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Blue Economy Promises New Era of Plenty for Mediterranean
All Things Energy Forum 2021 is an international digital Forum that takes place from 2 – 4 June in Athens and is co-organized by BOUSSIAS and Natural Resources PC already hosts 95 invited speakers from 22 countries and numerous participants from the domestic and international business world.
The Forum is the largest energy event with significant market influence as it engages energy producers, energy consumers, enterprises of energy-related services and technology, as well as governmental and public authorities. All parties shall examine through fruitful dialogue the new financial data, the international politics and policies, the energy trade, the innovations, and state of the art technologies in the era of the pandemic.
In one of the most interesting sessions of the event, Mr. Rudi Baroudi has given the following speech. The global energy business has entered a period of unprecedented change as we transition toward a new world of low or no emissions. The science says this transition is necessary if we are to reverse the overheating of our planet that is driving climate change. The business and economic changes will be challenging for some, but the transition also will open myriad opportunities for those who think ahead.
The coal that fired the Industrial Revolution is increasingly unpopular, mainly because burning it releases so much carbon, the worst of the so-called “greenhouse gases” responsible for climate change. The oil that replaced coal for so many purposes, then became the world’s most important commodity, is destined for a similar fate. Its emissions are lower than coal’s, but still too high to keep using it as we have been. Even natural gas, the cleanest of all fossil fuels, will eventually be phased out, although until then it will be a crucial fuel that bridges the inevitable gaps between supply and demand. Every day, new advances in wind and solar make them more efficient and more competitive as generators of electricity, and the batteries required to back them up during interruption have more storage capacity. Better and more affordable batteries are also revolutionizing the auto industry, allowing the latest electric cars to outperform their traditional rivals at highly competitive prices.
The fossil fuel era is coming to an end.
Just listen to Larry Fink, the CEO of BlackRock. His company is the world’s largest asset manager, deciding how and where to invest something like 8.5 trillion dollars worth of other people’s money. This past January, he warned other CEOs to get their companies’ climate plans in place with all due speed – or risk the wrath of investors. Then, just last week, BlackRock backed a shareholder revolt aimed at placing advocates of emissions cuts on ExxonMobil’s Board of Directors.
The move was launched by Engine No. 1, an activist hedge fund that stresses sustainability, but its share of ExxonMobil stock was far too small to get its way on its own. Enter BlackRock, the oil giant’s third largest stakeholder, and it wasn’t alone: support for Engine No. 1 also came from State Street and Vanguard, two other huge institutional investors which happen to be ExxonMobil’s first and second largest shareholders, respectively. The company tried to put down the rebellion, even suspending the election process for an hour so it could lean on key stakeholders, but it wasn’t enough. The rebels secured at least two seats on the Board. More importantly, a Wall Street titan showed that it would not be passive, that it would use its enormous weight to influence the behavior of one of the world’s largest companies.
Simultaneously, another shareholder revolt was unfolding at Chevron. There the result was 61% approval for a proposal that Chevron slash its Scope 3 emissions, which include those caused when customers actually use the company’s products. These account for the vast majority of an oil company’s overall carbon footprint, so the issue is deeply relevant to fighting climate change. The proposal is not binding, but its passage sends a clear message: most shareholders want to see a very different kind of corporate leadership.
The very same day, Big Oil took an even bigger blow when a Dutch court issued a ruling in a case brought by environmental groups. In its verdict, the court ordered Shell to cut its total emissions – including the crucial Scope 3 variety – by 45% versus 2019.
The world is changing, so what do we do about it?
We need to be ready. Like the companies that Mr. Fink warned, every country on Earth needs to have a comprehensive climate plan of actions for the short, medium, and long terms. In fact, most of us should be well into implementation, and many countries are.
Here in the Mediterranean region, the post-carbon era actually holds enormous opportunities in terms of the Blue Economy. One such field is Blue Energy. Say “offshore renewables” and everyone thinks floating wind farms. These have a key role to play, especially for countries where dry land is at a premium. But there are other promising energy technologies too, including rain, wave, and tidal power, as well as undersea geothermal. Some of the most promising replacements for fossil fuels are waiting out at sea, if only we have the wisdom and the foresight to develop them. If we do, vast swathes of the region can be fully electrified, offering reliable and virtually universal access to affordable energy. That kind of access is a key requirement for the kind of economic growth that would lift millions of people – even tens of millions – out of poverty. It also would reduce the flow of African migrants bound for Europe by generating new economic opportunities for them at home.
There is no excuse for inaction on meeting our energy needs without ruining our planet, not when our common milieu consists of the world’s tenth largest sea. Even landlocked Switzerland has joined the Blue Energy club: since 2019, it has operated the world’s highest floating solar farm on a lake – 1,800 meters up in the Swiss Alps. That might sound counter-intuitive, but the altitude has several advantages that allow photovoltaic panels to produce up to 50% energy than they would on the valley floor below. The cells that absorb sunlight are more efficient in cold weather, fog is rarer, ultraviolet rays are stronger, and – especially in winter – the snow on surrounding mountain slopes reflects still more sunlight onto the panels. It took research, planning, and vision to make this project happen, and that’s exactly what we need in the Mediterranean Basin.
The Blue Economy also covers a host of non-energy activities up and down the water column. These range from tourism, maritime transport, and fisheries (including aquaculture), to seabed mining, bio-prospecting, and undersea communication cables. This is nothing to sneeze at: these and other industries can provide jobs and entertainment, lower the cost of everything from food to precious metals, even lead to life-saving medicines. Companies and individuals engaged in various forms of environmental consulting will see demand boom, and not just for the usual impact assessments designed to ensure that a given project will meet basic safety and pollution standards. Given what we now know about the need to protect ecosystems, participants in the Blue Economy need to incorporate green thinking into every aspect of their operations. Environmental protections should be prioritized right alongside production goals and annual profits: right at the top the agenda and always part of the bottom line. As these priorities are adopted, demand for qualified experts, those who specialize in analyzing and formulating core business functions and processes, will go through the roof.
Nor does the private sector have to be the only beneficiary. Many Blue Economy industries are inherently cross-border, so Mediterranean governments should miss no opportunity to cooperate and coordinate. Both cargo ships and pleasure craft pass through different countries’ national waters as a matter of course, deposits of natural resources often straddle borders, and wild fish obviously go where they please. So does pollution. Given these movements, all jurisdictions stand to gain by working together to coordinate, standardize, and reliably enforce all manner of transport, safety, and environmental regulations. If we want to make the Mediterranean a stable platform for economic growth, the best place to start is by ensuring predictability across borders.
But there’s a problem, a huge problem in fact. Half of the maritime boundaries in the entire Mediterranean are unresolved, meaning that neighboring coastal countries have not officially recognized one another’s Exclusive Economic Zones or EEZs. The problem is especially acute in the East Med, so it’s no surprise that this part of the region has the highest and most intense levels of international tension. And it’s costly too: the only countries that have made significant progress on developing offshore natural gas, for instance, are those with at least partly settled maritime boundaries. Obviously, IOCs and investors don’t like to deal in commodities whose ownership remains in dispute, so they stay from undefined borders.
This is crucial for two reasons: first, as I mentioned earlier, gas is still popular and will remain in use for a considerable period as a transition fuel, so there is ample revenue to be gained by extracting and selling it. But second, there’s a catch: many climate scientists now believe that the crisis is worse than previously imagined, and are now recommending a global ban on new oil and gas projects. Details of such a ban could come at COP26, the UN Climate Change Conference being hosted by Glasgow, Scotland, in November of this year. Those who wait much longer to activate their offshore gas industries might well be left out in the cold, unable to realize any of the revenues, energy savings, and other benefits of the treasure off their shores.
This situation calls for brave leadership and historic decisions to settle maritime boundaries across the Mediterranean. No need is more pressing, especially since the dialogue and compromises required would not only open up gas development, but also lay the groundwork for closer cooperation in other fields – which is exactly what the Blue Economy demands in order to realize its full potential.
As a bonus, a calmer, friendlier Mediterranean would also allow the sharing of responsibilities and the pooling of resources and data, which would significant improve outcomes in everything from immigration, weather forecasting, and search and rescue to tsunami warning systems and protecting communication cables. Then we could just see the whole Euro-Med region become one of Good Neighbors, a place of mutual goals, settled grievances, and geostrategic cooperation.
Dare I say it, the Mediterranean could be fully at peace in our lifetimes.