The Price of Energy Security: Addressing the Energy Crisis in the Face of Global Uncertainty

by Jonathan Wilson, CEO

A Perfect Storm

Few would deny the logic for a shift towards renewable energy. Cleaner, “greener” energy sources provide a viable means of enriching the much-needed energy diversification mix. Still, more fundamentally, renewable sources provide a secure, affordable and sustainable provision of power without the jeopardy associated with fossil fuels.

However, events of the last few years have clearly demonstrated that the call to action needs to be amplified. The convergence of Brexit, the COVID-19 pandemic and, most recently, the Russia-Ukraine conflict have created the perfect storm for an energy crisis.

Whilst Brexit placed uncertainty on future investments in the UK energy sector, the unprecedented oil demand shock of the pandemic and subsequent “V-shape” rebound as nations emerged from lockdown highlights the volatility inherent within the current energy portfolio. Then, just as the road to recovery seemed to be on course, the Russia-Ukraine conflict poured new fuel onto the smouldering embers left behind from the global pandemic.

In 2021, Russia was the third-largest crude oil producer and the second-largest natural gas producer. However, due to the conflict and consequential Western sanctions, supplies to the UK and Europe were cut almost entirely. This now leaves us struggling to contain an energy crisis that could lead to rolling blackouts, a far-reaching economic recession and a significant increase in poverty amongst some of the world’s wealthiest nations.

The International Energy Association (IEA) as been monitoring the ensuing impact on the global energy landscape since February 2022. They highlight the stark reality of an over-reliance on Russian supply, which saw Russia’s share of EU gas demand increase from 26% in 2010 to over 40% by 2018. However, the IEA also note that in light of a seemingly new-found urgency towards energy security, the EU’s ‘Fit for 55’ commitments on net emissions reductions could serve to be supercharged.

Indeed, whilst many European Governments have pushed to accelerate the deployment of solar and wind, they have also paradoxically increased their coal purchases in tandem, seemingly putting climate change targets on the back burner.

This juxtaposition is nowhere more evident than in Poland, fast becoming Europe’s leading market for heat pumps whilst concurrently suspending regulations aimed at reducing air pollution, the result of which has led to many residents saving rubbish to burn as fuel to heat their homes.

The Road to Clean Energy Security

Clean energy security is more critical now than ever before. We all recognise that fossil fuels are finite resources. Most of us can appreciate the need for deep decarbonising efforts to halt the irreversible damage posed by unchecked climate change.

However, it could be perceived to take an act of overt geopolitical aggression to provide the necessary shot in the arm for Governments and policy-makers to consider meaningful action towards a clean energy transition.

Climate change

The world needs to shift toward renewable energy sources, plain and simple. As the pendulum of cost-competitiveness continues to swing in favour of renewables, the chances of addressing the Energy Trilemma to make energy Secure, Affordable and Sustainable start to seem within reach.

The new focus on energy security is triggering unprecedented policy momentum to accelerate the transition. According to the IEA, the world is set to add as much renewable power in the next five years as it did in the past 20, overtaking coal as the largest source of electricity along the way.

Will the accelerated adoption of renewable technology put paid to the current global energy crisis and prevent another from occurring? The answer to this is, of course, multifaceted, and no one factor alone can determine the likelihood of success. That said, as the various technologies continue to advance and more robust policies emerge to underpin existing initiatives, the need to move beyond the ‘Plan’ phase and begin the ‘Implement’ and ‘Deploy’ process becomes all the more pressing.