State of Play: Where Are We Now?

Europe's energy transition has delivered record renewable deployment and significant emissions reductions, but a new wave of geopolitical instability is once again putting the resilience of the energy system to the test.

This episode launches the Plugged In Summer Series, where we'll be asking one overarching question throughout: is the energy transition slowing down, or speeding up? Across six episodes, we'll explore the market, policy and technology trends shaping the answer.

To kick off the series, we're joined by three of the sector's leading voices: Professor Jan Rosenow of the University of Oxford, one of Europe's foremost experts on energy policy and the energy transition; Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie and one of the industry's most respected market commentators; and Saul Kavonic, Head of Energy Research at MST Marquee, internationally recognised for his analysis of global energy markets and geopolitical risk.

Together, they explore how conflict, energy security and volatile gas markets are reshaping policy, investment and market dynamics across Europe. They discuss whether Europe has learned the lessons of previous energy crises and why politics, not technology, may now be the biggest barrier to progress.

This opening episode sets the scene for the rest of the series, asking a simple but critical question: can Europe's energy transition stay on course when the world around it becomes more unstable; and is this latest period of disruption ultimately slowing the transition down, or speeding it up?

#PluggedInPodcast #EnergyTransition #EnergySecurity #Geopolitics #GasMarkets #PowerMarkets #NetZero #EuropeanEnergy #Renewables #EnergyPolicy

Host:Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News

Guests: 

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie

Saul Kavonic -  Head of Energy Research, MST Marquee

Jan Rosenow - Professor of Energy and Climate Policy, University of Oxford 

Producer: Alexandra Carlon 

Editor: Alexandra Carlon

Transcript

Economics Behind Clean Energy

Jan Rosenow - Professor of Energy and Climate Policy, University of Oxford 0:00

I think the main constraint is around getting the economics right, getting the price signals right, and making it attractive for investors, for users.

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 0:11

When it comes to politicians this decade, you know, whether it's post-Ukraine war or now the Middle Eastern war, the responsibility for the government is to keep the lights on somehow.

Saul Kavonic - Head of Energy Research, MST Marquee 0:22

But the idea that current gas prices could double from their current levels, I think, is you know more than plausible. And particularly if there's no, you know, the straight opening remains slow or partial, um, may actually be quite likely by the end of the year.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 0:44

The road to decarbonisation looks increasingly complex amid geopolitical tensions, highly volatile gas and power prices, a renewed focus on energy security. So in this episode, we'll be exploring how global events are shaping Europe's energy policy and whether the energy transition can stay on course. I'm very pleased to be joined by Jan Rosenow, who's a professor of climate and energy at the University of Oxford. A warm welcome to Plugged In, Jan.

Jan Rosenow - Professor of Energy and Climate Policy, University of Oxford 1:13

Thanks for having me.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 1:14

I'd like to start off really by if we have a look across Europe, how on a scale of one to ten would you rate the current status of the energy transition?

Europe’s Transition Score And Gaps

Jan Rosenow - Professor of Energy and Climate Policy, University of Oxford 1:25

Well, if I look across Europe, I think we are certainly not at 10. There's still a very long way to go, but we are also certainly not at two or three. I would put us at somewhere around six or seven. Yeah, overall, I think we've made huge progress over the last 20 years. When you look at electricity, we're now in a situation where more than 70% of electricity is from non-fossil sources. Yeah, that was a lot more um just 10 years ago. So that's amazing in terms of the achievement of Europe's energy transition. Where we are lagging behind is in the transport sector, in the building sector, and in the industry sector, because there we're still using a lot of fossil fuels. We burn them, and that's where the opportunities for the next phase of the transition really lies is around electrification. But overall, I think we're we're actually doing relatively well. On a good path. There must be some regional variation here as well, or huge variation. I mean, if you look at um countries that have accelerated really fast, here, for example, well, Germany of course, even though there's still quite a bit of coal on the grid, but when you look at the share of renewables, you know, Germany had about 5% in the early 2000s, and then we're now looking at more than 50%, or pick Spain and the huge deployment you know of solar and wind or Portugal, Denmark is at more than 90% now when it comes to renewables. But then you also have countries that have not done quite as much, but even places like Poland that used to be 95% coal are now really you know speeding up and picking up the pace.

Tech Is Ready, Politics Is Not

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 3:05

And so looking ahead, Jan, what will determine whether Europe's transition accelerates, stalls, or becomes more fragmented? What are the key elements here to determine?

Jan Rosenow - Professor of Energy and Climate Policy, University of Oxford 3:18

I think technology is now at a such advanced stage where it's hard to see what else needs to happen to also make it work from a technology standpoint because we have you know storage, we now have cheap generation assets, we know how to manage the grid. Yeah, there are no insurmountable obstacles when it comes to technology, at least for the next five to ten years. You know, there's still work to be done for the harder to decarbonize parts of the economy. And then on the demand side, you know, heat pumps, electric vehicles, even industrial electrification, all of that is now available. I think the main constraint is around getting the economics right, getting the price signals right, and making it attractive for investors, for users to use clean electricity, clean energy. And then I think the hardest part is the politics. And that's where I think we have a lot of work to do, you know, as a society. Like what's the what's our what's our vision? Where do we want to be? Do we want to be more like China and electrify, use lots of renewables, we go into that direction, or are we trying to be more like the US, but then we don't have any you know oil and gas reserves in the same way that the US does. So I think we're a bit of stuck at the moment and we gotta find a way forward in terms of the politics.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 4:39

And the pendulum

Import Dependence And LNG Exposure

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 4:40

is swinging a little bit against kind of the net zero and climate policy, isn't it?

Jan Rosenow - Professor of Energy and Climate Policy, University of Oxford 4:44

100%, and it has already before the war. And I think what's interesting here is that you know clearly when you ask experts, they will point the finger at geopolitical tensions. First, the invasion of Ukraine by Russia, and then more recently the Iran war that lead to high gas prices primarily, but also higher oil prices, and that has ripple effects to the economy. But there are those who will say this is the fault of renewables and the transition. And there's certainly some people who believe those arguments and they're willing to give people their vote who say we're gonna do away with all the energy transition policies and go back to the old system. And that I think is a very dangerous situation that we're in where you know this polarization of net zero and of the transition is rather unhelpful.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 5:37

Because that's really, you know, we don't want to turn the clock back, do we?

Jan Rosenow - Professor of Energy and Climate Policy, University of Oxford 5:41

Well, it's impossible also, you know, when you look at the share of the global oil and gas resources that Europe has, it's tiny. Yeah, we are not in a position where we can rely on our own fossil fuel resources, even if we ignore climate change for a minute. Yeah, and we it's just not possible. So we would have to rely on imports, which of course, as we have now seen, is a very risky business to rely on imported fossil fuels. And increasingly those will be in the form of LNG, for example, which you know can suddenly become very, very pricey, as we have seen in the recent crisis in the Middle East.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 6:18

Absolutely. We don't want another crisis in two or three years. I think that's certainly, as we've talked before on this blog about, it's a real wake-up call, isn't it? Thank you very much, Jan, for being a guest on the Plugged In Summer Series.

Jan Rosenow - Professor of Energy and Climate Policy, University of Oxford 6:29

Thanks for having me.

Crisis Effects On Transition Pace

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 6:30

So if Jan Rosenow lays out the long-term picture, the next question is what that looks like on the ground today. Europe has made enormous progress on renewables, but markets remain volatile, power prices are under pressure, and governments are once again balancing energy security with climate ambition. To explore how geopolitics is reshaping and transition in real time, I spoke to Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie. A warm welcome to the podcast, Simon.

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 7:00

Richard, thanks very much. Great to be with you.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 7:02

We're talking today, and and we'll be across the all over the you know in the summer about the energy transition in Europe. Is it slowing down, is it faltering, or is it accelerating given the geopolitical unrest? What's your view here? I think it's too early to say. Big question to start with, Simon.

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 7:23

Well, look, I think if we think about prior to the crisis, there was some tremendous progress towards the policies which are among the most ambitious anywhere in the world. But there were also some some difficulties, you know, cost and not not not being leased, and some of the investors in in the tradition, thinking about the you know, big oil companies, for example, the European big oil companies who backed it, many of them backed it from the beginning, started to find they had to move away from it. And so uh even before the crisis, there was a bit of a bit of drift, if you like. It was beginning to slow down a little bit, and then comes the crisis. And I think it's too early to say what's gonna happen, but you could you can make definitely think, well, it's reinforced. The crisis has reinforced how dependent we are on the old hydrocarbon system or the current hydrocarbon system, as you'd say. And there's a very urgent need to make sure we can secure enough energy, even whether it's oil, gas, and and even coal, to keep the lights on for the next few years. At the other end, there's well, this is yet another lesson that we mustn't become too dependent on hydrocarbons. We we need to maybe double down on our our view that we need to get towards a low-carbon system as soon as we can, or at least over the next few decades.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 8:51

So you mentioned oil, gas, and coal. Do you think the crisis in the Gulf has really shifted how you know the thinking among European governments, how they, especially in relation to energy security and the pace of the transition?

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 9:08

Well, I think there the immediate thing is well, where where do we get our oil and our gas from? And so quite a bit of it is from the Middle East, and so I think Europe, like others, will be thinking, well, we need diverse sources of supply, whether it's a bit more from North Africa, a bit more from Latin America, North America, and maybe even regenerating our own sources. At the same time, I think it'll give them, give the policymakers tremendous confidence that in the medium to long term, they're going down the right line. So, renewables, let's keep those, keep that investment rolling. Let's think about more diverse sources of electricity as well to complement the renewables, which of course is a variable source. You can't survive only on that. So I think it's a bit of a double message in the near-term where are we going to get the oil and gas from? Longer term, let's keep the pedal to the metal in getting a low-carbon

Why Power Prices Stay Volatile

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 10:10

system going.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 10:10

Europe has added record renewable capacity in recent years. As you mentioned, it's a success story, it's an incredibly ambitious targets and objectives here. But power markets still feel kind of structurally stressed and volatile, and you you know, the talk of curtailment, negative prices, etc. What's what's happening? What's going on, Simon?

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 10:32

Well, yeah, I mean renewables is a pretty cheap marginal cost of production. And when the sun shines and the wind blows, in some countries which have very large amounts of renewables, you do see negative prices, and that's been around for a while, but you're seeing it in more not more often than not, the more than we used to, right? As the percentages click up. So we've got you know a number of countries which are over 50% already. That's renewable capacity as a share of electricity generation, and that's going to increase because the targets are going higher and the investment is going in. But look the so the variability is one factor, and another thing is that the electricity, the renewables may be produced in one place and needed in another, so interconnection is another big thing. But we shouldn't forget also that gas is still an important part in setting the prices, and so wholesale prices are very, very volatile because you've seen gas prices double in the last few months with the the crisis in the Middle East. And so it's frustrating. You've got this low-cost electricity pervading the system, but in many markets, and it varies across markets, you know, but somewhere like the UK, for example, your gas sets the the price more often than not in the UK market. So we're we have a cheap electricity system in many respects, but we we're the about the highest cost electricity in the world, in the United Kingdom, certainly in Europe.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 12:07

I mean, I think you know that's something we'll be returning to in this summer series and you know other episodes, especially

Which Countries Cope Best

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 12:15

this element of gas setting the setting the wholesale price. But which European markets, which European countries are currently managing the energy transition best? And which regions would you say look more vulnerable over the next few years?

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 12:31

Well, look, we're muddling through as a continent, but the ones that are coal or gas reliant are are struggling the most. So say take Italy. So Italy is has among the highest prices, is the most dependent of the European countries on imported oil and gas, so you know, roughly in the descending order, you go Italy, then Germany and the UK, and then at the lower end of the scale, where they've got either very high renewables penetration, such as Spain, or super high nuclear production like France,

Germany’s Coal Reserve And New Gas

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 13:15

they're weathering the storm a little bit better.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 13:17

Germany's post-nuclear strategy continues to divide opinion, and it's burning probably large amounts of coal. Has this damaged confidence in Europe's wider transition story? I mean, it's a leader in new renewable capacity, it's been at the forefront of the energy transition, but yet it has to burn coal to keep the lights on. Is that damaging the energy transition story somewhat?

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 13:46

Obviously it doesn't help, but here you've got a divergence, if you like, between the higher policy from the European Commission and then the federal situation. Because each country has its own legacy base, if you like, and Germany, some would say, and I'd probably agree with them, that you know, the decision to move away from nuclear wasn't the greatest one ever. And so when it comes to politicians this decade, you know, whether it's post-the-Ukraine war or now the Middle Eastern war, the responsibility for the government is to keep the lights on somehow. So you then have to edge towards or make a decision to be pragmatic, and that's what Germany's done. So actually, it's not using as much coal as it might do. It's got around seven gigawatts, which is just sitting in reserve for the time it's needed. And through the Russia, through the Middle East crisis of the last several weeks, and the the things have been in Germany's favor, like it's been milder than it might have been at this time of year. Renewables have worked pretty well, so they sort of muddled through. But I take your point, you know, they've still got those seven gigawatts in place, and they're also going to build new gas fired power stations, which seems to step away from the low carbon trajectory. They've just got to muddle through as best they can. And I think they're trying to reassure their own people that they're going to have a diversified supply source, so be it, if it has to contain a bit of coal in the background and some more upfront gas, but they're still going to keep to their targets by 2020 2045 to get to net zero. So at the moment the long-term policy is still in place, they just have to find a pragmatic way to weather the difficult next few years.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 15:31

Absolutely. Are there other countries that are you know falling back onto coal in terms of these very high, also, especially gas prices that you mentioned there, Simon?

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 15:41

I think it's happening almost everywhere. You know, We're talking about Europe here, but it's certainly in Asia. There's a leaning towards coal, and those countries which are not only in Eastern Europe but more towards the eastern side of the European continent will be using more coal than they might have expected. What you're not really seeing is new coal plant being built. I mean, that would I think be a real concern for climate ambitions. It's just not happening.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 16:07

So they're falling back on the burning coal

Who Pays For The Next Wave

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 16:10

with old stations rather than building. I think that's a very important point as well. Is Europe still on track for its long-term decarbonisation goals, or are we entering a slower, more sort of disorderly two steps back, three steps forward phase of the transition?

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 16:24

I'd say we are, yeah, most of the targets, whether it's your renewables targets or the other low carbon build-outs like carbon capture storage and hydrogen, they're all behind, okay, but it's not being derailed. And I think that the next few months or so are going to be critical. I mentioned at the beginning it's too early, really, to tell whether transition is being slowed down. And I would predict that you'll see the European Commission cement its concept of a low-carbon economy, not delay the dates, but use or leverage this crisis as a means of supporting the move to low carbon even further. The big question is: well, it's easy to think, right? Where does the money come from? And it's still got particularly the renewables is a goer in its own right. You know, certainly onshore wind and solar are competitive. It's when you come to the industrial scale, very large-scale offshore wind, they need heavy subsidies. Electric vehicles need heavy, heavy subsidies, and so there's a bit of a question about where that money is going to come from. But I'd say in the next year or two we'll hear affirmation that the European Commission is still maintaining its long-term goals of net zero, whether it be 2045 or 2050, depending on the country.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 17:50

Still on track there, Simon. Simon, thank you very much for joining the summer series of the Plugged in podcast.

Simon Flowers, Chairman, Chief Analyst at Wood Mackenzie 17:55

My pleasure, Richard.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 17:57

Simon Flowers argues that Europe's long-term direction hasn't changed, but the immediate priority is keeping energy supplies secure. That brings us to perhaps the biggest short-term risk facing global energy markets, the conflict in the Middle East, and what it could mean for oil, LNG, and ultimately European gas and power prices.

Middle East Conflict And LNG Shock

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 18:18

To unpack those risks, here's Saul Kavonic, head of energy research at MST Marquee. A warm welcome and welcome back to the podcast, Saul.

Saul Kavonic - Head of Energy Research, MST Marquee 18:27

Pleasure to be with you as always.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 18:29

I thought we could start by talking about, you know, this is about the current energy crisis. This is the second time in four years that there's been absolutely grave energy crisis or energy price crisis. Is it time that Europe in particular thought a little bit differently about its energy supply and its energy energy dependencies?

Saul Kavonic - Head of Energy Research, MST Marquee 18:52

Well, sitting here in Asia, many of us thought that Europe was going to heed the lessons of the 2022 crisis precisely to make sure they didn't end up in the situation that they now face in 2026. I don't know how many headlines we've read about various developments since the Ukraine war, which said, in essence, this is a wake-up call for Europe. And we're now at the point where Europe has managed to relax its gas storage and end up near record low gas storage just as a major geopolitical event disrupts gas markets at an unprecedented scale again. And it gets to the point again, when we look at this from through an Asian lens, it it looks very much like Europe is unable to learn the lesson that it keeps being given repeatedly over the last few years, which is very different to the way some major Asian economies are approaching things and adapting and fundamentally have shifted their entire energy procurement strategies since 2022 and now are in a better position to withstand the current shock, which we're seeing right now, because they've actually learned the lessons from the Ukraine war that Europe didn't.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 20:11

How exposed is Europe today to disruption in LNG flows if tensions with Iran escalate further? I mean, we're recording here at the start of June. The war's been going for three months, but how would you say, talk a little bit about the exposure that Europe has to these global supply shocks?

Saul Kavonic - Head of Energy Research, MST Marquee 20:31

Well, first of all, it's important to understand now this shock is different to the Ukraine war shock. So what we have this time is a larger withdrawal of supply from the market. So it's about 80 million tons per annum equivalent, where it was about 60 million tons equivalent that was removed via Russian pipeline gas in 2022. But this time the disruption is actually more directly affecting Asia and because a lot of the Qatari contracts are coming into Asian customers. So that means the impact this time, unlike in 2022, is it's a secondary impact on Europe because ultimately Europe is still in the LNG market, including in the LNG spot market, supply, which will have to now directly compete with Asia for the limited supply available, including out of the United States. The other main difference this time is in 2022 we saw some, you know, I think one of the really constructive and positive things we saw in Europe, particularly in Germany,

Why 2022 Lessons Did Not Stick

Saul Kavonic - Head of Energy Research, MST Marquee 21:30

was pulling a lot of levers to reduce gas demand, improve efficiency, do things like insulate manufacturing equipment across the nation, which made it to really capture that low hanging fruit to reduce gas demand. The problem, of course, this time around is with that lever being pulled in 2022, we can't pull it again in 2026. So when you've got now coming into this war, very low gas stocks in Europe um and limited ability. In the near term to reduce demand compared to a few years ago. What I think we see now is Asia's felt the brunt of this first, and there's been some demand destruction there, or at least demand reductions across Asia. But it is going to take this lag time. So, first of all, a lot of LNG tankers that left the Strait of Hormuz before the war still take one or two months to get to their end markets. Then you still have to start to see your stocks with draw down in Northeast Asia. We're now at that point now. So the real pressure point for competition between major Asian economies and European economies is only going to start in the next month or so, right as we start to see an uptick in seasonal demand for the Northern Hemisphere sun up summer. And so I think we can see, particularly if the Strait of Hormuz closure is prolonged, but frankly, even if it starts to open soon, we could actually see an uptick in prices over the next two quarters as demand rises, the need to refill stocks ahead of winter rises, and the actual end user impact of the war starts to be felt in earnest.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 23:13

So, what other levers do policymakers have? What other options do they have, in light of the current crisis and ahead of the winter?

Saul Kavonic - Head of Energy Research, MST Marquee 23:23

Look, short term, the reality is there's very limited levers one can pull. The most effective one is going to still be demand management measures. We're seeing, particularly in some emerging Asian economies, for example, things such as thermostats, so reducing the amount of air conditioning or reducing the amount of heating that is being used, which is you know perhaps exemplary of the amount of effort that is being taken to reduce demand because every molecule counts. So mostly is going to be in demand side measures. The reality is you need to, you know, to be fully prepared for a shock like this, you need to have been prepared beforehand, which has not fully happened. And most of the other things that you can do on the demand side in particular, along the lead items, for example, regarding electrification, which has been given a huge push in Europe anyway. So it's unclear how much harder that can be pushed to make it move more quickly. I think what, you know, let's look at what we're hearing from our major Asian counterparts. Remember, we're the original foundation and founders of our energy industry globally, is

Levers Before Winter Hits

Saul Kavonic - Head of Energy Research, MST Marquee 24:30

they are looking at this and seeing they need to rapidly change their procurement strategies to have greater diversity of supply, particularly from outside the Middle East, but also invest more direct investment directly in equity projects, to have equity molecules they can bring to their markets and to overinvest to have more LNG than they need in their portfolio in order to have buffers when shocks happen. So that's what you're seeing from the likes of Japan and Korea. China, of course, is going down a different route, particularly on the local production and demand switching side, which unfortunately, from an environmental perspective, is going to ramp up coal production. But what we haven't yet seen from particularly European lands is government support for measures to also see increased amounts and diversity of supply going forward. The impetus behind that in 2022 seemed to have fallen away by 2025. And I think it needs to return again because you can't leave all the heavy lifting here to Japan, Korea, and other Asian nations.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 25:36

So, what are the options there, Saul, in terms of diversifying supply? Are we talking Nigeria, Mozambique, other such, you know, Asian markets?

Saul Kavonic - Head of Energy Research, MST Marquee 25:45

Yeah, well, I mean, the unfortunate thing is if you look at where the major growth centers for LNG were expected to be, which is Russia, Qatar, Mozambique, and the US, we've all got, you know, Russia and Qatar embroiled in a much higher risk profile. So we're now trying to diversify away from those very places. Mozambique does look like it is coming back, so that's one. And the US obviously is a huge part of that, but we can look beyond additional capacity, obviously, in the US, where there's some opportunities in West Africa, there's some opportunities to, again, in Mozambique to expand it more quickly, even in places like Tanzania, although the cost is obviously higher, even in places such as Australia, where there are is gonna be a huge amount of investment required just to keep current production levels going, let alone grow it. If we don't see increased support from major customers to get those projects which are currently marginal and questionable over the line, then they're not gonna happen. And if they don't happen, it means we remain in a tighter market outlook. And I'm particularly looking at beyond the 2030, the early 2030s here. We've obviously still got a lot of supply ramping up into the US and Qatar near term. But the outlook, particularly if we still want

Diversifying LNG Supply For The 2030s

Saul Kavonic - Head of Energy Research, MST Marquee 27:00

to have impetus on phasing down coal demand, has to see much higher LNG demand and therefore supply decisions made in the next few years so that it comes online in the early to mid-2030s.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 27:12

If we can bring it back to 2026 and sort of ahead of the coming winter, Saul, do you see you mentioned a potential uptick in prices? Is that on the level as we saw in 2022? Do you think?

Saul Kavonic - Head of Energy Research, MST Marquee 27:25

At the risk of putting out a highly controversial and counter-consensus view, I think it could still approach some of those you know more lofty levels we saw in 2022. I mean, I think there were some lessons learned from 22, particularly regarding the forced buying out of Europe, which might you know mitigate those very like peak highs. But the idea that current gas prices could double from their current levels, I think, is you know more than plausible. And particularly if there's no, you know, the straight opening remains slow or partial, may actually be quite likely by the end of the year.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 28:05

And which European countries are most vulnerable to such a gas price spike?

Saul Kavonic - Head of Energy Research, MST Marquee 28:11

Oh, Richard, you're far better European gas market experts than I am. You know, I I'll be where you're sitting here in Asia and pointing out who's doing a better or worse job of the European nations. I guess you know what matters more is what Germany's gonna do. I mean ultimately Germany is where the leadership from gas runs out of Europe. And if Germany gets it right, everyone, a lot of others are beneficiaries, and if Germany gets it wrong, everyone else is gonna be in paying quite regardless of how well they try and prepare at a national level, assuming the European gas market remains intact.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 28:50

Absolutely. Germany is key, potentially Italy as well, very vulnerable. But so a final question, really. You mentioned an increase in coal burn. Is this kind of temporary balancing or potentially evidence of deeper structural problems in the energy transition? What's your view?

Saul Kavonic - Head of Energy Research, MST Marquee 29:09

Well, unfortunately, it is a sign of deeper structural problems with climate policy and the appetite and support for it more globally. So, again, sitting here from in Asia and someone who's spent a lot of time visiting Europe over the last five years, Europe is being very much in a climate bubble compared to the rest of the world. You know, to the point where, a few years ago, if I was, it doesn't matter if I was in Berlin or London or Paris, to say for someone to go somewhere and say, I believe that climate policy is a sham and net zero shouldn't be adhered to, you wasn't even allowed in polite society. But keep in mind, if you said something like that in China, Japan, or US, that would be a perfectly normal thing and

Could Gas Prices Double Again

Saul Kavonic - Head of Energy Research, MST Marquee 29:55

perhaps often what the majority of the table around dinner would be talking about. And so Europe's been very much in a much more progressive policy space, which is and that pendulum has started to swing back, began in 2022, particularly in 2025. Now, what you saw last year is the ESG pendulum regarding climate has started to swing back in a very large way. That's been partly driven by some of the logistical realities of the energy transition, which have been proven much harder, but also on a popular level, we've seen obviously the election of Donald Trump, we've seen the US move away from this in a big way, and cost of living pressures around the world, which makes this climate is no longer the top item on a voting level that it was a number of years ago. And my fear is, and you know, this is playing out exactly as many of us predicted, is that by climate policy being pushed so ideologically and so impractically so fast that it didn't bring people along with it. And now the risk is that the pendulum swings

Climate Backlash And Coal Temptation

Saul Kavonic - Head of Energy Research, MST Marquee 31:05

too far backwards and we end up not doing anywhere near as much as we could do. And I think that's exactly now in what the situation is that we are in. And you can see, for example, even what's happening now in the wake of the war with China moving more to coal. The reality is right now, while it was paid lip service to a few years ago, most Asian nations considered nets in euro by 2050 not only is not something to be desired, but something that is logistically impossible. Right? And we need to get back on a path where we are doing what we think is practically feasible and can bring populations along with us because if we don't, then we're not going to end up doing anything.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 31:49

And that would be a very worrying situation indeed. So, thanks very much for being a guest on the Plugged In Podcast.

Saul Kavonic - Head of Energy Research, MST Marquee 31:55

Always a pleasure.

Snjólfur Richard Sverrisson – Editor-in-Chief, Montel News 31:57

And to you listeners, thanks for listening to this episode of Plugged In. If you enjoyed this discussion, please like, rate, and follow to make sure you get the latest podcast episodes as soon as we release them every Thursday. And finally, you can head to Montelnews.com for more news and analysis from our team of journalists across Europe and beyond. See you next time.