A closer look at Chris Wright's positions on climate change and the energy transition, and what the recent completion of the Russia-China gas pipeline could mean for the future.
Gradually and surely, President-elect Trump has appointed new cabinet members for his upcoming administration. These appointments could have major effects on the energy sector within the U.S. and globally.
We shall provide some background on these key appointments and dig into two pieces of energy news this week.
Shangyou Nie
Editor, Well Read
Trump Appoints Energy Czar and Heads for Energy and EPA
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President-elect Trump has nominated three key cabinet members relating to the energy industry: Doug Burgum as Secretary of the Department of the Interior and the Energy Czar in charge of National Energy Council; Chris Wright as Secretary of Energy; and Lee Zeldin as the Administrator for Environmental Protection Agency.
Last week, I mistakenly referred to Chris Wright as a climate change denier. I have since learned his positions on climate and the energy transition are far more nuanced. Let’s take a closer look at Wright’s background, recent statements, and publications.
Wright’s professional background:
Chris Wright is 59 years old and from Colorado. He is the founder, CEO, and chairman of the board for Denver-based Liberty Energy.
He received an undergraduate degree in mechanical engineering from MIT before conducting graduate work at U.C. Berkeley and MIT.
In 1992, he founded Pinnacle Technologies to help commercial shale gas production through hydraulic fracturing.
In 2010, Wright founded and served as the executive chairman of Liberty Midstream Solutions, as well as Liberty Resources, a Bakken-focused E&P company.
The Bettering Human Lives Report: Liberty Energy published the 180-page Bettering Human Lives online in January 2024. The site’s description of the report says it “seeks to inform readers and drive thoughtful dialogue surrounding the tradeoffs at the nexus of energy, climate, poverty, and prosperity.”
The report includes a 15-page CEO Letter, written by Wright, which can also help provide insights into his views on climate change and the energy transition. Here are some key quotes from the report.
From the CEO Letter:
“Climate change is a real and global challenge that we should and can address. However, representing it as the most urgent threat to humanity today displaces concerns about the more pressing threats of malnutrition, access to clean water, air pollution, endemic diseases, and human rights, among others.”
“Industrial development of the modern world has driven up atmospheric concentration of carbon dioxide by 50 percent... This rise has mainly been driven by the combustion of hydrocarbons: coal, oil, and natural gas.”
“The reality is that [solar and wind] have not, will not, and cannot replace most of the energy services and raw materials provided by hydrocarbons.”
“I am quite passionate about alternative energies and have been my whole life. Liberty Energy is an investor and partner with companies in next-generation geothermal energy, small modular nuclear reactors, and sodium-ion battery technology.”
From the report’s Key Takeaways summary section:
“Climate change is a global challenge but is far from the world’s greatest threat to human life.”
“Hydrocarbons are essential to improving the wealth, health, and life opportunities for the less-energized seven billion people who aspire to be among the world’s lucky one billion.”
“Global demand for oil, natural gas, and coal are all at record levels and rising—no energy transition has begun.”
“Modern alternatives, like solar and wind, provide only a part of electricity demand and do not replace the most critical uses of hydrocarbons. Energy-dense, reliable nuclear could be more impactful.”
“Zero Energy Poverty by 2050 is a superior goal compared to Net Zero 2050.”
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China Completes the Last Segment of the Russia-China Gas Pipeline
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Last week, state-owned company PipeChina completed the last segment of a more than 5,000-kilometer pipeline that extends from Shanghai into Russia. This represents the completion of the entire Russia-China gas pipeline.
About the Russia-China gas pipeline:
The pipeline is called the Power of Siberia in Russia, and the China-Russia East gas pipeline in China.
China has divided the 5,111-kilometer domestic portion of the pipeline into three segments: northern, central, and southern. Each was constructed separately. The pipeline runs from the Heilongjiang Province in northeastern China to Shanghai in eastern China.
Russian gas is scheduled to supply Shanghai customers before the end of 2024.
The Russian portion of the pipeline contains 3,000 kilometers inside Russia.
The pipeline started delivering gas to China in 2019, but it has not yet reached its full capacity of 38 billion cubic meters (bcm) per year, partly due to Covid-19.
Production numbers:
According to PipeChina, thus far, the Russia-China gas pipeline has delivered 78 bcm of gas to China, or less than 20 bcm per year since 2019.
According to Russian media TASS, gas export to China was $6.4 billion, a 62-percent increase over that of one year ago.
Context:
Since the Russian invasion of Ukraine in February 2022, the E.U. has significantly reduced imports of Russian pipeline gas—dropping about 100 bcm in 2023. This reduction could be permanent.
The designed route for the Power of Siberia No. 2 has been changed a number of times, with the latest proposal going through Mongolia to reach China.
China has been reluctant to commit to construct this new pipeline, as it wants to diversify its gas supply source and lower gas prices.
If China agrees to plans for the Power of Siberia No. 2 pipeline and imports 50 bcm of pipeline gas annually from Russia, that could force about 36 mtpa LNG out of the global market.
In view of Trump’s second term, China is expected to purchase significantly more LNG from the USA, partly to help balance the trade between the world’s two largest economies.
What to watch:
The final agreement from China to construct the Power of Siberia No. 2 might be interpreted in the West as a closer tie to Russia.
In the future, will China decide to import more LNG from the USA, more pipeline gas from Russia, or both?
Dive deeper: I recently spoke on this topic on BBC’s Business Matters radio broadcast. Take a listen here.
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