Global energy crisis (2021–present)
A global energy crisis began in the aftermath of the COVID-19 pandemic in 2021, with much of the globe facing shortages and increased prices in oil, gas and electricity markets. The crisis was caused by a variety of economic factors, including the rapid post-pandemic economic rebound that outpaced energy supply, and escalated into a widespread global energy crisis following the Russian invasion of Ukraine. The price of natural gas reached record highs, and as a result, so did electricity in some markets. Oil prices hit their highest level since 2008.[1]
Higher energy prices pushed families into poverty, forced some factories to curtail output or even shut down, and slowed economic growth. It was estimated in 2022 that an additional 11 million Europeans could be driven to poverty due to energy inflation.[2][3] Europe's gas supply is uniquely vulnerable because of its historic reliance on Russia, while many emerging economies have seen higher energy import bills and fuel shortages.[1]
Causes[edit]
Slow supply recovery after pandemic[edit]
The COVID-19 pandemic in 2019–2020 caused a rapid drop in energy demand and a corresponding cut in oil production, and despite the 2020 Russia–Saudi Arabia oil price war, OPEC responded slowly to the demand recovery under new normal, causing a supply-demand imbalance. The 2021–2022 global supply chain crisis further stressed the delivery of extracted petroleum.
Additionally, as Europe sought to replace Russian gas, it bid up prices of U.S., Australian, and Qatari ship-borne liquefied natural gas (LNG), diverting supply away from traditional LNG customers in Asia. Because gas frequently sets the price at which electricity is sold, power prices soared as well. Both LNG producers and importers rushed to build new infrastructure to increase LNG export/import capacity, but these costly projects take years to come online.[1]
Responses[edit]
2021[edit]
Overall, the response to this rising crisis has been to return to coal and other polluting energy sources, subsidizing prices, easing gas taxes, or even lowering the price of carbon dioxide emissions. These short-term solutions lower electricity bills but go exactly in the opposite direction of what is needed to prevent the 1.5 degree increase in temperatures, increasing the likelihood of a climate apocalypse.[45][46]
Europeans rushed to increase gas imports from producers such as Algeria, Norway and Azerbaijan. EU members also introduced gas storage obligations and agreed on voluntary targets to cut gas and electricity demand by 15% through efficiency measures, greater use of renewables, and support for efficiency improvements.[1]
The UK government has turned to Qatar to seek a long-term gas deal to ensure a stable supply of liquefied natural gas (LNG) to the UK.[47] Former Prime Minister Boris Johnson asked Sheikh Tamim bin Hamad Al Thani, the Emir of Qatar, for help during a meeting at the UN General Assembly in September 2021.[48][49] EU suspended an antitrust investigation into QatarEnergy in February 2022.[50]
In October 2021, U.S. producer Venture Global LNG signed three long-term supply deals with China's state-owned Sinopec to supply liquefied natural gas. China's imports of U.S. natural gas will more than double.[51]
On 28 October 2021, natural gas prices in Europe dropped by at least 12% after Gazprom announced it would increase supplies to Europe after Russian domestic storage sites were filled on about 8 November. Norway had increased gas production and lower coal prices in China also helped lower natural gas prices.[52][53]
Hungarian Prime Minister Viktor Orbán blamed a record-breaking surge in energy prices on the European Commission's Green Deal plans.[54] Politico reported that "Despite the impact of high energy prices, [EU Commissioner for Energy] Kadri Simson insisted that there are no plans to backtrack on the bloc's Green Deal, which aims to make the EU climate neutral by 2050."[55] Speaking at the COP26 climate summit in Glasgow, Czech Prime Minister Babiš denounced the European Green Deal,[56] saying that the European Commission "continues to propose dangerous policies such as the ban on combustible engines in 2035, or carbon allowances for transport and individual housing. Due to improper legislature and speculation, the price of emission allowances has gone out of control, resulting in the surging costs of electricity."[57]
This article incorporates text from a free content work. Licensed under CC BY 4.0 (license statement/permission). Text taken from IEA Global Energy Crisis, International Energy Agency, International Energy Agency.
This article incorporates text from a free content work. Licensed under CC BY 4.0 (license statement/permission). Text taken from Russia's War on Ukraine, International Energy Agency. International Energy Agency.
This article incorporates text from a free content work. Licensed under CC BY 4.0 (license statement/permission). Text taken from How the energy crisis is exacerbating the food crisis, International Energy Agency.
This article incorporates text from a free content work. Licensed under CC BY 4.0 (license statement/permission). Text taken from A 10-point plan to reduce the European Union's reliance on Russian natural gas, International Energy Agency.