The "green" 20s: a decade to transform the world

These are the years of energy change: the energy transition is an unstoppable process because we do not have a planet B, and although the economy will still need fossil fuels for a while, the advance of renewable energies and sustainable mobility will come sooner than we expect.

Miguel Ángel García Vega

All life is a process of change. The hands of the future will be turned by renewable energies. No one doubts it. The war in Ukraine has highlighted the importance of energy as a key factor in the economy and the need to invest in sources that guarantee security and independence from third countries. Germany is preparing new legislation to ensure energy independence from Russian gas. By 2035, all of its consumption must be renewable, so it will increase its investments in solar panels and onshore wind power. Green hydrogen is also presented as the balm of Fierabras to strengthen energy autonomy on the old continent. 

"Truly, we are walking into a new world. Not because it brings us a new vision, but because it pushes us into a different reality," reflects Giles Alston, North America expert at the consulting firm Oxford Analytica. This different geography also brings the echoes of a new energetic reading. A few years of cohabitation. "In the short and medium term, fossil fuels will be essential," ventured the analyst. "But the time when the balance shifts away from oil, gas, and coal will come faster than we think today." The transition has begun its countdown. Just look at the numbers on the dial. At the end of the first quarter of this year $2 trillion were invested in ESG (environmental, social and corporate governance) funds spread across 3,500 different products. Today, the major funds already require a strong commitment to the environmental and sustainable universe, especially from the largest organizations.

Behind it does not rise a horizon of junk but the look of a different landscape. The British investing group ShareAction, for example, has influenced HSBC bank to commit to eliminating its carbon financing in the European Union and the OECD (the organization representing the world's richest countries) by 2030. "The new activists aren't just trying to save the world; they're also trying to save their own wallets on a planet where regulators are forcing green compliance," stated Gillian Tett, editor of the Financial Times in the United States. The most diligent oil companies have already taken steps to make this transition. "It is inconceivable, especially in this new geopolitical situation, to reset the fossil meter to zero. We need hydrocarbons (proven crude oil reserves are 1.7 trillion barrels, enough to fill 263,000 Empire State Buildings) in the medium and short term. However, companies that do not have the green transformation in place will be penalized by society and the markets," predicted Emilio Ontiveros, President of Analistas Financieros Internacionales (AFI). Andrew Oxlade, head of content at the private bank Schroders, warned: "The oil industry is facing a paradigm shift." It will not be easy. For now, 94% of the fuel used in transportation is fossil fuel, says Antonio Turiel, researcher at the Institute of Marine Sciences of the CSIC (Spanish National Research Council). "For me, the big concern is focused on the shortage of raw materials. I'm talking about plastic, aluminum, copper, etc. We are experiencing it. We will have to promote saving and recycling systems," warns the expert.

Being 'green' is complicated, but it is the only way. There is no other way. Deutsche Bank has made a discovery that illuminates that complication. Most of the raw materials needed for the energy transition are in countries with high biodiversity. Two cases: Brazil has 24% of the world's graphene, 15% of manganese, 23% of iron ore, and 5% of aluminum, while Chile has 58% of lithium and 29% of copper. It will have to be extracted in a way that causes the least possible damage to the environment. It is the beginning: obtaining without destroying.

Most of the raw materials needed for the energy transition are in countries with high biodiversity

You only need look at the managers of hedge funds to feel all the iridescence of the beginning of this new world. In their chairs sit experts in activism, ecology, technology, venture capital. Skills that until recently were unimaginable. An environmentalist in a hedge fund? A few months ago it sounded as strange as Mozart played by a hard rock band. But it is the score of a transformation. "Our favorite renewable stocks are companies in transition from the fossil world to the sustainable future," confirmed Xavier Chollet, manager of the Pictet Clean Energy fund. Words that do not bring echoes of 1920s jazz, but of one of America's "founding fathers," Benjamin Franklin (1706-1790): "Do well by doing good." There should be no gap between socially profitable and ethically sound business practices and business performance. "Our research suggests," proposed Enza Iannopollo, an analyst at U.S. consulting firm Forrester Research, "that consumers are increasingly choosing the companies they engage with based on their corporate commitments and values. Sixty-five percent, for example, of U.S. consumers do not buy a brand because it has remained silent on an issue it had an obligation to address." The spontaneous exit of countless Western companies from Russia announces that there are red lines that no one is willing to cross.

It is, above all, the younger generations that are driving this change. A survey by investment bank Morgan Stanley revealed that 86% of millennials are interested in socially responsible investing. They have a deep awareness of the climate emergency. It is the land they will inherit. And no one wants to walk in a valley of ashes. The devastating effects of runaway global warming, said Sue Noffke, head of UK equities at Schroders, have been made clear in the landmark Intergovernmental Panel on Climate Change (IPCC) report published last August. UN Secretary-General António Guterres described the findings of the document as a "code red for humanity." Everyone wants a decarbonized economy by 2050. But it takes time, huge investments, and technologies that are not yet available. How do you electrify an airplane, a heavy ship, or a truck, when the necessary batteries alone would take up half of its space. "It's all very well to give up cars, fly less, recycle, etc., but we're going to need engineers, agronomists, and physicists to put the resources in place to solve the big problems. And this can only be achieved by investing in education and training and in the development of collective intelligence," French sociologist Gilles Lipovetsky recently commented. It is sending a message in a bottle to all the countries of the world, especially the more developed ones.

Green hydrogen (produced from renewable energies) is among the cutting-edge technologies floating in the energy environment. The National Integrated Energy and Climate Plan, prepared by the government, gives a lot of space to this molecule. "Between now and 2030 we should have four gigawatts installed and 100 to 200 ‘hydrogenerators.’ Currently there are [only] three," describes Emilio Nieto, director of the National Hydrogen Center (CNH2). He adds: "But Spain, driven by the Next Generation Funds, is in a position to be both a producer and an exporter. Create a hub. And compete out there. Cepsa's CEO, Maarten Wetselaar stressed this idea in the presentation of its new strategic plan 2030 "Spain can become the green hydrogen hub for the rest of Europe; our company will deploy 2 GW to lead this technology throughout this decade". You must first adjust costs. A kilo of gray hydrogen costs one euro and green hydrogen costs about five. As the numbers balance out, renewables and biofuels will continue to advance.

The blades rotate downwind. Wham, wham, wham, wham, wham, wham, wham… A recent study by the International Energy Agency (IEA) forecasts four times more wind energy in 2030 than in 2020, 18 times more electric vehicles, and 30 million jobs created thanks to the energy transition. The roadmap is set by the United Nations 2030 Agenda for Sustainable Development. An international map. U.S. President Biden has pledged to reduce his country's carbon emissions between 50% and 52%. He has put nearly three trillion dollars on the table. In the short term, it will approve measures to counteract the rise in fuel prices in the face of the energy crisis generated by the conflict in Ukraine, including allowing the sale E15 fuel, which has a higher percentage of biofuel and is produced in the USA, this summer. The Biden administration also plans to invest $700 million in a Biofuel Producers Program, $5.6 million in renewable energy infrastructure, and another $100 million in biofuel infrastructure.

Four times more wind energy in 2030 than in 2020, 18 times more electric vehicles, and 30 million jobs created thanks to the energy transition

Europe has 750 billion euros from the now famous New Generation Funds. But the world's seven richest countries (G-7) agreed in June to halve emissions that year. It is a shared, international path for all of us, so as not to lose our Earth. We will see if Russia is finally expelled from that organization. "One of the objectives of the 2030 Agenda is the sustainable management of aquifers, ecosystems, and water reserves," Virginijus Sinkevicius, European Commissioner for the Environment, Oceans and Fisheries, explained by email. It is possible to care for water and go much further. Just by mobilizing 1% of all the wealth of the world's families (according to various studies it ranges between 230 and 400 trillion dollars) would be enough to provide 2.5 trillion (about 2.1 trillion euros), the investment needed if the Sustainable Development Goals (SDGs) are to be met. 

But energy is only part of that transition. Its current goes further. It generates vibrations that are multiplied by an infinite number of sectors. "The pandemic brought a major acceleration of trends that already existed in consumption," noted Mauro Guillén, sociologist and director of the Cambridge University Business School. And he clarified: "The use of digital platforms had already revolutionized that sector before COVID-19. Now these digital spaces are used by the majority of the population." The education professional imagines this new country 2.0 or 3.0. Hybrid models are being used in the workplace (mixing face-to-face and remote, just as there is a desire to separate work and personal life) and investment has shifted—like a landslide—towards large platforms. "In principle, these changes could make the economy more sustainable. But it is still too early to calculate all the effects. The important thing is that we are less wasteful in terms of consumers and that governments agree to move towards greater sustainability," he argued. There are traces, tests, proposals. The famous 15-minute city spreads out. The idea of having the essential spaces for recreation, work, health and commerce within reach in that time, whether on foot, bicycle, or public transport. The neighborhood as city; the neighborhood as a world. "We need to go include proximity if we want to breathe new life into our democracy, so that elected representatives do not simply feel that they are depositaries of what a political party has asked them to say, but that they are truly custodians of the trust that citizens have delegated to them," observed French-Colombian urban planner Carlos Moreno, ideologist of this 'new' city. 

The new 20s are here. It is a time of change. Not revolution. Fossil fuels will lose ground as technology makes other energy solutions feasible. The planet will be greener and more sustainable. That is the destiny of this small house of blue and earth located on the shore of a cosmic ocean.

Miguel Ángel García Vega
He has been writing for EL PAÍS for some 25 years, currently for Cultura, Negocios, El País Semanal, Retina, Suplementos Especiales, and Ideas. His texts have been republished by La Nación (Argentina), La Tercera (Chile) or Le Monde (France). He has received, among others, the AECOC, Accenture, Antonio Moreno Espejo (CNMV) and Ciudad de Badajoz awards.