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Global energy crisis (2021–2023)

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The 2021 global energy crisis is an ongoing shortage of energy across the world, affecting countries such as the United Kingdom[1][2] and China,[3] among others.[4]

Background

In December 2020, after months of restrictions, China fully blocked coal imports from Australia, which was China's largest source of imported coal.[5]

Brazil's worst drought in almost a century is threatening its electricity supply.[6][7] Brazil relies on hydropower for two-thirds of its electricity.[8]

Euractiv reported that European Commissioner for Climate Action Frans Timmermans told the European Parliament in Strasbourg "that "about one fifth" of the energy price increase can be attributed to rising CO2 pricing on the EU’s carbon market."[9]

Effects by location

China

China is facing its worst energy crisis in decades.[10] The Guardian reported that "Companies in the industrial heartlands have been told to limit consumption, residents have been subjected to rolling blackouts, and annual light shows have been cancelled."[11]

Prices for industrial metals such as copper, zinc and aluminium have soared to record levels as energy shortages in China drive up costs for electricity and natural gas.[12][13] The price of aluminium has reached a 13-year high.[14][15]

The energy crisis has intensified pressures on China ahead of the 2022 Winter Olympics.[16][17] Al-Jazeera reported that "China’s energy crisis is partially of its own making as President Xi Jinping tries to ensure blue skies at the Winter Olympics in Beijing next February and show the international community he’s serious about de-carbonizing the economy."[18]

India

India is on the verge of energy crisis as the country's coal stockpiles at power plants are dangerously low.[19]

Europe

Due to a combination of unfavourable conditions, which involved soaring demand of natural gas, its diminished supply from U.S., Norway and Russia to the European markets, less power generation by renewable energy sources such as wind, water and solar energy, and cold winter that left European gas reservoirs depleted, Europe faced steep increases in gas prices in 2021.[20][21][22][23] Russia has fully supplied on all long-term contracts, but has not supplied extra gas on the spot market.[24] In October 2021, the Economist Intelligence Unit reported that Russia had limited extra gas export capacity because of its own high domestic demands with production near its peak.[24][25] On 27 October 2021, Russian President Vladimir Putin authorised state-controlled energy giant Gazprom to start pumping extra natural gas into European gas storage sites once Russia finishes filling its own gas inventories, which may happen by November 8.[26][27] This caused the sharp drop in global prices on energy resources and alleviated the energy crisis in Europe significantly.

The Groningen gas field in the Netherlands, Europe's largest natural gas field, will stop production by mid-2022. Reuters reported that "extraction quickly became problematic in recent years, as a series of tremors caused by gas production damaged houses and buildings in the region."[28][29]

Some critics blamed the European Union Emissions Trading System (EU ETS) and closure of nuclear plants for contributing to the energy crisis.[30][31] The Merkel government in Germany has decided to phase out both nuclear power and coal plants.[32]

U.S. exports of liquefied natural gas (LNG) to China and other Asian countries surged in 2021, with Asian buyers willing to pay higher prices than European importers.[33]

In late 2021, European energy prices continued to increase, while an unprecedented energy crunch, particularly for natural gas, weighed heavily on economic growth indicators. Liquified natural gas markets were tight for the entire 2021. The Kremlin has been accused to tout the necessity of Nord Stream 2, but some energy analysts view energy shortages in Europe as self-inflicted, and blame European Union sanctions of Russian entities, among other reasons.[34]

Belgium

A study by the Commission for the Regulation of Electricity and Gas shows a 30% increase in the price of electricity and 50% in the price of natural gas in Belgium.[35]

France

Surging energy prices for natural gas and heating oil have caused higher living expenses, particularly for renters and rural land owners. Socio-economic measures were taken to counter-act increased energy prices that disproportionally affect working families and immigrants. The 2021 energy crisis, complicated by political tensions in Eastern Europe and scarce natural gas supplies, have cost the French state an additional 580 million euros ($685 million) per year.[36]

United Kingdom

Main articles: 2021 United Kingdom fuel supply crisis and 2021 United Kingdom natural gas supplier crisis

From August 2021, high European wholesale natural gas prices caused some smaller domestic suppliers in the United Kingdom to go out of business.[37] In September 2021, panic buying of petrol and diesel fuel by consumers in the United Kingdom caused serious disruption to the supply of road fuel.[38]

Spain

In Spain, electricity prices rose more than 200%.[39]

On 1 November 2021, Algeria stopped natural gas exports to Spain through the Maghreb–Europe Gas Pipeline. Algeria is Spain's largest gas supplier.[40][41]

Responses

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.[42]

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 are also helping lower natural gas prices.[43][44]

Hungarian Prime Minister Viktor Orbán blamed a record-breaking surge in energy prices on the European Commission’s Green Deal plans.[45] 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."[46] Speaking at the COP26 climate summit in Glasgow, Czech Prime Minister Babiš denounced the European Green Deal,[47] 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."[48]

Countries by natural gas proven reserves (2018), based on data from CIA World Factbook. Iran has the world's second largest natural gas reserves after Russia.

U.S. President Joe Biden's national security adviser Jake Sullivan released a statement calling on OPEC+ to boost oil production to "offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022."[49] On 28 September 2021, Sullivan met in Saudi Arabia with Saudi Crown Prince Mohammed bin Salman to discuss the high oil prices.[50] The price of oil was about $80 by October 2021, the highest since 2014.[51][52]

Iranian oil minister Javad Owji said if U.S.-led sanctions on Iran's oil and gas industry are lifted, Iran will have every capability to tackle the global energy crisis.[53]

Qatar's energy minister Saad Sherida al-Kaabi stated that there "is a huge demand from all our customers, and unfortunately we cannot cater for everybody. Unfortunately, in my view, this is due to the market not investing enough in the [gas] industry."[54]

European Commission President Ursula von der Leyen said that "Europe today is too reliant on gas and too dependent on gas imports. The answer has to do with diversifying our suppliers ... and, crucially, with speeding up the transition to clean energy."[55][56]

European Commissioner for Climate Action Frans Timmermans suggested "the best answer to this problem today is to reduce our reliance on fossil fuels."[57]

In late October 2021, Russian ambassador Andrei Kelin denied that Russia is withholding gas supplies for political reasons. According to the ambassador, delivery of natural gas through the Ukraine has been increased by up to 15% for November 2021, but it was unclear whether this increase would have an immediate effect on the natural gas supply in Europe. Furthermore, such increase in gas delivery was hindered by a lack of modernization of the Ukrainian gas pipelines, according to the source.[58]

Relations with climate change

See also: Climate change mitigation and Fossil fuel phase-out

See also

References

  1. ^ "Global Energy Crisis Shows Fragility of Clean-Power Era". Bloomberg.com. 2021-10-05. Retrieved 2021-10-09.
  2. ^ "Warning UK energy bills may soar 30% in 2022 – as it happened". The Independent. 2021-10-07. Retrieved 2021-10-09.
  3. ^ "China's Energy Crisis Is Hitting Everything From iPhones to Milk". Bloomberg.com. 2021-10-07. Retrieved 2021-10-09.
  4. ^ "The Electricity Crisis Was Not Caused By A 'Perfect Storm'". finance.yahoo.com. Retrieved 2021-10-09.
  5. ^ "China needs more coal to avert a power crisis — but it's not likely to turn to Australia for supply". CNBC. 26 October 2021.
  6. ^ "Brazil warns of energy crisis with record drought". Al-Jazeera. 1 September 2021.
  7. ^ "Brazil's Drought Pressures Power Grid, Boosting Case for Renewables—and Fossil Fuels". The Wall Street Journal. 11 October 2021.
  8. ^ "Drought squeezes Brazil's electricity supply". France 24. 3 September 2021.
  9. ^ "The Green Brief: Europe's energy price crunch dilemna". Euractiv. 29 September 2021.
  10. ^ "Will China's Energy Crisis Make It More Reluctant to Fight Climate Change?". Time. 30 September 2021.
  11. ^ "Global energy crisis: how key countries are responding". The Guardian. 12 October 2021.
  12. ^ "METALS-Copper heads for best week since 2016, zinc rockets". Reuters. 15 October 2021.
  13. ^ "Base Metals Surge as Energy Crisis Knocks Out More Supply". Bloomberg. 15 October 2021.
  14. ^ "Aluminum prices hit 13-year high amid power shortage in China". Nikkei Asia. 22 September 2021.
  15. ^ "Global Energy Crisis Piles Pressure on Aluminum Supply". Bloomberg. 11 October 2021.
  16. ^ "Analysis: China's green Winter Olympics 2022 to boost natural gas demand". S&P Global. 15 September 2021.
  17. ^ "How China's energy crisis has sent commodity markets reeling". Nikkei Asia. 18 October 2021.
  18. ^ "The next shock in the pipeline for China's economy: energy crunch". Al Jazeera. 27 September 2021.
  19. ^ "China isn't the only huge Asian economy with a coal shortage now". CNBC. 12 October 2021.
  20. ^ "Energy crisis: The blame game has begun - but are some of the claims just hot air?". Sky News. 22 September 2021.
  21. ^ "Europe's Power Crisis Moves North as Water Shortage Persists". Bloomberg. 3 October 2021.
  22. ^ "Russia says it could boost supplies to ease Europe gas costs". Associated Press. 7 October 2021.
  23. ^ "It is tempting to blame foreigners for Europe's gas crisis: The main culprit is closer to home". The Economist. 16 October 2021.
  24. ^ a b Horton, Jake (14 October 2021). "Europe gas prices: How far is Russia responsible?". BBC News.
  25. ^ Mazneva, Elena (3 September 2021). "Russia Has a Gas Problem Nearly the Size of Exports to Europe". Bloomberg.
  26. ^ "Russia seen starting to fill Europe's gas storage after Nov. 8". Euronews. 27 October 2021.
  27. ^ "Putin Orders More Gas for Europe Next Month, Sending Down Price". Bloomberg. 27 October 2021.
  28. ^ "Dutch confirm plan to end gas production at Groningen next year". Reuters. 24 September 2021.
  29. ^ "Europe's energy crisis: Why are natural gas prices soaring and how will it affect Europeans?". Euronews. 6 October 2021.
  30. ^ "European Energy Crisis Fuels Carbon Trading Expansion Concerns". Bloomberg. 6 October 2021.
  31. ^ "In Global Energy Crisis, Anti-Nuclear Chickens Come Home to Roost". Foreign Policy. 8 October 2021.
  32. ^ "Germany Flirts With Power Crunch in Nuclear and Coal Exit". Bloomberg. 22 August 2021.
  33. ^ "Asian buyers outbid Europe for spot supplies of US natural gas". Financial Times. 21 September 2021.
  34. ^ Cohen, Ariel (Oct 14, 2021). "Europe’s Self-Inflicted Energy Crisis". Forbes. Retrieved 8 November 2021.
  35. ^ "Les prix du gaz et de l'électricité explosent". RTBF Info (in French). 2021-09-06. Retrieved 2021-10-18.
  36. ^ "France to Give Families 580 Million Euros to Pay Energy Bills". Bloomberg News. Retrieved 8 November 2021.
  37. ^ "Two more UK energy firms go bust as prices soar". BBC News. 14 October 2021.
  38. ^ "Fuel crisis: Business Secretary Kwasi Kwarteng 'not guaranteeing anything' over impact on Christmas". Sky News. 29 September 2021.
  39. ^ "Spain's Plan to Curb Soaring Energy Prices a Sign of Growing State Intervention". VOA News. 20 September 2021.
  40. ^ "Europe's energy crisis: Spain presses Algeria to guarantee natural gas supply". Euronews. 28 October 2021.
  41. ^ "Algeria to halt gas exports to Spain via Morocco". Africanews. 1 November 2021.
  42. ^ "Sinopec signs huge LNG deals with US producer Venture Global". Financial Times. 20 October 2021.
  43. ^ Millard, Rachel (28 October 2021). "Gas prices slump as Putin boosts supplies to Europe". The Daily Telegraph. Retrieved 28 October 2021.
  44. ^ "Russia seen starting to fill Europe's gas storage after Nov. 8". Euronews. 27 October 2021.
  45. ^ "The Green Brief: East-West EU split again over climate". Euractiv. 20 October 2021.
  46. ^ "Putin promises gas to a Europe struggling with soaring prices". Politico. 13 October 2021.
  47. ^ "COP26: Babiš to focus on European energy crisis, EU Green Deal's economic impact". Czech Radio. 1 November 2021.
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  50. ^ "Top White House aide discussed oil prices with Saudi Arabia". Reuters. 1 October 2021.
  51. ^ "U.S. crude oil price tops $80 a barrel, the highest since 2014". CNBC. 8 October 2021.
  52. ^ "Oil analysts predict a prolonged rally as OPEC resists calls to ramp up supply". CNBC. 5 October 2021.
  53. ^ "Iran ready to resolve global energy crisis if sanctions lifted: minister". Tehran Times. 5 October 2021.
  54. ^ "Soaring gas prices not a crisis, reflect lack of investment -Qatar minister". Reuters. 21 September 2021.
  55. ^ "EU chief says key to energy crisis is pushing Green Deal". Associated Press. 20 October 2021.
  56. ^ "Europe's energy crisis: Continent 'too reliant on gas,' says von der Leyen". Euronews. 20 October 2021.
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  58. ^ "Ambassador Andrei Kelin denies Russia is withholding gas supplies for political reasons". the national.scot. Retrieved 8 November 2021.
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