Global Energy Crisis in 2021: Will This Lead to the Growth of Green Technology or a General Crisis?
It took years of unsustainable practices that eventually led to global warming and the destructive effects of climate change. We were used to the way things were done — business as usual, they might say. But finally, we’re past the climate change awareness stage. With the UN’s leadership through the Paris Agreement, countries around the globe are hopping on board to implement green technologies for cleaner energy.
But the transition to low-carbon energy sources has its growing pains. Right now, certain parts of the globe are experiencing blackouts as prices of fossil fuels have skyrocketed. European countries and China are clamoring about the global energy crisis.
2021 Global Energy Crisis: What’s Happening?
COVID-19 is still here and may probably never leave — we just have to work around it. Economies are starting to recover with the continued rollout of the vaccines. As energy consumption starts to pick up its pace again, the supply is still lagging. When energy demand outpaces both fossil and low-carbon energy supply, it would result in a global energy crisis.
Here’s what’s happening to certain parts of the world:
More than half of China’s provinces are turning off street lights to save on energy. Some factories were forced to reduce operating hours to 3 days per week to save on energy, and some were forced to shut down. What’s concerning about this is that China’s production cut can start a domino effect since a lot of countries outsource from their manufacturing plants.
Natural gas and oil prices have skyrocketed. Natural gas prices increased by 670% since December 2020, while oil is being traded at $82+ per barrel. This has also affected the prices of other consumer goods, resulting in a 13-year high inflation.
Electricity bills in the U.K. are the most expensive across Europe. Despite committing to shutting down coal plants by October 2024, the soaring fuel prices forced them to fire up an old coal power plant early in September 2021 just to meet electricity needs.
There is a water crisis brought about by droughts. Hydropower is unreliable during these times, so unexpected blackouts and power cuts are happening.
Coal power plants are falling short on their storage. Out of the 135 coal plants, 64 have less than 4 days of stock, 25 have less than 7 days of stock, and 17 plants completely ran out of coal.
Fuel prices have also increased, though not as severe as in Europe’s case. However, they are still on the lookout as they prepare for the winter months.
What’s Causing this Global Energy Crisis?
There are a lot of factors to consider. It involves economic, political, and environmental reasons.
1. Economics: Energy demand outpaces energy supply as COVID-19 vaccines roll out
The main reason can be explained by the law of demand and supply.
Oil, gas, and coal prices have dropped in 2020 when there was abundant supply yet declining demand due to the COVID-19 pandemic. To bring back the balance, producers cut back on drilling and pumping operations.
After lockdown restrictions started to ease out, energy demand around the world shoots up all at once. However, the producers are not on the same page yet — thus, the power crunch. Fuel prices are skyrocketing because there is not yet enough supply for everyone.
2. Environmental: Despite the climate policies for decarbonization, renewable energy is not yet scalable
Low-carbon energy resources, especially renewables, have significantly increased in electricity production especially in the last decade. But still, the majority of the world’s electricity comes from fossils — coal, oil, and natural gas.
According to 2019 data, the low-carbon resources have increased to 36.7% of the total electricity mix. But if we talk about the total energy mix, low-carbon resources only make up 15.7%.
This means that the general population is still heavily dependent on fossils. That’s why part of climate change mitigation is to incorporate more electricity in heating and transportation. If fossil fuels are getting expensive, why not turn to renewable energy? Aren’t these resources free and up for grabs?
Yes, they’re free but they’re also intermittent. People still need energy anyway even when countries like Brazil and Norway are experiencing drought or low dam water levels, and North Sea winds in Europe are still. The hurricane in the Gulf of Mexico (oil source) also adds to the supply chain problems. Because of seasonal variability paired with increasing fuel prices, some governments are backpedaling from their climate action progress. People begin to question, was the transition to green energy too ambitious and rushed?
Despite these reservations, the European Union is adamant that the global energy crisis happening right now is just one of the growing pains of transitioning to clean energy. Europe has a steel resolve to become the world leader in tackling the climate crisis. The same applies to China. Despite the power outages, China has still reduced domestic coal production as they focus on being carbon neutral by 2060.
3. Political: Trade tensions and Brexit
China stopped sourcing coal from Australia after the latter pushed for an independent international probe on how the Chinese government handled the spread of COVID-19. Instead, China turned to other countries like Mongolia for coal supply. But it comes with a price since Australia was 25% cheaper in comparison.
In the U.K., long queues of consumers were panic buying in pump stations for gasoline. It’s partly due to the recovery from the pandemic, and the lack of drivers transporting fuel to stations. After Brexit, drivers left the U.K. because they prefer to work in EU countries with higher salaries like France and Germany. The British government imposed emergency measures such as outsourcing overseas drivers and calling the army on standby to ease the panic buying at gas stations.
In Europe, Russia provides 33% of its gas reserves. But there seems to be a decreased natural gas supply that’s associated with the controversial Nord Stream 2 project.
How Does This Affect The Climate Goals?
Energy is the most fundamental component in any civilization. It’s essential to manufacturing industries, commercial and residential buildings, transportation, and agriculture. At the rate of the global energy crisis, a general crisis is more likely to happen especially while we’re still dealing with the pandemic.
As for the supply problem, analysts predict that this global energy crisis will be more severe in the winter season. The U.S. particularly is wary of the months leading to cold winters. Despite pressuring the Organization of the Petroleum Exporting Countries (OPEC) to pump more oil, OPEC stands by their existing pact of an output of 400,000 barrels per day in November.
Some experts point the blame to world leaders for not implementing well-planned policies to ensure a smooth transition to clean energy. But was the growth of green technology really rushed?
The chart above shows the year-to-year changes in primary energy consumption between fossil fuels and low-carbon sources (renewables and nuclear). If you look at the trend of changes with the low-carbon sources, there were no sharp fluctuations. The increase of clean energy consumption seems to be relatively slow.
Meanwhile, fossil fuel consumption changes are all over the place when they should be decreasing. If you notice, the market recession in 2008–2009 showed a dip in fossil fuel consumption. The following year after, it increased sharply. Can you see the pattern here? It’s what’s happening again with the 2020 recession and the beginning of the recovery from the pandemic.
So, should the energy problems around the world encourage us to continue the growth of green technologies?
Or should we take a few steps back from our progress with clean energy transition?
If you were to ask me, I’d say we make good use of what we have now at the present. In any crisis, we use what’s readily available just to get out of the woods. Even if it means using more oil, coal, and gas. At least, until the supply picks up production again and the energy crisis eases down. While also keeping in mind the prized goal — to decarbonize our energy systems.
Needless to say, it’s still true that world leaders must rethink their climate strategies, especially with the scalability issues of renewable energy. Perhaps, we should take cues from Korea and France — they have abundant energy sources from nuclear energy. Or from Nordic countries that run predominantly on renewable energy. If it’s possible with these countries, then it’s achievable for others too.
Maybe Europe’s persistence with the climate goals despite the energy crisis is commendable. Clean energy may be a hard way, but it’s the right way. We owe it to future generations to let them experience how beautiful and magnificent our planet Earth is.