When I wrote The End is Near a few weeks ago, the narrative war between Israel-US and Iran hadn't turned kinetic. Negotiations in Geneva between Donald Trump's representatives and the Iranian government seemed hopeful. A “breakthrough” was announced in which Iran offered major concessions [q.v.]. Accordingly, The End is Near talks about e-fuels and their approaching feasibility in the context of a changing, but still mostly “business as usual”, world order.Â
Two days later, it was raining bombs and missiles in the Middle East. Trump had ignored the Iranian offer, and operations “Epic Fury” (US) and “Roaring Lion” (Israel) commenced. Suddenly, we found ourselves living in a very different world. That world bears little resemblance to the “mostly business as usual” world that I’d anticipated. In this sudden new world, Iran has effectively closed the Straits of Hormuz, and there is no immediate prospect of reopening it to shipping from any nation allied with the US or Israel. A number I’ve hheard is 22% of world oil supplies at least temporarily stranded. The price of oil has surged, despite unprecedented releases from the strategic reserves of the US and other nations. That can’t last. Once those releases dry up, prices will skyrocket. The knock-on effects promise economic impact on the scale of the 2008 recession – and possibly much worse.
A turn to synthetic e-fuels to replace fossil fuels cannot, at this point, do anything to avert the coming economic crash. It’s too late. But the current situation certainly punctuates the strategic logic arguing for moving away from fossil fuels. Clean Technica just published an article (here) noting that Pakistan is facing less disruption from the loss of LNG shipments than many other gas-importing nations. Surging deployment of PV capacity over the last two years has reduced the amount of gas Pakistan needs for power generation. It hasn’t eliminated the need for imported gas altogether, but Pakistan holds long term contracts for deliveries that now exceed its actual requirements. It can shrug off declarations of force majeure for a percentage of its contracted imports without being forced into a desperate scramble on the spot markets.
A buildout of solar PV capacity is of course only one part of the first step on the path to moving away from fossil fuels. Another part is installation of the storage battery capacity required to spread the output from the PV arrays over a full 24 hours. That will reduce or eliminate the need for natural gas for powering the nation’s electrical infrastructure. It will also enable cost-efficient production of the green hydrogen that is foundational for production of carbon-neutral e-fuels.
In the world as it existed before February 28, these steps would have been spread out over a period of 20 years or more, ramping in an orderly manner from existing pilot operations to full scale commercial production. Steady growth would have allowed time to identify and work out the kinks in commercial production, and to fold in newer and more efficient technologies in plants deployed later in the build-up. Steady growth leverages Wright’s law of the industrial learning curve. A forced rush to implement wastes capital. It may be necessary under wartime conditions, when the normal rules of business economics are suspended. But we’re not in that type of war yet, are we?
Oh.
Those who attacked Iran certainly did not expect matters to develop into that sort of war. But it did. Now we’re in it, and no offramp is in sight. I don’t think anyone knows how long the war might continue, or how it will end. Energy Central is not the place to take up those issues, but I think it’s clear that anyone expecting a quick restoration of the energy sector to the status quo ante will be sorely disappointed. Iran has demonstrated that it has the missile capability to strike at will across the middle east, and to maintain that capability in the face of relentless bombing campaigns by the US and Israel. In all, some 40% of the world’s oil and gas production appears to be at risk, along with potentially 60 to 70% of the region’s freshwater supplies. If things go that way, the disruption of oil supplies won't just be temporary. The wells and refineries won't just be stranded, waiting for the Straits of Hormuz to reopen. They will be destroyed. It will take years to rebuild them.
I'm as eager as anyone to see the world move away from fossil fuels, but this is not a way I would ever have wanted it to happen. The collateral damage is obscene. I dearly hope matters won’t come to that, but with both sides mounting ever higher on the escalation ladder of strike and retaliation, I fear for the future. The new millennium has so far proven to be a dismal time for common sense.