THE ENERGY FUTURE FORUM
Last week, I attended the Energy Future Forum, hosted by RealClear Energy in collaboration with the National Center for Energy Analytics (NCEA). The event commenced with opening remarks from David DesRosiers, President of RealClear, and Mark P. Mills, Executive Director of NCEA, who served as the conference co-chairs. Discussions covered a spectrum of topics, from the allocation of capital for green energy projects to updates on energy policies and the latest developments in oil/gas, solar, wind, and nuclear sectors. Below are some key insights:
-To put it succinctly, the return on investment in green energy is often perceived as minimal. Investors currently active in the market may accept lower returns for the sake of principle, yet there is a general trend moving away from Environmental, Social, and Governance (ESG) investments, and more critically, from the weaponization of ESG. As stated on the June 28th release of Wood Mackenzie’s podcast, The Energy Gang, host Ed Crooks says, “…one of the very hot topics in the industry in the past few months is this book, The Price is Wrong….it’s by an academic based in Sweden called Brett Christophers, and he’s talking about investment in renewables and essentially making the argument that investment in renewables…has not been strong enough to put us on a course for a net zero by mid-century…And one of his crucial arguments for why investment isn’t strong enough is that returns are too low. And he says if you compare returns in fossil fuel industries, they might be in the mid-teens and higher, whereas returns typically in wind and solar are single digit and often low single digit.” As a reminder, in 2022, the SEC Chair, Gary Gensler, released a proposal to hold companies accountable on ESG strategies, “I am pleased to support this proposal because, if adopted, it would establish disclosure requirements for funds and advisers that market themselves as having an ESG focus.”
-Neil Atkinson, former Head of the Oil Industry & Markets Division of the International Energy Agency, stated that the IEA has unfortunately lost its objectivity. To add color, a Wall Street Journal article on February 12th states the following: “Unfortunately, in recent years, the IEA has succumbed to politicization and strayed from its security mission. In 2020 the IEA bowed to enormous pressure from climate activists and ceased publication of oil and gas demand forecasts that didn’t show demand for those fuels would soon peak because of imaginary future climate policies.” The article was written by Robert McNally, energy consultant and author.
-Discussions also highlighted "energy density" as a crucial metric in energy creation. In previous blogs, I've discussed how energy density is gauged by the amount of land or materials required. This remains a vital component to watch as solar, wind, and mining contribute to the sector's expansion.
-Finally, James Danly, former chairman of Federal Energy Regulatory Commission (FERC) spoke bluntly about the misdirected focus of reliability versus resource adequacy. Per the FERC website:
Grid reliability is based on two key elements:
Reliable operation – A reliable power grid has the ability to withstand sudden electric system disturbances that can lead to blackouts.
Resource adequacy - Generally speaking, resource adequacy is the ability of the electric system to meet the energy needs of electricity consumers. This means having sufficient generation to meet projected electric demand.
Danly stated that the emphasis on reliability is a disservice and that the priority should be resource adequacy, which focuses on the availability of sources to meet the country's electrical demands. If these resources are not available or consistent, it can impact consumer prices and the overall management of the grid. This is a summary of Mr. Danly's position, and viewing his panel discussion is recommended for a comprehensive understanding..
There were many more great speakers, especially on the growth of the nuclear space, which is fascinating. You should be able to rewatch the panels here: The Energy Future Forum | RealClearEnergy - Opinion, News, Analysis, Video and Polls
If this field interests you, I strongly suggest attending next year, as it aims to become an annual event. The forum took place at the Heritage Foundation in Washington D.C. A heartfelt thank you to all the organizers and speakers.