Why the so-called “energy crisis” is both a threat and an opportunity

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This is a moment to accelerate the transition towards net zero, not to retreat.

When it comes to the politics of energy and the climate it can seem as though we are living inside a kaleidoscope. In April 2020 Covid-19 sent oil futures tumbling into negative territory. In May this year, global oil companies were on the run, as ExxonMobil’s diehard management were humiliated by activist shareholders when they demanded that the company take action on climate change. Now, only a few months later, the oil price is more than $80 per barrel for the first time since 2014. With gas and coal also in short supply, the talk is of a “global energy crisis”.

In the UK the sense of panic is particularly acute. Brexit amplifies the uncertainty. But tensions are rising worldwide. In Beijing and Delhi, Brussels and Washington, DC, surging prices for coal, oil, gas and carbon permits are causing alarm in governments and chancelleries. A ripple effect is running through the global economy. As the prices for oil, gas and coal increase, so do the prices of everything that is made out of them, such as fertiliser. That, ultimately, adds to the price of food. Before long, an energy crisis may become something more comprehensive and more politically dangerous – a cost of living crisis.

Fear of stagflation – a combination of low growth and high inflation – haunts the terminals. On this telling, the world is facing a historic rerun of a 1970s-style “energy shock”. Except this time the crisis is not blamed on the Organisation of the Petroleum Exporting Countries (Opec) but on a premature and ill planned push for decarbonisation.

Thanks to crowd-pleasing green policies, so the narrative goes, we are being starved of gas. To some conservatively inclined commentators, the pursuit of net zero appears as a new totalitarian ideology, a “religious-like” cult of state-planning that will impel societies towards global hunger and mass death. According to the head of one influential energy advisory firm, “as with so many previous, state-led utopian revolutions in the 20th century, the road to a promised utopia [in this case ‘net zero carbon’] is littered with the likely reality of a dystopian nightmare”. Apparently, the spectre of Stalin’s famine in 1930s Ukraine is lurking on the horizon.

Read full article at The New Statesman.

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