Lord David Howell
2022 was said to be the year when green transition momentum was halted by energy security concerns. But in truth it was the year when harsh and conflicting energy realities, which had been there beneath the surface long before the Ukraine assault, began to surface.
Global emissions continued to rise fast, despite all the Net-Zero commitments and targets. Recognition of widespread greenwash began to undermine faith in climate curbing policies.
The intermittency problems and dangers of renewables were still far, maybe, decades away from being solved. 85% of world energy continued to be sourced from oil, gas and coal.
Talk of ‘making oil history’ conflicted with powerful worldwide demand for oil and gas, with supply disrupted, hyper-volatile prices and the realisation that fossil fuels, on which the whole global industrial structure had been built over 150 years or more, could not just be cancelled and would continue declining, albeit slowly, for decades to come. It dawned that short-term oil and gas market chaos, as Russia diverted supplies away from Europe to Asia, could not just be wished away by medium- and longer-term plans for carbon-free economies, and by new nuclear capacity and storage technologies which did not yet exist.
Indeed, unless the short-term energy turmoil, with worldwide inflationary results along with both financial and political stability, plus consequent recession, could be handled sensibly, there would be no calmer and carbon-free times further ahead at all.
None of these clashes between energy trends, policies and ambitions will be resolved quickly in the year ahead.
Oil and gas prices, the chief inflation drivers, may ease, but a China rebound could limit the decline, as could renewed intensity in the Ukraine conflict. Capping the price of Russian fuel imports, the EU plan, will have unpredictable, and, probably, small effects.
Energy issues will remain at the heart of the global crisis, demanding ice-cool analysis and the deepest understanding of markets.
Hold on for further ‘unexpected’ events and more rough rides.