Green Energy and Sustainable Development
The need for structural changes in the economy and the future of energy
Igor Sechin, Chief Executive Officer of Rosneft, made a key presentation at the special session "Reliable Energy and Global Energy Transition" within the XIV Eurasian Economic Forum framework, held in Verona (Italy) at the end of 2021.
The forum was attended by former German Chancellor and Chairman of the Board of Directors of Rosneft Gerhard Schroeder, Deputy Prime Minister, Minister of Foreign Affairs of Qatar Mohammed bin Abdulrahman bin Jassim Al Thani, Minister of Oil and Natural Gas of India Hardeep Puri, BP Chief Executive Bernard Looney, Chairman of the Board of Directors and Chief Executive Officer of Trafigura Jeremy Weir and other representatives of the global business community, politicians, experts, and analysts.
The report's topic is "The need for structural changes in the economy and the future of energy". It is a view from Russia on the current situation in the global energy sector and the problem of the green transition. Petroleum offers the most interesting fragments of the report by Igor Sechin, who is called one of the closest people to Vladimir Putin.
Uncertainty in the global economy due to the difficult epidemiological situation persists. The pandemic continues, remaining a key factor affecting the situation. Despite large-scale efforts to ensure the necessary level of vaccination, collective immunity is still not formed. Universal solutions to the pandemic problems have not yet been found. New strains and diseases may be waiting for us ahead.
In 1990, the International Classification of Diseases numbered about 14 thousand names, and in the new edition, the transition to which will begin in 2022, there will already be about 55 thousand. We have entered a new era when improved diagnostics, accumulated knowledge, and modern clinical approaches make it possible to detect more than 1,200 new diseases per year. Unfortunately, we cannot yet answer which of them poses the greatest danger to the future of humanity.
Green energy companies should also take care not so much about the rapid growth of capitalization by increasing prices for consumers but about ensuring a consistent energy transition that does not create shocks for the economy and consumers, which have been enough since the beginning of the pandemic.
Global supply chains, including maritime transport, railways, road, and air transportation, were not ready for surges in supply and demand. Deliveries of finished goods and raw materials are disrupted, which was well shown by the situation with the tanker that blocked the Suez Canal. The modern industrial model, which implies working with minimal inventory, is called "off the wheels" when raw materials or goods received from suppliers are immediately sent to production, it allows reducing costs. However, the economy is becoming increasingly interconnected, and the importance of reliable infrastructure is coming to the fore.
Apparently, the complexity of global production links and the need for stable supplies should lead to a rethinking of the role of inventories the need to maintain them at reasonable levels that reduce uncertainty and the risks of disruptions.
The current gas crisis in Europe has demonstrated the importance of commodity stocks. Due to the lack of long-term contracts, gas storage facilities were filled by only 75% compared to the 10-year historical level of 90%. Against the background of growing demand, the limited possibilities of alternative generation to ensure stable electricity supplies not only in winter but also in summer and autumn periods more comfortable from the point of view of weather conditions led to record gas prices that exceeded $1,300 per 1,000 cubic meters, a level that no one could even imagine before. Such a price level certainly threatens Europe's economic recovery. Record prices have become an indicator of the shock that Europe has experienced.