Daniel Yerguin is one of the leaders in energy thinking in the world.
Many remember his book The Prize (world oil history from 1850 to 1990) for which he received the Pulitzer Prize for Literature.
In 2020, he again illuminated critical energy thinking with another book The New Map, Energy, Climate and the Clash of Nations, focused on the analysis of the energy transitions that the world has experienced in recent centuries and the objectives set in this century for go mutating from the fossil paradigm to a green paradigm where the participation of renewable or alternative energies such as nuclear grows.
Yergin is not a denier.
It assumes the human impact on the emission of greenhouse gases (the energy sector is responsible for 75% of CO2 emissions) and is concerned about the planetary consequences of climate change.
As an economist, he analyzes and promotes cooperative solutions to mitigate these emissions and facilitate the adaptation of those most affected based on global agreements (tax on emissions, green bond market, financing funds, etc.), but he does not hide his concern about certain proposals. voluntarists who imagine disruptive scenarios in the global energy matrix that he considers unfeasible and precursors of future crises.
On January 23, he published a note for Project Syndicate, which he titled "The energy transition faces reality."
There he once again recalls the sui generis nature of the current energy transition from fossil fuels to renewable energies compared to the historical background of other energy transitions.
The previous ones, he highlights -such as the one from wood to fossils, or from coal to oil-, were founded on technology and the economic advantage of change, while he sees the current transition as motorized and dependent on public policies.
The previous ones generated long-standing cumulative processes (around a century), while the current one poses disruptive processes of a quarter of a century.
Remember that coal was only displaced by oil as the first source of energy in the world matrix in 1960, but that coal mines were not closed;
exploitation was concentrated in the most productive, and, in fact, the world currently uses three times more coal than the world then, and in 2022 the production and consumption of coal reached a historical record.
It is true that Russia's invasion of Ukraine has once again put energy security at the top of the world agenda, with the geopolitical consequences that this implies (accessible, safe and cheap supply).
But even before the war, the most developed countries, the ones most responsible for the stock of greenhouse gases (GHG), were indifferent in their environmental demands to the needs of energy transitions in the developing world (today the most responsible for the flow of GHG).
In many emerging countries, "clean energy" means replacing firewood and dung with a bottle of liquefied gas.
The Road Map brings realism and orientation to the public policies that should guide the energy transition in different countries.
It is not about replacing “drills” with “excavators”, ironically Yerguin alludes to the exponential growth that the demands for certain critical minerals such as copper, cobalt, lithium, rare earths, etc., will have if the green scenario is to be accelerated .
If these mineral demands are not met (and his research highlights the foreseeable obstacles in the way), everything could lead to an energy supply shock with a strong negative impact on the world economy and on the policies that promote the transition.
A critical reading of Yerguin's analysis is necessary in an Argentina that has energy trapped in the short term, with massive power cuts that put the sector on the front page of the newspapers, and with the hidden face of a system of financed subsidies with issuance, which distorts the allocation of resources, discourages investment and hits the public and external accounts.
If the country returns to economic normality and institutional predictability, the energy sector has immense potential to offer in a long-term development strategy.
It has oil, it has gas, it has renewable energies (wind, solar, biomass) without ruling out the role it can play in a potential world market for modular nuclear reactors (SMR).
In this long-term strategy, it is key to resolve the dilemma between a horizon of more intensive use of fossil resources, vis à vis the more accelerated incorporation of renewable energies.
Of course, we will have to take into account our relative wealth, the window of opportunity opened by the geopolitical impact of the war in Europe, and the evolution of energy transition trends in the world.
It is about deciding between a long-term scenario that maximizes the exploitation of resources at a minimum cost in a gradual transition, or opting for an accelerated decarbonization scenario that allows us to converge to the neutral emissions that many States have committed to by 2050. (net zero emissions).
The incentives will be set by public policies (prices, tariffs, carbon taxes) and the investments will be mostly private, but hypotheses must be tested, results, feasibility and consequences analyzed to solve the dilemma by selecting the option that is most convenient for articulate a long-term energy plan, which Argentina owes itself.
Daniel Montamat is former Secretary of Energy and former president of YPF