Carbon capture is a transition technology that is poorly understood, yet it has the potential to change our transition materially. And it isn’t talked about enough.
The recent spike in natural gas prices has been nothing but a wake-up call for Britons, many continental Europeans, Brazilians and Japanese alike, who depend on the resource to firm demand and supply in their energy grids. While there is talk of power price decoupling from gas prices in the future, the biggest question will be, how long that will take. The pundits and speculators are out with views, yet the truth is, nobody really knows.
Coal plants in Germany remain significantly more profitable than gas plants, even as the benchmark intraday price for the dirtier fuel rises to its highest level in a month and carbon trades near a record above 70 euros. The spark-and-dark chart for the first quarter of next year, estimating profitability for the different fuel types, shows coal margins above 80 euros and gas with negative margins.
According to the International Energy Agency (IEA), we need $4tn (£2.99tn) per year of new capital investment if we are to support the IEA’s Net Zero Emissions Targets in 2050.
Some believe Latin America to be in a good position, however, and it can benefit from the global economic recovery.
However, perverse though it may seem, it is the gas sector that is winning from an investment perspective and it could see further benefits as industry commentators expect the government to rethink their energy transition strategies.
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