A year ago, at Houston’s CERAWeek in Texas – a “Davos” of the oil and energy sector organized by S&P Global, the parent company of rating agency Standard & Poor’s – a feeling of civil war was spreading.
Following the invasion of Ukraine, oil companies were taking their revenge against the Democratic administration of United States President Joe Biden, which had fought them in the name of the combat against global warming. Suddenly, investments were needed to lower the price of gas and help the Europeans. “It’s a shame it took the Ukrainian crisis for the Biden administration to wake up,” said at the time Sean Strawbridge, the chief executive of the oil port of Corpus Christi, blaming it for “putting ideology over pragmatism.” A year later, the Texan turned conciliatory: “We’re on a much better path, the administration has finally recognized the value of the energy sector.”
In the meantime, the US Congress voted for $369 billion in all-out subsidies for the energy transition (batteries, hydrogen, wind, solar, carbon capture, insulation, power grid, etc.) as part of the now notorious Inflation Reduction Act ( IRA). Everyone has made peace.
In the name of the environment, Biden is also asking oil companies to produce more to lower the price of gas, which could otherwise cost him his re-election. The US is united in imposing an American vision of energy transition, that is to say, on the strength of its endless gas resources and its technological advances.
Forget about the Europeans who are so poor in energy, whose competitiveness is undermined and who suffer from the restrictive environmental standards voted in Brussels such as the end of internal combustion engines. “From a European’s perspective, you’re lucky,” said Josu Jon Imaz, CEO of Spanish oil company Repsol, on the CERAWeek’s podium on Monday, the first day of the event. “What you have here is a carrot. What we have in Europe to accelerate the energy transition is a stick.”
A lesson to the Europeans
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The Americans have taken the lead and the Europeans, furious at US subsidies, are viewed as jealous and somewhat incoherent. Having declared for years the US inaction in the fight against global warming, they are now criticizing the way they proceed. “You should do the same thing,” said an excited Jennifer Granholm, the US secretary of energy, to the Europeans. The second largest emitter in the world, the US, which has reduced its emissions by more than 15% since 2005, now wants to become best-in-class.
“We are now the leader in the energy transition [thanks to the IRA]. We’re going to have the lowest-carbon economy on the planet,” said Chris Romer, co-founder of Project Canary, a methane and CO2 emissions measurement company.
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