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The Geopolitical Implications of Future Oil Demand

The Geopolitical Implications of Future Oil Demand

Chatham House Energy, Environment and Resources Department produced this research paper dated August 14, 2019, of Professor Paul Stevens, Distinguished Fellow, Energy, Environment and Resources. It is about The Geopolitical Implications of Future Oil Demand. The study’s Summary is reproduced below.

The Geopolitical Implications of Future Oil Demand

The global energy economy is undergoing a rapid transition from ‘hydrocarbon molecules to electrons’: in other words, from fossil fuels to renewables and low-carbon electricity. Leading energy industry players and analysts – the energy-forecasting ‘establishment’ – are seriously underestimating the speed and depth of this transition. This in part reflects the vested interests that dominate that establishment. By contrast, the financial sector – which has little or no vested interest in fossil fuels – understands what is going on and is taking the transition on board.

The history of past energy transitions – including the US’s shift from wood to coal in the late 19th and early 20th centuries, and the French adoption of nuclear power on a wide scale in the 1980s – provides useful context for analysis of this trend. Such transitions have been triggered by factors ranging from market upheaval to technological change, with the technological element typically reinforcing the transition.

A similar dynamic, involving triggers and reinforcing factors, is in evidence today. The current transition in the global energy system has been triggered, in the first instance, by concerns over climate change and recognition of the imperative of shifting to a lower-carbon economy. In some places, growing concerns over urban air quality have overtaken climate change as a driver of government policy in support of the transition. The reinforcing factors include the falling costs of renewables and the rapid market penetration of electric vehicles (EVs). To these factors can be added ongoing uncertainty over the possibility of another oil price shock; and rises in oil product prices that are independent of movements in crude oil prices – a phenomenon sometimes known as ‘OECD disease’.

If the transition to renewables and low-carbon electricity happens faster than the energy establishment anticipates, the implications for exporters of oil and for the geopolitics of oil will be very serious. For example, the failure of many oil-exporting countries to reduce their dependence on hydrocarbon revenues and diversify their economies will leave them extremely vulnerable to reduced oil and gas demand in their main markets. The countries of the Middle East and North Africa (MENA) region will be particularly exposed, with the possible consequences including an increase in the incidence of state failure in a region already suffering the fallout from having signally failed to address the causes of the Arab uprisings since 2011. Increased political and economic turbulence in the MENA region would also have the potential to create serious migration problems for Europe.

The geopolitics of oil over the past 120 years have played a central role in international relations. Indeed some would argue that geopolitical rivalry over access to, and control of, oil supplies has been the source of much of the conflict witnessed in the 20th century (Yergin, 1991). The rise of renewables implicit in the current energy transition could well change this status quo. Renewables are widely used and widely produced. Currently, their availability is constrained neither by the agendas of dominant fuel suppliers nor by the threat of physical disruption to the strategic transit routes along which traded resources are typically shipped. There are certainly supply constraints associated with some minerals required for renewable energy technologies, but these hardly compare with the conflicts around oil supply, and most such constraints, in any case, are easily managed. Thus, as this energy transition proceeds, oil geopolitics will begin to fade away as an issue of concern.

The paper (ISBN978 1 78413 325 2) DOWNLOAD PDF914 KB

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Growing pull towards entrepreneurship in the UAE

Growing pull towards entrepreneurship in the UAE

Gulf Business and Middle East Affairs of August 10, 2019, informed that a Growing pull towards entrepreneurship in the UAE is and remains as strong as it could be despite all regional turpitudes and other hydrocarbons related market volatilities.

A recent survey suggests that almost seven out of 10 employees want to start their own companies despite concerns over procuring finances.

The pull of self-employment is as strong as ever in the region, according to a recent report by Middle East jobs site Bayt.com and global research firm YouGov.

In Bayt.com’s survey, Entrepreneurship in the Middle East and North Africa 2019, in the UAE some 69 per cent of respondents said they want to quit their current job and be their own boss instead. 54 per cent cited freedom over their work-life balance as the reason behind their thinking, while 42 per cent of them said they aimed to find personal fulfilment.

What’s more, some 73 per cent admitted that they are currently thinking of starting a business, while only 7 per cent say they have never thought of starting their own business.

Looking at the wider MENA region, for those who had already made the leap into entrepreneurship, 33 per cent said they left their previous jobs in order to increase their income, while 27 per cent said they wanted to do something they loved, and 25 per cent said they had a great business idea or concept.

The most appealing industries for prospective entrepreneurs were found to be IT / internet / e-commerce (10 per cent), commerce / trade / retail (9 per cent), consumer goods / FMCG (8 per cent), and real estate/ construction/ property development (8 per cent).

The report was published shortly after recruitment firm Robert Walters shared their own new research, which showed 73 per cent of professionals in the Middle East have left a job because they disliked the company’s culture. Some 82 per cent said they have previously worked for a company where they disliked the company culture. Both statistics suggest a further reason the number of would-be entrepreneurs is so high.

Bayt.com’s report also shows that the main concern of respondents while setting up their own business would be procuring finances to start (61 per cent), and the uncertainty of profit or income (41 per cent).

These concerns haven’t stopped increased numbers of people opening businesses – at least in Dubai, where the number of new business licenses in the first four months of 2019 grew by 35 per cent compared to the same period in 2018. The emirate’s Department of Economic Development issued 9,489 new licenses between January and April.

Start-ups and SMEs have long been the backbone of GCC economies, with SMEs making up around 98 per cent of business in the UAE, contributing approximately 53 per cent of gross domestic product (GFP). Under the country’s Vision 2021 plans, the government is seeking to increase this contribution to 60 per cent by 2021.

Earlier this year, as part of the UAE’s bid to improve ease of doing business, the Federal Authority for Identity and Citizenship started issuing five-year residency visas to entrepreneurs – a move that drew more than 6,000 applications. It’s one of a series of moves that aim to improve opportunities for the wider SME community.

Another is Dubai’s recent package of initiatives by the emirate’s Department of Finance, announced in March. These initiatives include paying the dues of SMEs that supply services and goods to government agencies sooner, reducing the value of primary insurance for SMEs, cutting ‘performance insurance’ rates, calling for 5 per cent of government capital projects to be allocated to SMEs, and seeing projects worth Dhs1bn allocated to public-private partnerships.

Saudi Arabia has also striven to lay more accommodating foundations for entrepreneurs, such as 2018’s launch of an entrepreneur license that allows new companies to benefit from a range of SME services and incentives. At April’s World Economic Forum, the kingdom’s energy minister Khalid Al Falih told delegates that Saudi’s start-up scene is “moving faster than anyone can imagine” and will create hundreds of thousands of jobs in the coming years.

“I predict that by 2030, companies that we don’t know today will be among the top 20 or 30 companies in Saudi Arabia. They will be driven by innovation, they will be driven by young people, they will be driven by women,” he added.

Backed by public sector support, those 69 per cent of people cited by Bayt.com’s survey are surely in as strong a position as ever to realize success should they take the step into the world of entrepreneurship.

Transparency, data privacy and collaboration critical to urban innovation

Transparency, data privacy and collaboration critical to urban innovation

Yung Wu, per this contribution of his holds that transparency, data privacy and collaboration critical to urban innovation are of vital importance especially in the MENA region whilst:

Cities must plan ahead for innovation without leaving people behind

GettyImages 508463561

Yung Wu is CEO of MaRS Discovery District, a Toronto-based innovation hub.

From Toronto to Tokyo, the challenges faced by cities today are often remarkably similar: climate change, rising housing costs, traffic, economic polarization, unemployment. To tackle these problems, new technology companies and industries have been sprouting and scaling up with innovative digital solutions like ride sharing and home sharing. Without a doubt, the city of the future must be digital. It must be smart. It must work for everyone.

This is a trend civic leaders everywhere need to embrace wholeheartedly. But building a truly operational smart city is going to take a village, and then some. It won’t happen overnight, but progress is already under way.

As tech broadens its urban footprint, there will be more and more potential for conflict between innovation and citizen priorities like privacy and inclusive growth. Last month, we were reminded of that in Toronto, where planning authorities from three levels of government released a 1,500-page plan by Alphabet’s Sidewalk Labs meant to pave the way for a futuristic waterfront development. Months in the making, the plan met with considerably less than universal acclaim.

But whether it’s with Sidewalk or other tech partners, the imperative to resolve these conflicts becomes even stronger for cities like Toronto. If they’re playing this game to win, civic leaders need to minimize the damage and maximize the benefits for the people they represent. They need to develop co-ordinated innovation plans that prioritize transparency, public engagement, data privacy and collaboration.

Transparency

The Sidewalk Labs  plan is full of tech-forward proposals for new transit, green buildings and affordable housing, optimized by sensors, algorithms and mountains of data. But even the best intentions of a business or a city can be misconstrued when leaders fail to be transparent about their plans. Openness and engagement are critical for building legitimacy and social license.

Sidewalk says it consulted 21,000 Toronto citizens while developing its proposal. But some critics have already complained that the big decisions were made behind closed doors, with too many public platitudes and not enough debate about issues raised by citizens, city staff and the region’s already thriving innovation ecosystem.

In defense of Sidewalk Labs and Alphabet,  their roots are in Internet services. They are relative newcomers to the give and take of community consultation. But they are definitely now hearing how citizens would prefer to be engaged and consulted.

As for the public planners, they have a number of excellent examples to draw from. In Barcelona, for example, the city government opened up its data sets to citizens to encourage shared use among private, public and academic sectors. And in Pittsburgh, which has become a hub for the testing of autonomous vehicles, the city provided open forum opportunities for the public to raise questions, concerns and issues directly with civic decision-makers.

Other forward-looking cities, such as San Francisco, Singapore, Helsinki and Glasgow, are already using digital technology and smart sensors to build futuristic urban services that can serve as real-world case studies for Toronto and others. However, to achieve true success, city officials need to earn residents’ trust and confidence that they are following and adapting best practices.

Toronto skyline courtesy of Shutterstock/Niloo

Data privacy

Access to shared data is crucial to informing and improving tech-enabled urban innovation. But it could also fuel a technologically driven move toward surveillance capitalism or a surveillance state – profiteering or big brother instead of trust and security.

The Sidewalk proposal respects the principles of responsible use of data and artificial intelligence. It outlines principles for guiding the smart-city project’s ethical handling of citizen data and secure use of emerging technologies like facial recognition. But these principles aren’t yet accompanied by clear, enforceable standards.

Members of the MaRS Discovery District  recently co-authored an open-source report with fellow design and data governance experts, outlining how privacy conflicts could be addressed by an ethical digital trust. A digital trust ought to be transparently governed by independent, representative third-party trustees. Its trustees should be mandated to make data-use decisions in the public interest: how data could be gathered, how anonymity could be ensured, how requests for use should be dealt with.

They come with big questions to be resolved. But if a digital trust were developed for the Sidewalk project, it could be adapted and reused in other cities around the world, as civic leaders everywhere grapple with innovation plans of their own.

PCs on a grid in front of a city skyline.
Image courtesy of Getty Images/Colin Anderson

Collaboration

The private sector creates jobs and economic growth. Academia and education offers ideas, research and a sustainable flow of tech-savvy workers. The public sector provide policy guidance and accountability. Non-profits mobilize public awareness and surplus capital.

As Toronto is learning, it isn’t always easy to get buy-in, because every player in every sector has its own priorities. But civic leaders should be trying to pull all these innovation levers to overcome urban challenges, because when the mission is right, collaboration creates more than the sum of its parts.

One civic example we like to point to is New York, where the development of the High Line park and the rezoning of the West Chelsea Special District created a “halo effect.” A $260-million investment increased property values, boosted city tax revenues by $900-million and brought four million tourists per year to a formerly underused neighborhood.

A mission-oriented innovation ecosystem connects the dots between entrepreneurs and customers, academia and corporates, capital and talent, policymakers and activists, physical and digital infrastructure – and systems financing models can help us predict and more equitably distribute the returns. Organizations like Civic Capital Lab (disclaimer: a MaRS partner) work to repurpose projects like the High Line into real-life frameworks for other cities and communities.

That kind of planning works because the challenges cities face are so similar. When civic leaders are properly prepared to make the best of modern tech-driven innovation, there’s no problem they can’t overcome.

More posts of Yung Wu :

MENA start-up ecosystem on the rise

MENA start-up ecosystem on the rise

Saudi Gazette posted an article dated July 9, 2019, on MENA start-up ecosystem on the rise, explaining that it is all “positive news for the continually growing ecosystem with strong growth through a record number of transactions.”

DUBAI — Total funding across the Middle East and North Africa (MENA)-based start-ups was up 66% from H1 2018, MAGNiTT, the region’s most powerful startup platform, said in its H1 2019 MENA Venture Investment Report, which provides an in-depth analysis of start-up funding and venture capital across the Middle East and North Africa.

The report highlights positive news for the continually growing ecosystem with strong growth through a record number of transactions.

Philip Bahoshy, MAGNiTT’s founder, said “the MENA region is hitting its inflection point. The acceleration of funding we saw in the latter half of 2018 has continued into 2019.”

Bahoshy noted that “there are many signs of an ever maturing ecosystem. As start-ups grow, we have seen more start-ups raising larger tickets, more exits and a continued interest from International investors in the region, especially from Asia.”

He also pointed to “UBER’s acquisition of CAREEM is another example of a large international player acquiring a local company after Amazon’s acquisition of Souq. This will further act as a catalyst to spur on the regions entrepreneurial environment.”

The report noted that H1 2019 saw 238 investments in MENA-based start-ups, amounting to $471 million of total funding. This is an excellent indicator, a 66% increase in investment dollars compared to H1 2018, in which $283 million was invested.

The number of deals remained healthy at a record high, up 28% compared to H1 2018, showing continued appetite in start-ups from the region at all stages of investment.

Noor Sweid, General Partner of Global Ventures, said “the growth in the start-up and tech ecosystem in the region is phenomenal, and yet, we are just at the beginning of a trajectory that will see technology-driven companies grow significantly and incredibly quickly over the coming years. These numbers illustrate the momentum and successes that the underlying companies and founders are achieving, and the growth in the investment ecosystem and opportunities alongside them.”

The UAE remains the most active startup ecosystem with 26% of all deals and 66% of total funding. Saudi Arabia was one of the fastest growing ecosystems, up 2% from H1 2018 recording 26 investments in H1 2019.

The UAE has maintained its dominance with 26% of all transactions made in to UAE-headquartered start-ups in H1 2019, while it also accounted for 66% of total funding.

Khalfan Belhoul, CEO of the Dubai Future Foundation, explains this by highlighting that “With the vision of our leaders, and a strong strategy in place, the UAE has cemented its position as an ideal destination for startups, founders, creative thinkers, and innovators. We have leveraged that vision, through creating dynamic co-working spaces, agile legislation that supports innovation and attractive visa policies for entrepreneurs and business professionals, and we continue our efforts toward positioning Dubai as a global testbed for cutting-edge technologies.”

However, the landscape continues to evolve. Tunisia was the fastest growing ecosystem in H1 2019 – receiving the 5th highest number of deals at 8% of all deals, up 4% from H1 2018. While Saudi Arabia recorded 2% increase in number of deals, up to 11% of all transactions across the MENA region.

FinTech retained its top spot in H1 2019 and accounted for 17% of all deals. Notable investments include the $8 million in Yallacompare, $6 million in Souqalmal and $4 million in Beehive.

E-commerce still remains prevalent accounting for 12% of all deals, followed Delivery & Transport, which was the third most popular industry in terms total deals in H1 2019, accounting for 8%.

The report furthered said 130 institutions invested in MENA-based start-ups in H1 2019, of which 30% were from outside the region.

500 Startups remained the most active venture capital firm, especially at early stage investments, while Flat6Labs was the most active accelerator program.

Moreover, H1 2019 saw the influx trend of foreign investors continue. The entrance of China’s MSA Capital and Germany’s food conglomerate Henkel, among others, highlighted continued international interest in MENA start-ups. In fact, 30% of all entities that invested in MENA-based start-ups were international investors.

Walid Faza, Partner and Chief Operating Officer of MSA Capital, said: “Chinese models are shaping the consumption habits of emerging market tech consumers and MSA’s deep knowledge in both ecosystems positions us to add a lot of value to companies based in MENA.”

EMPG leads the start-up ecosystem with a $100 million fundraise, followed by Yellow Door Energy and Swvl

EMPG receives the highest amount of funding by a single start-up, raising $100 million in February 2019. Yellow Door Energy ($65M) and Swvl ($42 million) complete the top 3.

In total, the top 10 deals in H1 2019 account for 62% of the total investment amount in H1 2019, down 9% from H1 2019. In terms of exits, H1 2019 has seen 15 start-up exits take place across MENA, an increase of 5 compared to H1 2018.

The largest of these was Careem’’ landmark exit to Uber. Magnus Olsson, Co-Founder, Chief Experience Officer noted “Our $3.1 billion deal with Uber was a hugely significant moment, not just for Careem, but also for the Greater Middle East. It was the largest tech deal this part of the world has ever seen and puts our region’s emerging technology ecosystem on the map of both regional and foreign investors.” On the impact the deal will have across the ecosystem, Olsson noted that “Careem views its colleagues as owners of the business and so we introduced an equity scheme that will now see them financially benefit from the transaction. We hope that the deal will act as a catalyst for the next generation of tech startups in our region.”

— SG

Tech can empower refugee communities

Tech can empower refugee communities

Tech can empower refugee communities – if they’re allowed to design how it works.

By Reem Talhouk, Newcastle University; Andy Garbett, Newcastle University, and Kyle Montague, Newcastle University.

In Lebanon, around 350,000 Syrian refugees don’t have access to enough safe and nutritious food. To stem the crisis, the World Food Programme (WFP) of the United Nations introduced an electronic voucher system to distribute food aid. People are given debit cards loaded with “e-vouchers” that they can use in certain shops to buy food.

But we found that Syrian refugees living in rural Lebanon often have to make difficult choices when buying essential items at the expense of food. Their e-vouchers can only be used in exchange for food, not other essentials like nappies.

Refugees have to engage in “grey-area transactions” that work around the e-voucher system, by asking shop owners to sell them the nappies and instead record on the system that they bought food. This places refugees in a vulnerable position – shop owners often charge higher prices for scanning non-food items as food, but refugees have no choice but to depend on shop owners to cooperate.

Using dialogue cards, Syrian refugees mapped out their experiences of food insecurity and their interactions with shop owners. Reem Talhouk, Author provided

Collective purchasing allows refugees to pool their cash and e-vouchers so that one person can buy non-food items for another and be repaid with food. This allows people a degree of autonomy – they don’t have to rely on shop owners to allow them to buy non-food items using their vouchers. Instead, the community can manage their resources and needs among themselves.

Unfortunately, the e-voucher system prevents refugees from buying goods in bulk. Shop owners are advised by the WFP that purchases by refugees should be typical of buying food for a family. If refugees want to buy enough rice for their community and benefit from a wholesale discount, then the shop owner can refuse the transaction. This makes collective purchasing – something refugees often prefer to do when they have cash available – more difficult.

The WFP is currently piloting blockchain technology to replace this e-voucher system in Jordan and Pakistan. This is an exciting opportunity to alleviate these problems and help to empower both refugees and the shop owners, but only if the refugees themselves are involved.


Food aid designed by refugees

Rather than using a debit card, under this new system refugees would have a digital wallet that is similar to a bank account that you can access online. And instead of it being hosted by a bank, it’s part of the blockchain.

A blockchain is a shared log of transactions, with each user being able to track how much money and goods have been exchanged. This is constantly updated as transactions of food aid and money transfers are agreed between the customer and the shop owner. Each transaction forms a block of new information. The digital ledger is an expanding chain of interconnected blocks of information – hence the name, blockchain.

The WFP is using blockchain technology to cut costs on currency exchange and bank transfers. But the blockchain still allows transactions between refugees and shop owners in the same manner as the e-voucher system. If this new and innovative technology mimics the model that came before, the restrictions on what refugees can do will continue and blockchain will mimic paternalistic aid models that focus on efficiently distributing aid, rather than empowering refugees to leverage their own ways of coping with food insecurity. But if aid is designed with input from refugee communities, the technology could give Syrian people in Lebanon more agency when buying the essentials they need to live.

A Syrian woman’s depiction of her community’s food insecurity. Reem Talhouk, Author provided

Blockchain can write smart contracts, which would allow people to buy items together. These are agreements whose terms are automatically enforced by an algorithm. Smart contracts act like a lock box with two keys that can be used to open it, one key is given for each party involved in the contract.

When the smart contract is created, both parties set the conditions that need to be met for them to be able to use the keys to open the lock box. Both keys need to be used for the lock box to open and for the money to transfer to complete the transaction. Before this can happen, both parties must agree that the conditions of the contract have been met. With this, refugee communities can negotiate collective purchases with shop owners and hold them accountable to the agreements they make.

Negotiating the terms of the smart contract means that refugees have more of a say over what they consider to be a fair deal. Once the smart contract is in place, the agreed sum of money for the purchase will be placed in a digital wallet – the lock box – that is bound by the terms of the smart contract. The value of items purchased by refugees is deducted once they’ve verified their identity with a retina scan, but the money will only be released to the shop owner if the refugees verify that they received the items.

We saw how these smart contracts could rebalance the power disparity between refugees and shop owners. Including refugees in the design process of humanitarian technologies and aid models can ensure they incorporate the values and practices of the people they’re supposed to help. Future innovations must be rooted in the daily lives of refugee communities. These technologies can empower people and make a real difference to their lives, but only if they’re allowed to design how they work.

Reem Talhouk, Researcher in Human Computer Interaction and Design, Newcastle University; Andy Garbett, Research Associate in Computing Science, Newcastle University, and Kyle Montague, Lecturer in Digital Civics, Newcastle University


This article is republished from The Conversation under a Creative Commons license. Read the original article.

Read more: Beyond Bitcoin: how blockchains can empower communities to control their own energy supply

Costs of Technologies reshaping Energy-related Investment

Costs of Technologies reshaping Energy-related Investment

Following on the ever-increasing ease of accessibility of all renewables-hardware, the costs of technologies reshaping energy-related investment per The International Energy Agency’s World Energy Investment 2019 report have mainly affected and/or facilitated the surging demand for even more power. In effect, it is in the developing world, including, the MENA region where the market seems to be the highest, that this is happening before our very eyes. Hence this article of the World Economic Forum.

A general view of the DanTysk wind farm, 90 kilometres west of Esbjerg, Denmark, September 21, 2016. Picture taken September 21, 2016. To match EUROPE-OFFSHORE/WINDPOWER  REUTERS/Nikolaj Skydsgaard - D1BEUNDQTLAA
The costs of technologies are reshaping energy-related investment
Image: REUTERS/Nikolaj Srkydsgaad

The world invested almost $2 trillion in energy last year. These 3 charts show where it went

By Charlotte Edmond, Formative Content.

22 May 2019

The world invested $1.8 trillion in energy last year, with spending on renewables stalling, while oil, gas and coal projects increased.

The International Energy Agency’s World Energy Investment 2019 report shows overall global investment in energy stabilised in 2018 after a recent decline, with the power sector continuing to make up the biggest proportion of this spending. Much of that investment has been fueled by the world’s rapidly increasing demand for electricity.

Investment in coal increased for the first time since 2012, despite reduced Chinese spending to focus on power generation.

When it comes to cleaner fuels, there was little movement in the overall investment in renewables and no net addition to capacity, driven in part by the falling costs of some technologies. But production of biofuels, which has fallen behind the IEA’s sustainable development targets, saw a rise in investment last year.

The agency’s report also showed minimal increases in energy efficiency investments, with spending on transport efficiency remaining constant even though sales of electric vehicles are motoring upwards.

Indeed, the IEA warns there is a “growing mismatch between current trends and the paths to meeting” the world’s climate goals laid out in the 2016 Paris Agreement and “other sustainable development goals.”

The changing landscape

The costs of technologies are reshaping energy-related investment, as the chart below demonstrates.

Some of the most marked changes have been seen in the power sector, where there have been dramatic falls in the costs of solar, onshore wind and battery storage.

Prices for some efficient goods such as light-emitting diodes (LED) and electric vehicles have continued to fall, too. But investment in efficiency innovations is still being held back by governmental policy and financing challenges.

On the other hand, there has been little change in the costs of nuclear power projects and carbon capture and storage – a technology that aims to trap greenhouse gases before they enter the atmosphere.

Who invests the most?

China remained the biggest market for energy investment last year, even as the US is rapidly catching up, the IEA report said.

Increases in oil and gas — particularly in the shale sector — have driven the bulk US investment. By contrast, China is putting much of its money into low-carbon projects, with big investments in nuclear power and renewables.

India is the most rapidly growing market for investment. Elsewhere, investment in energy generally has fallen in recent years in Europe, the Middle East, Southeast Asia and sub-Saharan Africa, according to the agency.

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