In our ESG and Climate report yesterday we focused on sustainable aviation fuel, discussing a recent report from Shell and Deloitte, which shows some of the challenges with getting the aerospace industry to net zero. The report focused on the need for sustainable aviation fuel now, and in large volumes, as this is the only thread that the industry can pull on today – synthetic fuels (from CO2 and hydrogen will be uneconomic for decades, and neither electric powered or hydrogen-powered aircraft are going to be a solution before 2050). The bp, Delta, and Boeing linked headline is one of many that we expect to see as the need for near-term progress is urgent, given the scale of investment required. See yesterday’s report for more detail.
The exhibit below is another stark reminder that where we are relying on nature for power, we lose control over availability. This does not mean that the pursuit of renewable power is wrong, it just means that we will need much more capacity than the fossil fuel capacity we are replacing and that while we build that out we should not be too quick to dismiss fossil fuels. There is a story today (see here) that Drax in the UK is willing to delay its planned coal-based power closures because of the acute power shortages in the UK – this is likely a smart move. We are very much of the view that fossil fuel-based power plants are needed for the longer-term, at least as swing capacity and it is noteworthy that a couple of power generators are in the Houston CCS consortium – the idea being to lower the carbon footprint of existing natural gas-fired units so that they can operate for longer. This seems like a better risk-adjusted approach. See our recent Sunday report.
Source: Today In Energy - EIA, September 2021
