The world is embracing the energy revolution; shale gas could disrupt the oil and gas market

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The history of human development is a history of energy transformation. Whether it was the first energy “technological revolution” by humans ten thousand years ago—the invention of fire by rubbing wood together—or the emergence of the steam engine and the extensive use of coal during the First and Second Industrial Revolutions, all these developments accelerated the pace at which humans improved their productivity. They have become a chapter in history that must never be forgotten. From a productivity standpoint, what we need is not “remembrance”, but change—particularly another transformation in the energy sector. Against the backdrop of global warming, efforts by various countries to reduce energy consumption and emissions, and the push for a low-carbon economy, the hopes for a new round of energy revolution seem to lie in non-traditional and renewable energy sources. Globally speaking, has the low-carbon energy revolution truly begun? Are countries around the world really prepared to embrace this revolution? What role should China play in this low-carbon revolution? Moreover, what impact will this potential revolution have on the global political landscape? Trend: The world is embracing the energy revolution. The focus of this new round of energy revolution may lie in non-traditional energy sources. Perhaps global consumers need an energy revolution more than ever before. An authoritative report by the International Energy Agency shows that in the coming years, global demand for oil will grow at a rate of 1% per year, rising from 85 million barrels per day in 2008 to 105 million barrels per day by 2030. “If this continues, the global average temperature will rise by 6 degrees Celsius within 20 years, causing irreparable damage to the environment. ”The aforementioned report states, “The international community can no longer allow such things to continue.” If countries embark on an ‘energy revolution’ from now on, it is not impossible to curb climate change. ”The report also states that the most important thing at present is to invest heavily in the development of green transportation, housing, power plants, and biofuels. Coincidentally. On October 4 last year, UNIDO Director-General Yumkella said in Vienna that global climate change is a huge problem facing humanity. “Without an energy revolution, it will be impossible to halt the trend of climate change.” To this end, Yumkella suggests reducing the use of traditional energy sources and developing new types of environmentally clean energy sources, such as renewable energy, in order to prevent climate change. It is believed that revolutions are driven by \"internal needs\" such as improving labor productivity and promoting industry development. According to \"The Energy Revolution (Changing the 21st Century)\", the discovery and development of coal mines in the Channel region of France and the Ruhr area of Germany around 1850 led to a significant increase in coal production in these countries. \"A large number of steam engines came into use, which facilitated rapid progress in transportation, steel production, and electricity generation.\" The entire world economy and society experienced successive leaps in development, and the world thus entered a new era altogether.” However, experts believe that the focus of the new energy revolution is likely to lie on non-traditional energy sources. On the one hand, as traditional energy sources diminish day by day, some forms of non-traditional energy, such as solar and wind power, can be utilized indefinitely” ； On the other hand, by developing non-traditional energy sources, countries can improve their new energy industry chains, creating a range of employment opportunities from upstream to downstream activities, and even boosting their economies ； Furthermore, the emergence of alternative energy sources can reduce costs related to environmental protection and other aspects, thereby improving the operational efficiency of enterprises as well as the entire **. When it comes to choosing what model China should adopt and what path to take for the development of non-conventional energy, we must follow the market. Rather than exploring in unknown areas, it is better to conduct exploration and development in fields where there are already successful precedents. In fact, countries have already formulated plans for the development of non-conventional energy. “Europe hopes to reduce the use of fossil fuels, and they have found that not only coal, but all fossil fuels contribute to air pollution and the formation of hazy weather. ”James O Connell, senior global coal editor at Platts Energy Solutions, told reporters that as a result, the trend in Europe is to increase the use of renewable energy. Reportedly, the scope of renewable energy is quite broad, encompassing solar energy, hydropower, wind power, biomass energy, wave energy, tidal energy, ocean thermal energy, and so on. The EU had previously set a goal to achieve 20% renewable energy in its total energy consumption by 2020. Japan demonstrates a \"passion for the ocean.\" On March 12 this year, Japan’s Ministry of Economy, Trade and Industry announced that an experimental team led by the Japan Petroleum Exploration Co., Ltd. had extracted methane from a layer of combustible ice in the deep sea near Aichi Prefecture, thus becoming “the first to master the technology for extracting combustible ice from the seabed”. Just a day later, the Japan Oil, Gas and Metals National Corporation announced that it aimed to put methane clathrate technology into use by March 2019. Apart from methane hydrates, Japan, which lacks resources such as oil and natural gas, has also participated in the development and construction of non-traditional energy sectors through capital investment and other means, thereby acquiring its own share of resources and reducing its reliance on external sources. The United States, the world’s largest energy consumer, has demonstrated its interest in non-conventional energy sources through the “shale gas revolution”. Data shows that the \"shale gas revolution\" that began in 2005 not only helped the United States gradually reduce its dependence on oil-producing countries such as those in the Middle East, but also secured jobs in the country. “Whether it’s shale gas developed in the United States or methane hydrate exploited in Japan, China can give it a try. ”Regarding these three different approaches to the development of non-traditional energy sources, Sun Lijian, deputy dean of the School of Economics at Fudan University, told reporters that what China should consider is which \"standard\" to follow – that is, whether to develop shale gas and methane clathrates or to continue focusing on the development of renewable energy sources such as solar energy. He believes that, drawing on China’s previous development experience, continuing down the path of nuclear and wind energy is a good choice. However, it is necessary to take into account the “real needs of 1.3 billion people” in order to refine the development strategies for the field of non-traditional energy in the next phase. Lin Boqiang, director of the China Energy Economics Research Center at Xiamen University, told reporters that the choice of path for developing non-traditional energy sources should be guided by market trends; rather than exploring unknown areas, it is better to conduct research and development in fields where there are existing successful examples. For example, the model of methane hydrate exploitation that has not even progressed to commercial development does not conform to market logic or the ideas of some companies. “Given the current situation, China has made good progress in the field of non-traditional energy sources, particularly wind and solar power; it holds the highest installed capacity for wind power in the world. ”Lin Boqiang said. James O Connell predicted to journalists that in the coming years, the share of hydropower and wind power in China’s total power generation capacity will increase rapidly, showing a strong trend of growth. Barriers include the lack of mastery over the core technologies related to shale gas. However, given China’s actual situation, developing alternative energy sources is not an easy task, and many things cannot be done just by wanting to do them. One issue is that ordinary Chinese consumers have not yet developed the mindset to make widespread use of alternative energy sources. For example, in the automobile market, although the development of new energy vehicles has always been emphasized, among the rapidly increasing total number of vehicles in use, those powered by gasoline or diesel still account for a large proportion. At the same time, in China’s power generation structure, power plants that use thermal coal account for the majority of the market share. Automobile exhaust emissions and coal pollution are considered to be among the main causes of foggy days in China. “In China, change or reform never happens overnight or can be achieved easily. ”Observers have noted, “In China’s large-scale promotion of non-traditional energy sources, how to break up interest groups and related interest networks is an issue that must be addressed.” ” So, is China not yet ready to embrace this low-carbon energy transition? Some experts told reporters that in terms of the overall direction of energy conservation and emission reduction, as well as efforts to reduce fine particulate matter (PM2.5), the authorities have never said “no.” In fact, policies have been put in place to support the development of non-traditional energy sources. For example, in the development of new energy vehicles, the Ministry of Science and Technology has expressed its support on multiple occasions, and other departments have also introduced favorable measures in terms of taxes and fees, in an effort to gain greater recognition from the market. As for shale gas, the Ministry of Land and Resources has even classified it as a separate type of mineral resource, and it enjoys support from other official policies. “China has outlined the direction for transformation, and also mentioned the goals of improving the energy consumption structure and reducing the use of fossil fuels. ”Some argue that China will not give up on the low-carbon energy revolution. But setting aside macroeconomic factors, the situation in China regarding the “supporting” infrastructure related to non-traditional energy sources is not optimistic at present. A typical example is shale gas development. There are doubts about whether China possesses the necessary technical capabilities and strength to develop shale gas resources in conditions that are more complex than those in the United States. More importantly, is it appropriate for China to pursue large-scale shale gas development at this stage? As a lesson from past experiences, regarding Russia’s plans to develop shale oil and gas on a large scale, foreign media analysts argue that while shale oil development has been successful in the United States, \"due to a number of factors, this revolution cannot be repeated in other parts of the world.\" An appropriate combination of factors such as geological conditions, free regulation, private ownership of underground resources, low-interest loans, advanced technologies, and well-developed infrastructure exists only in North America. “China has a certain technical foundation, but it has not truly mastered the core key technology: fracturing technology. ”Zhang Dawei, director of the Mineral Resources Reserve Evaluation Center at the Ministry of Land and Resources, once said. In his view, the biggest challenge is the institutional issue. “Although the market has been opened up to allow various types of investors to enter, **after shale gas was classified as a separate mineral resource, the corresponding institutional framework and overall strategic planning have not been established, which could ultimately dampen companies’ enthusiasm. ”He said that water resource issues arise during the development of shale gas, and the cooperation of water resources departments is required ； It involves environmental protection and land use issues, thus requiring approval from environmental protection and land administration authorities ； Issues related to gas transmission pipelines and third-party access require close cooperation among multiple departments. Sun Lijian said outright that China is currently focusing on developing sources of renewable energy and striving to overcome the technical challenges associated with their production, including those related to transmission and storage. “Although the disadvantages of these new energy sources are not obvious, technology and market demand still pose barriers when it comes to their actual use in production and consumption processes.” In Lin Boqiang’s view, when it comes to developing non-traditional energy sources, the obstacles posed by the market cannot be ignored. “Solar photovoltaics is an industry, yet there is no demand for it, and it is facing the crisis of trade wars. In the future development of non-traditional energy sources, and even in carrying out an energy revolution, we must not overlook actual market demand; moreover, we must avoid overcapacity and redundant construction.” Shale gas is on its way to disrupting the oil and gas industry; China doesn’t need to follow the path taken by the United States, nor does it need to imitate the energy \"standards\" established by the U.S. Former U.S. Secretary of State Kissinger once said, \"Whoever controls oil controls everything.\" ”In the realm of alternative or low-carbon energy sources, those who seize the initiative first are likely to once again change, or even overthrow, the traditional landscape of energy policies. Sun Lijian analyzed that, in addition to its own abundant resources, the United States develops shale gas mainly in order to compete differently with Europe and even undermine it. It seems that the United States has achieved its goal. “Back then, European photovoltaic technology, as a form of new energy, managed to make its way through numerous challenges, only to be defeated by various tactics employed by the United States. The U.S. increased the supply of traditional energy sources, which led to a sharp drop in oil prices and a decrease in demand for new energy technologies, resulting in severe overcapacity. In the end, this had a direct impact on Europe’s photovoltaic industry, rendering all of Europe’s efforts over more than 20 years futile. Meanwhile, China, which had followed Europe’s lead in earlier stages, also became a ‘victim’ of the new energy sector along with Europe. ”Sun Lijian believes that from this perspective, there is no need for China to follow the U.S. development approach, nor is there any need to imitate the energy “benchmarks” established by the United States. “The shale gas technology revolution in the United States is transforming the entire oil and gas market, and all Russian oil and gas companies must take measures in response. ”Russian President Putin, who had once been highly critical of U.S. shale gas, has also changed his view on the shale gas revolution. Data shows that in recent years, U.S. shale gas production has experienced explosive growth at an annual rate of over 40%. Fatih Birol, an economist at the International Energy Agency (IEA), once predicted that by 2015 the United States would surpass Russia by a large margin to become the world’s largest producer of natural gas ； By 2017, it became the world’s largest oil producer. This will not only undermine Russia’s energy interests but is also likely to change the current situation of over-reliance on Middle Eastern oil resources. A secret study by the German think tank BND (the headquarters of the German Federal Intelligence Service) shows that by 2020, the United States could shift from being the world’s largest energy importer to an oil and gas exporter, thereby reducing its dependence on the Middle East and allowing it to formulate policies more flexibly. Pattern: The global political landscape may change. In an era of economic globalization, solving energy issues inevitably requires international cooperation. It has been reported that in the future competition for global energy pricing power, countries such as China and Japan will be forced to formulate their import and export policies in line with the \"U.S. energy agenda\". Subsequently, the United States may pressure OPEC to become the dominant force in the global energy sector, using supply and demand factors as well as its sophisticated financial tactics to control the fluctuations in the prices of global crude oil, both in the futures and spot markets. “Under these circumstances, China should avoid following the U.S. energy ‘pace’ and instead formulate plans that suit its own strategies. ”Lin Boqiang said that, first and foremost, wind energy projects should be promoted, and China’s wind power policies should be optimized to facilitate the smooth grid integration of wind-generated electricity ； Secondly, to develop solar energy: although there may be setbacks at present, in the long run, a positive trend has taken shape, and it truly embodies the characteristics of being “green” and “low-carbon” ； Once again, as a low-carbon energy source, nuclear power is the most promising option. Despite various controversies surrounding it, in the new round of energy revolution, and provided that safety is ensured, nuclear power will play the greatest role. There are also views that energy has always been an international issue. Zeng Peiyan, president of the China Center for International Economic Exchanges, wrote in the media that in an era of economic globalization, resolving energy issues necessarily requires international cooperation. Zeng Peiyan suggested that countries should, based on the principle that “there is only one Earth for humanity,” re-examine and reconstruct the global energy system. This includes fostering a new concept of energy security characterized by mutual benefit and cooperation, diversified development, and coordinated safeguards ； Strengthen intellectual property protection to facilitate the transfer of advanced energy technologies ； Advocate for dialogue and exchange among energy exporting countries, consuming countries, and transit countries ； Establish a stable mechanism for the global energy and resource market ； Continuously promote the liberalization of energy trade and investment, etc. “With a more open attitude, China will strengthen international dialogue and exchanges in areas such as energy efficiency, energy conservation and environmental protection, energy management, and policies and regulations. It will also participate in improving international mechanisms for monitoring and responding to energy market issues, and deepen international cooperation in areas like information sharing, personnel training, and coordinated actions. ”Zeng Peiyan believed. (Source: China Economic Net)