How The Renewable Boom Can Counter Energy Poverty In Rural Areas

By Felicity Bradstock - May 21, 2023, 

• The nature of traditional energy sources means that development happens around resource-rich areas in order to increase efficiency.
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• As the renewable energy rollout accelerates, there is a huge opportunity to develop rural and more isolated regions.
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• The potential of renewable energy is particularly attractive in rural areas with high levels of poverty and little to no access to electricity.
• 
  

As the world undergoes a green transition, governments around the globe have the potential to develop new energy hubs and diversify beyond traditional fossil fuel-rich regions to create a new energy landscape. While coal, oil, and gas operations were confined to a few resource-rich areas, renewable energy can be produced in a more diverse and widespread manner, which could help to develop the economies of much-overlooked rural regions of the world. In fact, vast areas of undeveloped land present the perfect location for generating solar and wind power. So, could renewable energy be the key to global rural development? 

The OECD has long been discussing the potential for linking renewable energy to rural development, having launched an Executive Summary Brief for Policy Makers in 2012. This has shaped the way some (but not all) political leaders have approached the development of their renewable energy sectors. Some of the benefits for rural areas identified by the OECD included new revenue sources, job creation, business opportunities, technological innovation, community skills development, and a decrease in energy prices. 

Since this report, the OECD has seen a significant deepening of the ties between renewable energy and rural development. The organization now expects rural regions to be the primary beneficiaries of accelerated investments in renewable energy, particularly thanks to the acceleration of the green transition in several countries. As rural territories provide open spaces, agriculture, and a low population density, they are ideal for the development of renewable energy projects, including wind, solar, water, and biomass. At present, rural regions produce around 63% of renewable energy, with 36% of this figure coming from the most remote places. 

The United Nations Development Programme (UNDP) has also identified the rollout of renewable energy operations in rural areas as a means of tackling the barriers to rural energy access, as well as rural poverty. The development of green energy projects in non-traditional energy production areas, many of which may not have access to mains electricity, could help encourage the electrification of these regions. This is particularly important for developing countries that experience high levels of energy inequality. And some states are already developing their rural areas as renewable energy hubs, to spur economic development in disadvantaged communities, attract foreign investment, boost the country’s economy, and support the green transition. 

In rural sub-Saharan Africa, most of the population continues to rely heavily on agricultural activities as their main source of income. Many do not have access to irrigation or electricity, making the modernization of farming impossible, and revenues therefore limited. There is also a huge problem with food insecurity and the growing threat of climate change. The development of renewable energy projects could go hand in hand with rural development, with green energy operations supplying vital clean power to the country, as well as a new source of revenue and affordable power to disadvantaged communities. 

The International Energy Agency (IEA) believes the global clean energy transition holds new promise for Africa’s economic and social development. By May 2022, the countries that account for over 70% of the world’s CO2 emissions committed to net-zero emissions by 2050. This includes 12 African countries, that produce more than 40% of Africa’s carbon dioxide emissions. The IEA’s Sustainable Africa Scenario sees the African continent having universal access to modern energy services by 2030, as well as the full implementation of all African climate pledges. This would require 90 million people a year to be connected to an electricity grid, tripling the connectivity rate of recent years. In 2022, 600 million people, around 43% of Africa’s population, had no access to electricity. While the cost of achieving this goal is huge - around $25 billion per year - the benefits are far-reaching.

This is true of all areas of the world, not Africa alone. And in China, there has been significant development seen in rural areas thanks to the rollout of renewable energy projects. In March this year, China announced it would be launching a pilot scheme to further promote the development of renewable energy in rural areas. This will require provincial-level government departments to identify rural 'pilot counties' for the construction of renewable energy operations and submit these plans to the National Energy Administration (NEA) for assessment and approval by the end of May. 

Meanwhile, this month, in the U.S., the Biden Administration announced almost $11 billion in grants and loans to deliver affordable clean energy to rural communities across the country. The Department of Agriculture Secretary, Tom Vilsack, suggested that this funding will provide rural areas with more dependable power and help lower energy costs. This is the single largest federal investment in rural electrification since 1936. Vilsack stated: “These investments will also combat climate change and significantly reduce air and water pollution that put children’s health at risk.” The programme is expected to contribute to the development of large-scale solar, wind, geothermal, biomass, hydropower projects, and energy storage projects across the country, attracting greater investment from the private sector. 

Governments worldwide are discovering the expansion of renewable energy operations and rural development can go hand in hand, helping to improve the economies of much-neglected regions of the world as well as supporting the global green transition. Rural areas offer the ideal landscape for renewable energy development, while also providing energy security for areas that may not have had easy access to electricity previously. Further, the creation of energy projects brings new revenue, jobs, and more investment to these regions. In return, rural regions can develop their economies and contribute to the country’s overall economy, as well as help accelerate the green transition. 

By Felicity Bradstock for Oilprice.com

Why AI Is The Future Of Offshore Oil Drilling

By Alex Kimani - May 21, 2023

• Generative AI for seismic imaging has broad and far-reaching implications.
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• Shell recently announced plans to use AI-based technology in its deep-sea exploration and production activities.
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• AI tech is also starting to play a big role in the renewable energy sector and aiding in the creation of smart grids.

Artificial Intelligence (AI) has emerged as some of the biggest secular megatrends of our time. AI is powering the fourth industrial revolution and is increasingly being viewed as a key strategy for mastering some of the greatest challenges of our time including climate change and pollution. Energy companies are employing AI tools to digitize records, analyze vast troves of data and geological maps, and potentially identify problems such as excessive equipment use or pipeline corrosion. One such company is Dutch energy giant Shell Plc (NYSE:SHEL). On Wednesday, Shell announced plans to use AI-based technology from big-data analytics firm SparkCognition in its deep sea exploration and production in a bid to improve operational efficiency and speed as well as boost production.

"We are committed to finding new and innovative ways to reinvent our exploration ways of working," Gabriel Guerra, Shell's vice president of innovation and performance, said in a statement.

According to Bruce Porter, chief science officer for Texas-based SparkCognition, Generative AI for seismic imaging has broad and far-reaching implications, adding that the technology can dramatically shorten explorations to less than nine days from nine months. The company’s Generative AI will generate subsurface images using fewer seismic data scans than usual and thus help with deep sea preservation. Fewer seismic surveys will in turn accelerate the exploration process, improve  workflow and save costs in high-performance computing.

But this is not Shell’s first foray into AI tech. Back in 2018, the company partnered with Microsoft to incorporate the Azure C3 Internet of Things platform in its offshore operations. The platform uses AI to drive efficiencies across the company’s offshore infrastructure, from drilling and extraction to employee empowerment and safety.

Shell is not the only Big Oil company employing AI in its operations. Back in 2019, BP Plc (NYSE:BP) invested in Houston-based technology start-up Belmont Technology which helped the company develop a cloud-based geoscience platform nicknamed “Sandy.” Sandy allows BP to interpret geology, geophysics and reservoir project information thus creating unique “knowledge-graphs” including robust images of BP’s subsurface assets. BP is then able to perform simulations and interpret results using the program’s neural networks.

In March 2019, Aker Solutions partnered with SparkCognition to enhance AI applications in its ‘Cognitive Operation’ initiative. Aker SparkCognition’s AI systems called SparkPredict to monitor topside and subsea installations for more than 30 offshore structures.

Four years ago, the Oil and Gas Authority (OGA) launched the UK’s first oil and gas National Data Repository (NDR). The massive repository contains 130 terabytes of geophysical, infrastructure, field and well data--the equivalent of around eight years’ worth of HD movies. This data covers more than 5,000 seismic surveys, 12,500 wellbores and 3,000 pipelines. NDR employs AI to interpret this data, with OGA hoping to uncover new oil and gas prospects as well as enable more production from existing infrastructure. The platform will also be used in the country’s energy transition, with reservoir and infrastructure data used to support carbon capture, usage and storage projects.

AI And Renewable Energy

AI tech is also starting to play a big role in the renewable energy sector and aiding in the creation of smart grids.

One of the biggest barriers to the United States realizing its dream of having a 100% renewable grid is the intermittency of renewable power sources. After all, our grids are designed for near-constant power input/output whereas the wind doesn’t always blow and the sun doesn’t always shine.  For the transition to renewable energy to be successful, our power grids have to become a lot smarter. 

Luckily, there’s an encouraging precedent.

A few years back, Google announced that it had reached 100% renewable energy for its global operations including its data centers and offices. Today, Google is the largest corporate buyer of renewable power, with commitments totalling 7 gigawatts (7,000 megawatts) of wind and solar energy. Google teamed up with IBM to search for a solution to the highly intermittent nature of wind power. Using IBM’s DeepMind AI platform, Google deployed ML algorithms to 700 megawatts of wind power capacity in the central United States--enough to power a medium-sized city.

IBM says that by using a neural network trained on widely available weather forecasts and historical turbine data, DeepMind is now able to predict wind power output 36 hours ahead of actual generation. Consequently, this has boosted the value of Google’s wind energy by roughly 20 percent.

A similar model can be used by other wind farm operators to make smarter, faster and more data-driven optimizations of their power output to better meet customer demand.

IBM’s DeepMind uses trained neural networks to predict wind power output 36 hours ahead of actual generation

Source: DeepMind

Houston, Texas-based Innowatts, is a startup that has developed an automated toolkit for energy monitoring and management. The company’s eUtility platform ingests data from more than 34 million smart energy meters across 21 million customers including major U.S. utility companies such as Arizona Public Service Electric, Portland General Electric, Avangrid, Gexa Energy, WGL, and Mega Energy. Innowatts says its machine learning algorithms are able to analyze the data to forecast several critical data points including short- and long-term loads, variances, weather sensitivity, and more.

Innowatts estimates that without its machine learning models, utilities would have seen inaccuracies of 20% or more on their projections at the peak of the crisis thus placing enormous strain on their operations and ultimately driving up costs for end-users.

Further, AI and digital solutions can be employed to make our grids safer.

Back in 2018, California’s biggest utility, Pacific Gas & Electric, found itself in deep trouble after being found culpable for the tragic 2018 wildfire accident that left 84 people dead and, consequently, was slapped with hefty penalties of $13.5 billion as compensation to people who lost homes and businesses and another $2 billion fine by the California Public Utilities Commission for negligence. Perhaps the loss of lives and livelihood could have been averted if PG&E had invested in some AI-powered early detection system like Innowats.

By employing digital and AI models, our power grids will become increasingly smarter and more reliable and make the shift to renewable energy smoother.

By Alex Kimani for Oilprice.com

China Dominates Global Steel Industry

By ZeroHedge - May 22, 2023

Steel is a critical component of modern industry and economy, essential for the construction of buildings, automobiles, and many other appliances and infrastructure used in our daily lives.

Visual Capitalist's Niccolo Conte create this infographic, using data from the World Steel Association, to visualize the world’s top steel-producing countries, and highlights China’s ascent to the top, as it now makes up more than half of the world’s steel production.

The State of Global Steel Production

Global steel production in 2022 reached 1,878 million tonnes, barely surpassing the pre-pandemic production of 1,875 million tonnes in 2019.

Country	2022 Production (in million tonnes)	Annual Production Change	Global Share
???????? China	1013.0	-2.0%	53.9%
???????? India	124.8	5.3%	6.6%
???????? Japan	89.2	-7.9%	4.8%
???????? United States	80.5	-6.5%	4.3%
???????? Russia	71.5	-5.8%	3.8%
???????? South Korea	65.9	-6.9%	3.5%
???????? Germany	36.8	-8.8%	2.0%
???????? Türkiye	35.1	-15.0%	1.9%
???????? Brazil	34.0	-6.5%	1.8%
???????? Iran	30.6	6.8%	1.6%
???????? Italy	21.6	-13.0%	1.1%
???????? Taiwan	20.7	-12.1%	1.1%
???????? Vietnam	20.0	-15.0%	1.1%
???????? Mexico	18.2	-1.9%	1.0%
???????? Indonesia	15.6	8.3%	0.8%
Rest of World	201.0	-11.2%	10.7%
World Total	1878.5	-3.9%	100.0%

2022’s steel production marked a significant reduction compared to the post-pandemic rebound of 1,960 million tonnes in 2021, with a year-over-year decline of 4.2%–the largest drop since 2009, and prior to that, 1991.

This decline was spread across many of the world’s top steel producers, with only three of the top fifteen countries, India, Iran, and Indonesia, increasing their yearly production. Most of the other top steel-producing countries saw annual production declines of more than 5%, with Turkey, Italy, Taiwan, and Vietnam’s production all declining by double digits.

Even the world’s top steel-producing nation, China, experienced a modest 2% decline, which due to the country’s large production amounted to a decline of 19.8 million tonnes, more than many other nations produce in a year.

Despite India, the world’s second-largest steel producer, increasing its production by 5.3%, the country’s output still amounts to just over one-tenth of the steel produced by China.

China’s Meteoric Rise in Steel Production

Although China dominates the world’s steel production with more than a 54% share today, this hasn’t always been the case.

In 1967, the World Steel Association’s first recorded year of steel production figures, China only produced an estimated 14 million tonnes, making up barely 3% of global output. At that time, the U.S. and the USSR were competing as the world’s top steel producers at 115 and 102 million tonnes respectively, followed by Japan at 62 million tonnes.

Almost three decades later in 1996, China had successively overtaken Russia, the U.S., and Japan to become the top steel-producing nation with 101 million tonnes of steel produced that year.

The early 2000s marked a period of rapid growth for China, with consistent double-digit percentage increases in steel production each year.

The Recent Decline in China’s Steel Production

Since the early 2000s, China’s average annual growth in steel production has slowed to 3.4% over the last decade (2013-2022), a considerable decline compared to the previous decade’s (2003-2012) 15.2% average annual growth rate.

The past couple of years have seen China’s steel production decline, with 2021 and 2022 marking the first time the country’s production fell for two consecutive years in a row.

While it’s unlikely China will relinquish its position as the top steel-producing nation anytime soon, it remains to be seen whether this recent decline marks the beginning of a new trend or just a brief deviation from the country’s consistent production growth          

By Zerohedge.com

ACCELERATIONISM

How The Pace Of Climate Change Keeps Surprising Us

By Kurt Cobb - May 22, 2023

• The pace of climate change seems to have accelerated over the last decade.
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• Turning the giant global economy in a new climate-friendly direction has proven harder to do than expected.
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• So even as the window for an energy transition shrinks, our ability to speed up that transition remains handicapped by our dependence on fossil fuels.
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This seems like the 10th time that I've read a story that says Greenland's glaciers are melting faster than previously thought and thus the consequences of climate change are moving much more quickly than we have estimated in the past. Even the pace of such stories has picked up. I found some in 2015, 2016, 2019, 2021 and 2022.

And, back in 2013 scientists reported that just a little to the north of Greenland, their models were showing that the median estimate for an ice-free arctic in summer was 2060. (Median means half the results were before 2060 and half the results of the model were after.) Those scientists were convinced at the time that their model might be underestimating the pace of climate change in the Arctic, suggesting that an ice-free arctic might come before 2050.

Fast forward to 2020 when a study suggested that an ice-free Arctic in summer might come as soon as 2035. Not surprisingly, the story notes that the finding is "one of the more direct signs that humans are warming the Earth's climate at an even more dramatic pace than expected."

When I wrote about our human tendency to underestimate the pace of human-induced climate change way back in 2006, few people imagined that climate change would progress as quickly as it has between then and now. The idea that we have time to get ready for climate change or that climate change is "slowing down" has turned out to be a grave miscalculation.

In addition, turning the giant global economy in a new climate-friendly direction has proven harder to do than expected. The reasons are well-known to those who understand how energy works in human society.

First, humans seek the cheapest, easiest-to-get energy before going on to more expensive alternatives, no matter how climate-friendly those alternatives are. Fossil fuels remain the cheapest and most reliable source of energy for most applications.

Second, in the past it has taken a generation and sometimes two for human society to move from one dominant fuel, for example, coal, to, in this case, oil. Anyone expecting renewable energy to quickly replace fossil fuels is not paying attention to the numbers and to the practical problems with renewable energy. In the case of wind and solar intermittency is a big problem. The wind doesn't blow all the time, and the sun disappears every night. In addition, the low power density relative to fossil fuels and the vast amount of land needed are also major issues.

It is theoretically possible to run a modern, technical society on renewable energy, just not this one. Our energy requirements would have to be pared down to a fraction of what they are today, and our buildings and energy infrastructure would have to be completely reworked—a task that would require huge amounts of fossil fuel energy since that is primarily the kind that we currently have. Fossil fuels provide more than 80 percent of the world's energy today.

So even as the window for an energy transition shrinks—that is, the time before climate change becomes catastrophic (and fossil fuel depletion become dire)—our ability to speed up that transition remains handicapped by our dependence on fossil fuels, by the power of the fossil fuel interests, and by the practical difficulties of remaking our infrastructure on such a short timeline.

The name of this conundrum is the rate-of-conversion problem. Can we make the transition to a sustainable society before we run low on the fossil fuel energy needed to build the new sustainable infrastructure AND before climate change creates conditions so chaotic that we cannot sustain such a build-out?

The relatively slow pace of the renewable energy build-out compared to the available time window suggests we will not finish the job in time to prevent a serious decline in the fortunes of future generations.

By Kurt Cobb via Resourceinsights.com

Why Green Energy Stocks Are Facing Headwinds

By Alex Kimani - May 22, 2023

• The Inflation Reduction Act stimulus continues to support clean energy stocks, but the first effect has largely been priced in.
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• Clean energy projects tend to be highly sensitive to interest rates because they require developers to borrow lots of capital up front to build projects.
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• The United States is on track to grow domestic solar panel manufacturing capacity 8-fold by the end of 2024.
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The clean energy sector has lately been struggling, with higher interest rates and a weakening economic outlook outweighing considerable backing by the Biden administration. The iShares Global Clean Energy ETF (NASDAQ:ICLN), the world’s largest green energy ETF and a catch-all bet on clean energy, has lost 4% in the year-to-date compared to a 10.3% gain by the S&P 500. The solar and wind energy benchmarks are not faring much better, either, with Invesco Solar ETF (NYSEARCA:TAN) down 2.9% YTD while First Trust Global Wind Energy ETF (NYSEARCA:FAN) has only gained 2.6%.

Clean energy projects tend to be highly sensitive to interest rates because they require developers to borrow lots of capital up front to build projects. To make matters even more complicated, the cost of electricity generated from renewable energy tends to be impacted much more by rising interest rates compared to electricity generated from fossil fuels. Indeed, a 2020 analysis from the International Energy Agency found that a 5% rise in interest rates increases the levelized cost of electricity from wind and solar by a third but only marginally for natural gas plants. These are the main reasons why cash poured into companies focused on renewable energy, electric vehicles, batteries and hydrogen producers when interest rates were low but the funding gusher has lately slowed to a trickle as interest rates continue increasing. Startup electric-vehicle makers such as Lucid Group (NASDAQ:LCID), Fisker Inc. (NYSE:FSR) and Rivian Automotive (NASDAQ:RIVN) have been particularly hard hit with their shares tumbling this year as the companies scramble for market share in an increasingly crowded space.

The renewable sector has not been helped by the sudden collapse of Silicon Valley Bank.

SVB was popular in the renewables world for its crucial role in supporting small-scale projects, including community solar projects which other institutions shunned due to the onerous legal and tax paperwork required to advance them loans.

“Since deposits were guaranteed, the risk has moved from small, early-stage companies that might have struggled to make payroll, to those that might be reliant on the bank’s credit facilities for infrastructure projects,’’ Mark Daly, head of technology and innovation at BloombergNEF, has said. According to BloombergNEF, it’s not yet clear how much financing SVB was offering to community solar developers. However, SVB’s website says it has committed $3.2 billion to innovation projects in clean energy, was leading or participating in 62% of financing in U.S. developments and had more than 1,550 customers in the broader climate technology and sustainability sector. 

BloombergNEF has estimated that between 2020 and 2022, SVB financed ~$357 million of residential solar, excluding community solar, by no means an insignificant amount.

Government Backing

But it’s not all doom and gloom, with the clean energy sector enjoying a period of ample government backing. 

Last August, the United States Congress passed the Inflation Reduction Act, hailed as the most important climate legislation in United States history. A major goal of IRA--the largest federal government spending increase on alternative energy in U.S. history--is to strengthen energy independence, reduce dependence on Chinese imports, and reinvigorate the industrial sector. 

“The act will immediately spur private investments in production capacity across the solar supply chain, including batteries, helping to create thousands of manufacturing jobs and support our energy independence," Abigail Ross Hopper, president and chief executive of the Solar Energy Industries Association, said in written remarks after the act was passed. 

The IRA is expected to provide some $1 trillion worth of incentives for clean technologies, and drive trillions more in investments. According to the American Clean Power Association, IRA could more than triple clean energy production, cut emissions by 40% by 2030, and create 550,000 clean energy jobs. 

But the economic impact is even bigger: the Blue Green Alliance has predicted that the IRA could add 9 million jobs in the next ten years while Energy Innovation modeling projects the IRA will increase GDP nearly 1% in 2030. Meanwhile,  Credit Suisse has predicted that the legislation could become America’s most significant investment in clean energy manufacturing and leverage tax dollars to generate roughly $1.7 trillion in new investment within a decade.

“Capital is very much still flowing into quality companies,” Shayle Kann, a partner at Energy Impact Partners. Has told the Wall Street Journal.

The Biden administration has also continued to support the domestic solar industry.

Last June, Biden waived tariffs on solar panels from Thailand, Vietnam Cambodia and Malaysia in a bid to create a "bridge" while U.S. manufacturing ramped up. 

The White House is firmly opposed to the attempt to overturn the waivers by Congress, pointing to an increase in domestic solar production as a sign that Biden's policy has been successful.

"This legislation would sabotage U.S. energy security. It would undermine our momentum in creating a massive new domestic industry. It would sideline workers who are fired up to build these projects and operate them across the country," Ali Zaidi, Biden's national climate adviser, has told Reuters.

The United States is on track to grow domestic solar panel manufacturing capacity 8-fold by the end of 2024, an official has told Reuters, adding that Biden will not issue an extension on the tariff waivers because domestic manufacturing has taken off.

"Given the strong trends in the domestic solar industry, the President does not intend to extend the tariff suspension at the conclusion of the 24-month period in June 2024," the White House said in a "Statement of Administration Policy" obtained by Reuters.

Republicans in Congress, sometimes with the support of Democrats, have frequently used the Congressional Review Act to block Biden administration regulations. Both chambers passed a resolution this Congress to eliminate a rule from the EPA and the U.S. Army Corps of Engineers to define the waters that fall under protection of the Clean Water Act. Biden vetoed that measure, and another about investment and the Labor Department but signed in March a resolution to block Washington, D.C., from overhauling its criminal laws.

Meanwhile, a growing boom in EVs and the lithium-ion batteries that power them is showing no signs of slowing.  Some 47 major new EV projects adding up to an estimated $49 billion in capital investment in the United States have been announced since the IRA was passed. Global EV sales are expected to continue expanding at a brisk clip, with the International Energy Agency estimating 35% growth for the current year.

By Alex Kimani for Oilprice.com