Winter is coming. How is this year different?

In 2022, the world is facing a massive energy crisis. Each day, the Northern Hemisphere is getting shorter and the air is getting colder. Heating systems are quickly going to become an integral part of daily life and the functioning of society. However, energy supply shortages are causing oil, gas, and electricity prices to increase exponentially. The global economy is teetering on the brink of recession, with some reports saying that a recent OPEC oil output cut will be enough to push it over the edge (Bocca and Ellerbeck, 2022). Around the world, energy bills are going up and consumers are getting hit hard. The situation is so dire that EU citizens have begun taking to the streets and protesting the unbearably rapid rising costs of living (Euronews, 2022). Governments are rushing to pass energy price caps in order to help subsidize these bills and keep them at a reasonable level (BBC, 2022). 

What caused this crisis? Simply put, Russian gas exports have collapsed due to sanctions imposed by the West as a result of the Ukrainian invasion. This manufactured shortage coincides with an increase in energy consumption following the COVID-19 pandemic. Because of this, the energy crisis sits at the center of a larger material and political discussion. This supply shortage has created the pressing question of where remaining energy supplies should be purchased.

Hence, the world sits at a crossroad: find alternative fossil fuel suppliers and continue to increase C02 emissions or overhaul current carbon systems and push to transition to clean energy sources, investing in new technologies and the future of the planet. A window of opportunity has opened, a silver lining in this terrifying and destructive ordeal. By choosing renewable energy any political power that Russia wields in the form of gas is subverted and the world is redirected into a future of renewable energy. Governments must not take the easy route out and just invest in more fossil fuel infrastructure, continuing to get oil from any place that is not Russia. Steps in the latter direction would lock the world in “irreversible warming” (Bassetti, 2022).

Mark Radka, the head of the UN Environment Programme’s Energy and Climate branch, summed up the problem when he asserted, “We need energy, but we also need a healthy climate for the planet to function: we need an energy transition that is climate compatible” (Bassetti, 2022).

Which path is the world heading down? 

According to the World Energy Outlook 2022 report published by the International Energy Agency (IEA), the global energy crisis can be a historic turning point towards a cleaner future (IEA, 2022). For the first time since industrialization, the global demand for fossil fuels have peaked or plateaued. The report also found that Russia has been unable to find a market as large as Europe for its oil, therefore permanently decreasing their fossil fuel exports and permanently reshaping the world energy order.

The shortage of Russian oil has exposed just how dependent the EU had become, rendering it the hardest hit by the crisis. In 2021, energy represented 62% of EU imports from Russia. However, the crisis has forced governments to think long term and plan on how to secure their energy security for the future. In the eight months that have passed since the war began, EU countries have since taken significant steps toward diversifying their energy sources and decreasing dependence on Russian oil. The EU passed REPowerEU, a comprehensive plan to “rapidly reduce dependence on Russian fossil fuels and fast forward the green transition” (EU, 2022). It plans to do so through energy savings, diversification of energy supplies, and accelerated roll-out of renewable energy. This plan epitomizes the direction that the world must head in.

Some politicians and scholars are concerned that the crisis and resulting short-term spike in energy prices as this transition is being made will actually deter public support for clean energy. The heaviest burden of the crisis is falling on poorer households, where a larger share of the income is spent on energy. As citizens around the world struggle to pay their energy bills, frustration grows as does the pressure on the government to create short term solutions. They don't care where the energy comes from, whether it be coal or renewables. However, because clean energy often has a reputation for being more expensive, the public may be critical of long term governmental solutions. Therefore, public support for clean energy will decrease as it will be attributed to rising gas prices. It is important to note that the IEA’s 2022 report found little to no evidence to support claims that climate policies and net zero commitments contribute to run-ups in energy prices, and in fact higher shares of renewables were correlated with lower electricity prices. 

International energy markets are seeing unprecedented restructuring following the energy crisis. Whether Putin knows it or not, his invasion of Ukraine has caused governments to accelerate their historic push towards a cleaner, more affordable and more secure energy system. 

References

Bassetti, Francesco. “Solving the Energy Crisis with Renewables.” Foresight, 10 Oct. 2022, https://www.climateforesight.eu/articles/solving-the-energy-crisis-with-renewables/.  

“Cost of Living Protests across Europe Might Spell Political Trouble.” Euronews, 22 Oct. 2022, https://www.euronews.com/2022/10/22/cost-of-living-protests-and-strikes-across-europe-might-spell-political-trouble.  

“Electricity Use Drops in Europe: What You Need to Know about the Global Energy Crisis This Week.” World Economic Forum, https://www.weforum.org/agenda/2022/10/global-energy-sector-latest-news-17-october/.  

Iea. “World Energy Outlook 2022 Shows the Global Energy Crisis Can Be a Historic Turning Point towards a Cleaner and More Secure Future - News.” IEA, 1 Oct. 2022, https://www.iea.org/news/world-energy-outlook-2022-shows-the-global-energy-crisis-can-be-a-historic-turning-point-towards-a-cleaner-and-more-secure-future.  

“Press Corner.” European Commission - European Commission, https://ec.europa.eu/commission/presscorner/detail/en/IP_22_3131.  

“What Is the Energy Price Cap and What Will Happen to Bills?” BBC News, BBC, 24 Nov. 2022, https://www.bbc.com/news/business-58090533.