WASHINGTON. China is footing the bill for the war in Ukraine, the cap price is working and the energy transition is moving forward in strides. David Turk, American Deputy Secretary of Energy, in an interview with some foreign media including La Stampa, relaunched the need for partnership with European allies to continue to face the energy challenges – diversification of sources, supply chain, green transition – which the international context poses and that the war in Ukraine has complicated. Already at the time of Covid, there had been an increase in prices in the face of a difficulty in the supply chain, highlighted the exponent of the Biden Administration. The Russian invasion exacerbated the situation and had repercussions all over the world by pushing prices up. Finally, a third factor of volatility is climate change and the consequences with which the international community must interact: drought, floods, extreme events affecting infrastructures and more. An example underlined by Turk is what happened last year in Pakistan, where two-thirds of the territory remained under water for a long time due to the effects of climate change.
These are events that prompted the United States and its European allies to follow a double strategy: the first was to diversify the sources of supply and to keep the prices of gas and crude oil within acceptable limits by increasing the availability of energy. Last year, for example, the United States increased the export of liquefied natural gas to European countries and – Turk recalled – Biden ordered the use of strategic reserves to bridge the gap between global energy supply and demand; a second level which is defined as long-term, is instead linked to the development of alternative sources and therefore the strengthening of the energy transition. Turk highlighted how the demand, for example, for solar panels and material for the production of green energy has increased.
The Biden administration passed the IRA (Inflation Reduction Act). It contains investments ten times greater than ever allocated to green and renewable energy so that the tax incentives allocated, $369 billion at a minimum, could even be higher if more consumers and the industrial world reap the benefits of the law. The Department of Energy alone has the willingness to direct $100 billion for programs such as the development of hydrogen hubs, the construction of geothermal stations, wind energy accumulators, which according to Turk will have a flywheel effect not only in the United States but also in Asia and Europe.
2022, in Turk’s opinion, “will be a pivotal” year. “So I think we’ll look at it in a few decades”, the year that marked a determined turn towards clean energy. It’s not just the investment numbers that prove it, but also the political will shown by the countries: “Many of these – said Turk – see an advantage in the economic security and economic benefits of relying on clean energy. Europe has taken political and business-related decisions whose positive effects will be felt in 2024, or even later”. And this is the signal, according to the senior administration official, of a change of perspective and mentality.
If Europe, albeit late, underlined in Washington, has managed to detach itself from dependence on Russian energy, however the journey is not yet complete: “We are still in the forest”, explains Turk who, however, underlines how the price cap imposed on Moscow’s crude to reduce its revenues to finance the conflict is working. Both because Putin lacks money and because the price of energy is kept under control. On the other hand, he concludes that the one who is not gaining from this situation – at least in terms of energy – is China. Russian gas pays at lower prices than in the past but still high and the drag on other items of the economy – production and supply chain – of the war in Ukraine is strong.