Weekly Wrap: Davos, the new US administration and what this means for green products
It is still early to assess the impact of the incoming administration’s “unleashing” of US energy, but here is an attempt to take stock of what we know so far and identify some trends discussed at the World Economic Forum in Davos and elsewhere.
Many comments from Davos were about Europe’s need to improve its competitiveness. Well, Europe has an extraordinary opportunity now that renewable fuels and the low carbon economy faces challenges in the US. Now is the time to double down on industrial decarbonisation, on creating market conditions where low carbon iron and steel, ammonia for fertilisers and as a fuel for our ships, takes off. Europe must stay the course, and go further through both mandates and financial support, in convening and using its procurement power to make green products and renewable fuels thrive.
The US president’s executive order unleashing American energy and to pause payments and review all policies doesn’t mean that for example the tax credit provisions for the 45V clean hydrogen tax credit no longer stands, though it has certainly introduced significant uncertainty. With many green hydrogen projects set to be built in states with strong Republican support, it is possible that the tax credit or other supporting measures will remain.
As demand for renewable fuels, for green hydrogen and green ammonia in particular, still remains weak, the International Maritime Organization’s commitment to agree a pricing mechanism and a fuel standard later this spring is a genuine cause for optimism if they are carefully designed.
Our deputy CEO Joe Williams wrote earlier this week more on how the shift to green products remains essential.
Here are some quotes I jotted down while ducking in and out of meetings and panels in a Davos which felt bigger (though less snowy) than ever before. As many conversations are off the record or under the Chatham House Rule, I am afraid that I cannot attribute them. It will not surprise you that I tend to remember things I like to hear.
“It is the government that needs to do the de-risking.”
“It is now about numbers. Financial investment decisions are not based on commitments, but on projects being commercially viable.”
“There isn’t a green premium, only a dirty discount.”
“We need to keep the course in Europe. We need business leaders to tell governments to stay the course.”
“The main winners of the US entrenchment of oil and gas, are the Chinese renewable energy companies.”
“We can meet out 2030 goals just with exciting technology.”
“Nationally Determined Contributions needs fossil fuel end dates.”
“Commitments are not enough. We need standards.”
“We need to address the morality gap. The missing link is that people are angry. People don’t believe us. We must find the narrative, and it is about thriving, not about surviving.”
On the International Maritime Organization’s commitments to agree in April a robust fuel standard and pricing mechanism:
“We must shout in support.”
“It is time to agree what is clean.”
“Ammonia will dominate.”
“We are ready to supply the green ammonia, we need the demand.”
“LNG is the wrong path. It is crucial how we define clean.”
“The transition to low carbon shipping will create huge opportunities.”
On carbon capture:
“The only thing they have captured are politicians.” “Carbon capture will go nowhere because it is so energy intensive.”
“Carbon capture is a con.”
My personal view on carbon capture is that it certainly has not delivered to date. We need massive scrutiny of upstream emissions, capture rates and storage as these facilities are built.
Jonas Moberg
CEO, Green Hydrogen Organisation
