Here's why a sweeping energy crisis is hitting the world right now

LONDON – Much of the world is suffering from a devastating energy crisis.

Houses and factories across China are shrouded in darkness. India’s coal-fired power plants run on scrap. Dozens of UK utility companies have gone bankrupt. Spain announced emergency legislation after household electricity bills shot up more than a third in a year. And there are fears that a severe winter in the US could bring Americans the most expensive heating bills in years.

Energy scarcity inundates the world even before the cruelest months of winter freeze the northern hemisphere, and officials and experts suggest that the multiple problems behind the crisis will make it difficult to find solutions.

This cocktail of causes is a mixture of bad weather, China trying to end its dirty coal addiction, and even allegations that Russia is throttling natural gas for political reasons. However, most experts agree that the main driving force has been the recovery from Covid-19. People simply consume energy faster than production can be revived after a year of idling.

“It’s like a car that has been taken off the road for a while and now we want to start it again quickly – it takes time,” said Jianzhong Wu, professor of energy infrastructure at Wales University Cardiff.

Not only did Covid-19 kill more than 4.5 million people, but global energy consumption fell 4.5 percent in the past year – the biggest drop since World War II, according to BP’s Statistical Review of World Energy. That nosedive was the reason why oil prices went negative for the first time in history in April 2020.

China’s central government has ordered the country’s leading state-owned energy companies – from coal to electricity to oil – to secure supplies for this winter at all costs.Qilai Shen / Bloomberg via Getty Images

“As a result, many manufacturers simply stopped production,” said Keith Bell, an engineering professor at the University of Strathclyde, UK. “It’s not easy because you also have to make these offline oil and gas systems safe.”

But vaccines have encouraged governments to ease restrictions, and energy needs have resurrected. Just as stopping was not easy, “restarting production is a process that takes some time,” said Bell.

That loud demand comes when global reserves are depleted after a cold winter when millions of people who were locked up huddled in gas-heated homes.

Net zero is definitely the necessary direction of travel. But we need a well-planned and well-coordinated way to get there.

Jianzhong Wu

OPEC this week resisted calls to increase supply. Gas prices in Europe and Asia have skyrocketed, reaching record highs every day.

The USA weathered this global crisis better than most of the others because, as the world’s largest gas producer, it has an adequate supply. But here, too, prices have risen by 180 percent in the last 12 months, the highest value since 2014.

Experts say an early cold snap or particularly deep frost in parts of the country could result in crippling bills for consumers.

“Cascade of Problems”

Most experts agree that the ongoing effects of Covid-19 are pressing the world like an overworked stress ball. But a multitude of unrelated local factors also strike every country at the same time.

The European Union is looking into allegations by some of its lawmakers that Russia, which supplies more than 40 percent of the bloc’s natural gas, is restricting the flow. Legislators, especially from the Baltic States and Poland, say Moscow wants to use the crisis to approve the controversial Nord Stream 2 pipeline between itself and Germany.

A technician monitors the Nord Stream 2 offshore natural gas pipeline in the Leningrad region of Russia on July 27, 2021.Peter Kovalev / TASS

The Kremlin and Gazprom, its state-owned energy giant, deny this. And Europe’s largest gas company has told Reuters that Gazprom has met its commitments. Gas prices fell Wednesday after President Vladimir Putin hinted that Gazprom could increase supplies to ease the situation.

When asked whether Russia, a major gas supplier to Europe, is holding back energy as a leverage, National Security Advisor Jake Sullivan told reporters on Thursday: “Russia has a history of using energy as an instrument of coercion, as a political weapon.”

China has suffered weeks of power outages in more than a dozen provinces. Some of this is related to Covid-19: factories have seen a surge in demand as the world increases their desire for goods made in China. But there are other factors as well.

As the world’s largest emitter of CO2 and the hungriest consumer of coal, China has pledged to be CO2 neutral by 2060. In the short term, Chinese officials have also imposed stricter security controls in coal mines, which have a history of high accident rates.

Beijing has also effectively banned the import of Australian coal after the Australian government was the first to ban Chinese telecommunications giant Huawei from its 5G network.

And all of this comes at a time when most of the world is trying to wean itself off fossil fuels and towards renewables. But even in this transition period, the countries are still dependent on oil, gas and coal – especially when the weather does not cooperate.

Europe is often hit by Atlantic storms, but in the past few weeks many of its turbines have been limp due to less-than-expected winds. And although China suffered major floods that summer, there was also a drought at its hydropower plant in Yunnan Province.

Workers bag loose charcoal as they unload a truck at a wholesale market in Mumbai, India. Heavy rains have slowed coal production in much of the country, causing power plants to report low reserves.Dhiraj Singh / Bloomberg via Getty Images

Climate change has also affected traditional fossil fuels.

Successive Hurricanes Nicholas and Ida destroyed 26 million barrels of offshore oil production when they reached the Gulf of Mexico. A sultry summer used to mean that many Americans turned up their energy-guzzling AC units.

In India, monsoon floods have slowed coal production in the central and eastern states. This is one of the reasons why India’s coal-fired power plants currently only have an average of four days of fuel reserve.

“That was a cascade of problems,” said Wu, who also sits on an expert panel that advises the British government. “Net zero is definitely the necessary direction of travel. But we need a well-planned and well-coordinated path to get there – or what we are experiencing will happen again. “

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