Commodity Weekly (February 22, 2021)

When viewed through the lens of time, we believe that this will be the week that the slavish belief that the energy transition to net zero means the progressive removal of oil and gas was demolished, and proper debate could start. The Polar Vortex has not only brought low temperatures, but also highlighted a range of systemic issues.

To our mind, that the ambient temperatures are well below design parameters and lead to the shutdown of the oil & gas infrastructure is irrelevant, as it merely emphasised the dystopian future that awaits any nation or state that fails to address all scenarios when setting energy policy. What this needs to tell all politicians, activists and the public equally is that the myopic pursuit of the net zero by eliminating oil & gas is unachievable if you want resilient energy infrastructure.

The question is, will it? Or will there be the usual litany of excuses as to why what has happened in the US’ southern states isn't applicable more widely?

Texas is perhaps a state to most likely to adopt a more prosaic approach to the adoption of renewables amongst all the US states and is therefore more likely to have a more diverse energy base. That it has suffered in the way that it has is evidence of two things: (i) that the “1 in 100 year” design principle continues be important; and (ii) the scope of adoption of renewables into state-wide networks needs widened to include real-world energy infrastructure and usage.

Texas’ troubles need to be a lesson to all energy regulators and planners. If Texas’ network has suffered as a result of its lack of resilience, then the remaining states need to ensure that their future energy plans have an appropriate mix of energy sources, and that energy mix meets the demands of the end users, not just the eco-warriors.