As Europe and Britain head into winter hoping they have put the worst of the pandemic behind them, they are fast becoming, along with China, a casualty of a worsening global energy crisis. Skyrocketing prices for natural gas, coal, and electricity are threatening the ability of many to keep the lights on and the heaters going. The industry faces the prospect of forced shutdowns.
Much of the price spike can be explained by surging global demand from the post-lockdown recovery, a diminished supply of gas from Russia (Europe’s main provider), and fierce competition from Asia for energy resources. But there are other factors at play.
As demand for energy fell away at the start of the pandemic, so did investment in oil and gas infrastructure. When the economy snapped back far quicker than expected, the energy sector was left scrambling to keep up. This, along with the global phase-out of coal-fired power plants – a necessary component of countries’ attempts to meet their carbon reduction targets – and the winding back of nuclear power, meant renewables were suddenly asked to fill the gap well before the sector is ready.
Europe has invested trillions of dollars in developing renewable energy, but some experts believe it has neglected crucial investments in its energy grid to install the complex systems of storage, back-up, infrastructure, and supply redundancy required to support wind, solar, and other zero-carbon energy sources as they take on the role of baseload supplier.
The severity of the energy crunch has been exacerbated by many nations, including Australia, looking to use gas – which emits about half as much carbon dioxide as coal – as a bridge in the transition from coal to renewable energy. As a temporary fix, gas has its benefits, but when demand far exceeds supply, its limitations become evident, and its cost balloons.
There is no easy solution here. The crisis in Europe and Britain highlights the reality that while we must agree at the Glasgow climate summit later this month on substantial and ongoing emissions reductions, another absolute priority must be putting in place the policy framework to ensure the transition to renewables allows us to keep the lights on. And as the pandemic showed, at times of national crisis, governments must be front and center in finding a way forward.
Energy is a factor in everything we buy and consume, so its price has a significant impact on our economy. It is also a significant cost in our household budgets, with an outsized effect on the poor. Energy security, and thus climate policy, has to be treated like national security and not a political football, as it has been too often in Australia, being kicked about in pursuit of votes.
What Europe and Britain are revealing is that, in pursuit of net-zero emissions, good intentions are not enough. The transition from fossil fuels to renewable energy in a timeframe that will limit the impact of global warming requires a transformation that, in scale and complexity, is well beyond anything previously attempted by the modern global economy. Decarbonizing the economy does not mean plunging into darkness or forcing the poor to go without the necessities of daily life. It means continuing to power homes and industry, but doing it cleanly.
This, once again, illustrates how essential it is that Prime Minister Scott Morrison attend the summit in Glasgow. No nation can go it alone. Mr. Morrison calls frequently on international cooperation and the “rules-based order” to address other pressing issues such as the rise of China, and it is imperative that he show equivalent effort in being part of global coalitions to advance climate policy, in all its complexity.