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IIF New York 2023: Ukraine war still driving investment outlooks

By Onofrio Castiglia

Energy security and energy sustainability are now, in a sense, one-in-the-same: a phenomenon driven in part by Russia’s invasion of Ukraine and the subsequent war, panelists participating in the Power, Energy & Utilities: Meeting the demand for energy sustainability panel at the Infralogic Investors Forum said on Thursday.

“In the long term they go hand in hand,” Alfred Griffin, senior managing director and head of Generate Credit at Generate Capital said. “Having generation assets that aren’t dependent on feedstocks from certain geographies results in security more in distributed resources, which much of the transition is.”

In the short run, those assets not viewed as renewable still play a very important role, particularly natural gas, he said.

Rishi Patel, principal at I Squared Capital, said the conflict has spurred a rush to build renewables in Europe, along with security and monitoring software and better EV charging infrastructure.

Jim Hughes, managing partner at EnCap Energy Transition, said Europe’s new role as an LNG depot has changed the economics around how gas is used.

“You have derivatives of natural gas that it no longer makes sense to make from LNG-supplied gas, specifically ammonia and methanol,” Hughes said. The related cost change has shifted the dynamic of how gas is used and where gas by-products are sourced and manufactured.

A significant cross-Atlantic trade for hydrogen-derivative products is thus forming, Hughes said. There are seven ammonia projects in Texas and Louisiana, as it’s more cost-effective to manufacture the by-products in the US than to ship the raw material to Europe.

“That’s all derivative from the war in Ukraine,” Hughes said. “If you had told any of us before the war that Germany would build a LNG gasification terminal in six months, we would have scoffed at the notion.”

There is a strong case to be made for this based on energy security in the US and Europe, he said.

“It reintroduced energy security into the lexicon,” Hughes said. “I think that’s a permanent shift.”

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