Covid at the center of world energy crunch, but cascade of problems fuel it

  

Category:  News & Politics

Via:  perrie-halpern  •  2 weeks ago  •  0 comments

By:   Alexander Smith (NBC News)

Covid at the center of world energy crunch, but cascade of problems fuel it
Homes and factories across China are shrouded in darkness. British utilities firms have gone bust. And a harsh U.S. winter could deliver expensive heating costs.

S E E D E D   C O N T E N T



LONDON — Much of the world is suffering a punishing energy crisis.

Homes and factories across China are shrouded in darkness. India's coal-fired power stations are running on scraps. Dozens of British utilities firms have gone bust. Spain announced emergency legislation after household utility bills shot up more than a third in one year. And there are fears that a harsh winter in the United States could deliver Americans' most expensive heating costs in years.

Energy shortages are sweeping the world even before winter's cruelest months freeze the Northern Hemisphere, and officials and experts point out that the multiple issues behind the crunch will make solutions harder to come by.

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This cocktail of causes is a mix of bad weather, China trying to kick its addiction to dirty coal and even allegations that Russia is throttling the natural gas market for political gain. But most experts agree the central driving force has been the Covid-19 rebound. Stirring out of lockdowns, people are simply consuming energy faster than production can be rekindled after a year of idling.

"It's like a car that's been taken off the road for a while and now we want to restart it quickly — it takes time," said Jianzhong Wu, a professor specializing in energy infrastructure at Wales' Cardiff University.

Not only has Covid-19 killed more than 4.5 million people, it saw global energy consumption shrink by 4.5 percent last year — the biggest drop since World War II, according to BP's Statistical Review of World Energy. That nosedive was the reason that in April 2020 oil prices went negative for the first time in history.

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

"As a result of that, a lot of producers just stopped producing," said Keith Bell, an engineering professor at the U.K.'s University of Strathclyde. "That is not an easy thing to do because you've got to make these offline oil and gas facilities safe, too."

But vaccines have encouraged governments to ease restrictions, and energy demand has roared back to life. Just as stopping wasn't easy, "restarting production is a process that takes some amount of time," Bell said.

This clamoring demand comes when global reserves are already depleted after a cold winter when millions of people under lockdown were huddled in gas-heated homes.

Net-zero is definitely the necessary direction of travel. But we need 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 record highs daily.

The U.S. has been able to weather this global crunch better than most because, as the world's top gas producer, it has plenty of supply. But prices there too have surged 180 percent over the past 12 months, the highest since 2014.

Experts say an early cold snap or a particularly deep freeze in parts of the country could see consumers facing cripplingly high bills.

'Cascade of problems'


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

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. The lawmakers, mostly from the Baltics and Poland, say Moscow wants to use the crisis to gain approval for 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.Peter Kovalev / TASS

The Kremlin and Gazprom, its state-owned energy giant, deny this. And Europe's biggest gas firms have told Reuters that Gazprom has been fulfilling its obligations. Gas prices fell Wednesday after President Vladimir Putin hinted Gazprom may increase supplies to ease the situation.

Asked about whether Russia, a major natural gas supplier to Europe, was holding back energy as leverage, U.S. national security adviser Jake Sullivan told reporters Thursday, "Russia has a history of using energy as a tool of coercion, as a political weapon."

China has been hit by weeks of blackouts across more than a dozen provinces. Some of this is related to Covid-19: Factories have seen a surge in demand as the world ramps up its desire for Chinese-made goods. But there are other factors, too.

As the world's largest CO2 emitter and its hungriest user of coal, China has pledged carbon neutrality by 2060. In the short term, Chinese officials have also imposed tighter safety checks at coal mines, which historically have a high rate of accidents.

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

And all of this is happening at a time when most of the world is trying to wean itself off fossil fuels and onto renewable energy. But during this transition period, countries still need to rely on oil, gas and coal — particularly when the weather doesn't cooperate.

Europe is often battered by Atlantic storms, but in recent weeks many of its turbines have been limp due to lower than expected wind. And although China suffered huge flooding this summer, it then also saw a drought in its hydroelectricity hub of Yunnan province.

Workers bag loose charcoal while unloading a truck at a wholesale market in Mumbai, India. Heavy rains have stunted coal production in much of the country, leading to power plants reporting low reserves.Dhiraj Singh / Bloomberg via Getty Images

Climate change has also impacted traditional fossil fuels.

The back-to-back hurricanes Nicholas and Ida took out 26 million barrels of offshore oil production when they slammed into the Gulf of Mexico. Earlier, a sweltering summer meant many Americans ramped up their energy-guzzling air conditioning units.

In India, monsoon floods have stunted coal production in central and eastern states. This is one reason India's coal-fired power plants currently have on average just four days' fuel in reserve.

"This has been a cascade of problems," said Wu, who also sits on a committee of experts that advises the British government. "Net-zero is definitely the necessary direction of travel. But we need to have a well-planned and well-coordinated way to get there — or what we're experiencing will happen again."

Reuters contributed.


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