How can we transition to net zero yet maintain energy supplies needed to keep up the output of copper, steel and aluminium needed for turbines, solar panels and electric vehicles? Oil still dominates the mix, but with demand for energy continuing to rise around the world as poorer economies come out of poverty and populations increase, where will the sheer scale of the renewable sources needed to replace oil and gas come from?
Continuing the theme of sustainable finance from our previous episode of Trade Finance TV we welcome into the studio two experts on commodities and commodity trade finance, along with TXF Editor in Chief Jonathan Bell, to discuss these questions.
As Jonathan Bell puts it, “Many financing institutions are drastically re-evaluating or changing their portfolios, particularly so with the exclusion of coal/coke and the reduction in upstream oil and gas financing. As a result, less developed nations begin to suffer economically, supply chains get impacted adversely, and commodity pricing spirals. With tighter supplies, producers are reaping the benefits with record profits. And on the commodity trading front, the past two years have been the best yet for the big traders – largely due to the rise in oil and gas prices.”
Deutsche Bank’s Danai Koutra notes that the oil and gas industries are still relevant towards a net zero target, given their technical skillset, resources and expertise. Energy transition is seen as an opportunity by the industry players, who are now actively investing a significant part of their capital and revenue generation towards sustainable energy production (e.g. development of renewables, carbon capture and storage, hydrogen).
As for gas itself: the panelists agree that Europe is a gas-fed economy – all the infrastructure points to that – but as Refinitiv’s Gomersall explains, “acute tightness in the European gas market has been exacerbated by policymakers phasing out coal, nuclear and gas without giving sufficiently incentivising an increase in renewables capacity or applying sufficient attention to inflexible demand”.
Do tune in to hear more!
- Danai Koutra, Director, Natural Resources Finance at Deutsche Bank AG
- Edward Gomersall, Director of Natural Gas, LNG & Coal Research at Refinitiv
- Jonathan Bell, Editor in Chief, TXF News
- Clarissa Dann, Editorial Director, Deutsche Bank AG