Neste, TICO, and Gateway Terminals a few months ago.

Gateway Terminals CEO Kevin Price said, “Renewable diesel is a welcome choice that integrates well into current delivery models and reduces carbon and particulate matter in the quest to lower supply chain emissions. We are pleased that Colonial Oil is introducing this product to improve global air quality.”

The question is whether to retread. Some maintenance managers constantly dispute buying new tyres or retreading. In California, where regulators are aggressively winding down fossil fuels, companies are increasingly turning to renewable diesel as an easy and cost-effective way to lower emissions because it requires no modifications to switch from traditional diesel fuel.

This alliance expands renewable diesel throughout Georgia and the Southeast. Neste will supply the renewable diesel, according to Colonia Oil Industries. Neste is a leader in providing renewable and circular feedstock solutions for polymers and chemicals.
Colonial Oil President Bob Kenyon said his company is happy to offer sustainable fuels for land and maritime customers. Colonial has operated for almost a century.

“Our strategic partnership with Neste accelerates our objective to be the energy partner of choice in our markets,” Kenyon said.

Neste intends to produce 1.9 billion gallons of renewable products worldwide in 2024. It was one of the first to deliver renewable diesel to California and Oregon and is fast growing its production, filling station network, and distribution to satisfy rising US demand.

Its March 1 2023 Annual Report stated that the company helped clients reduce greenhouse gas emissions by 11 million tons last year. All diesel-powered vehicles can use Neste MY Renewable Diesel.

The research said that it did not require engine or logistics upgrades. Our customers reduced their GHG emissions by up to 95% (European market methodology) or 75% (North American market) by switching from fossil diesel to Neste MY Renewable Diesel in 2023.

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Boris Johnson stated during his keynote speech at Masdar’s Green Hydrogen Summit in Abu Dhabi that while his nation had hosted COP26 in 2021, hosting COP28 in Dubai later in 2023 had proven to be more difficult.

“There was a difference between COP26 and COP28,” Boris Johnson noted.

The Glasgow United Nations Summit took place before Russia’s war with Ukraine, the spike in hydrocarbon costs, and the general lack of confidence in Net Zero.

“And with all due respect to all of you here in Abu Dhabi, I must say that while we completed the soft COP, you completed the tough COP, if you understand what I mean,” the former British Prime Minister stated.

“But you were victorious. The UAE Presidency overcame negative coverage in some international media outlets that were pessimistic about the outcomes of the COP28. You also fared better than the expectations of non-governmental organisations, and by using your persuasive technological arguments, you convinced people to abandon fossil fuels here in the world’s largest and richest hydrocarbon basin,” he added further.

With its close ties to the United Arab Emirates, Boris Johnson, who was London’s mayor from 2008 to 2016 and prime minister from 2019 to 2022, claimed that during his tenure, the city had earned the moniker “eighth emirate.”

He claimed that during that period, the two nations had entered a new golden age of cooperation.

He went on to say that the United Kingdom had been able to reconsider and shift its perspective on power generation as a result of the UAE’s utilisation of solar farms and other renewable energy projects. He specifically mentioned Emirati involvement in Masdar through the London Array wind farm off the Essex coast.

One of the biggest planned offshore wind farms in the world, Dogger Bank South by Masdar, is presently undergoing the UK planning procedure, he said.

Boris Johnson further suggested that surplus energy from the farm may be utilised to contribute to the production of green hydrogen, which could eventually be used to power aircraft engines.

But to proceed, he continued, it was critical to get past reservations and scepticism regarding hydrogen as a power source.

“These things require political leadership, patience, and unwavering innovation. And that innovation necessitates ever closer collaboration between nations like the UK and the UAE, ranging from batteries to artificial intelligence,” he declared.

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