Covid at center of global energy crisis, but cascade of problems fuel it

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

Homes and factories across China are in darkness. India’s coal-fired power plants are scrapped. Dozens of UK utility companies have gone bankrupt. Spain announced emergency legislation after household utility bills rose by more than a third in a year. And there are fears that a harsh winter in the United States could result in the highest heating costs for Americans in years.

Energy shortages are sweeping the world even before the cruelest winter months freeze the northern hemisphere, and officials and experts stress that the multiple problems causing the crisis will make solutions more difficult to find.

This cocktail of causes is a mix of bad weather, from China trying to shake off its reliance on dirty coal, and even allegations that Russia is strangling the natural gas market for political gain. But most experts agree that the central driving force has been the rebound of Covid-19. By breaking out of blockages, people are simply consuming energy faster than production can be turned back on after a year of inactivity.

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

Not only has Covid-19 killed more than 4.5 million people, but it has seen global energy use drop 4.5% last year – the biggest drop since World War II, according to the review BP Statistical Review of World Energy. This fall is the reason why, in April 2020, oil prices turned negative for the first time in history.

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

“As a result, many producers simply stopped producing,” said Keith Bell, professor of engineering at the University of Strathclyde in the UK. “It’s not an easy thing to do because you have to secure these oil and gas facilities offline as well. “

But vaccines have encouraged governments to ease restrictions and demand for energy has come back to life. Just as the shutdown was not easy, “restarting production is a process that takes some time,” Bell said.

The glaring demand comes as global reserves are already depleted after a cold winter where millions of people in lockdown were crammed into gas-heated homes.

Net-zero is certainly the necessary direction of travel. But we have to have 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, setting records every day.

The United States has been able to weather this global crisis better than most because, as the world’s largest gas producer, it has a lot of supply. But again, prices have jumped 180% over the past 12 months, the highest since 2014.

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

“Cascade of problems”

Most experts agree that the continued fallout from Covid-19 is squeezing the world like an overworked stress ball. But a host of unconnected local factors also hit every country simultaneously.

The European Union is examining claims by some of its lawmakers that Russia, which supplies more than 40% of the bloc’s natural gas, is restricting the flow. Lawmakers, mostly from the Baltics and Poland, have said Moscow wants to use the crisis to gain approval for the controversial Nord Stream 2 gas pipeline between it and Germany.

A technician monitors the Nord Stream 2 offshore gas pipeline in Russia’s Leningrad region on July 27.Peter Kovalev / TASS

The Kremlin and Gazprom, its public energy giant, deny this. And Europe’s largest gas companies have told Reuters that Gazprom is fulfilling its obligations. Gas prices fell on Wednesday after President Vladimir Putin hinted Gazprom could increase supplies to ease the situation.

Asked whether Russia, one of Europe’s main natural gas suppliers, was using energy as a lever, US National Security Advisor Jake Sullivan told reporters on Thursday: “Russia has always used energy as a tool of coercion, as a political weapon “.

China has been hit by weeks of power outages in more than a dozen provinces. Part of this is linked to Covid-19: Factories have seen an increase in demand as the world increases its desire for products made in China. But there are other factors as well.

As the world’s largest emitter of CO2 and its largest consumer of coal, China has pledged to be carbon neutral by 2060. In the short term, Chinese authorities have also imposed tighter security controls in coal mines, which historically have a high accident rate.

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

And all of this is happening at a time when most of the world is trying to wean themselves off fossil fuels and turn to renewables. But during this period of transition, countries still have to rely on oil, gas and coal, especially when the weather does not cooperate.

Europe is often hit by Atlantic storms, but in recent weeks many of its wind turbines have been sluggish due to weaker-than-expected wind. And although China suffered huge flooding this summer, it also experienced a drought at its hydroelectric center in Yunnan province.

Workers bulk charcoal as it is unloaded from a truck at a wholesale market in Mumbai, India. Heavy rains have slowed coal production in much of the country, leading power plants to declare low reserves.Dhiraj Singh / Bloomberg via Getty Images

Climate change has also had an impact on traditional fossil fuels.

Back-to-back hurricanes Nicholas and Ida destroyed 26 million barrels of offshore oil production when they struck the Gulf of Mexico. Earlier, a sweltering summer meant many Americans increased their gas-guzzling air conditioning units.

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

“It’s been a cascade of problems,” said Wu, who also sits on an expert committee advising the British government. “Net-zero is definitely the direction of travel that is needed. But we have to have a well-planned, well-coordinated way to get there or else what we are going through will happen again.

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