Birol (IEA): Global energy crisis may worsen – Perhaps we have not seen the worst yet

According to the head of the International Energy Agency (IEA), the global tight energy supply that has caused catastrophic shortages and sent electricity and fuel prices soaring may worsen, Bloomberg reported.

“The world has never witnessed an energy crisis of this magnitude in terms of its depth and complexity,” IEA executive director Fatih Birol told a global energy forum in Sydney on Tuesday. “We may not have seen the worst yet, this is affecting the whole world.”

The entire energy system has been in turmoil since Russia invaded Ukraine in February, which at the time was the world’s largest oil and gas exporter and a major player in commodities, Birol said. Soaring prices are driving up the cost of filling gas tanks, heating homes and powering industry around the world, raising inflationary pressures and leading to deadly protests from Africa to Sri Lanka.

Like the oil crises of the 1970s, which brought about a boom in nuclear power, the world may see faster adoption of government policies that accelerate the transition to cleaner energy, Birol said. Meanwhile, the security of oil and natural gas supply will continue to be a challenge for Europe, but also for other regions, he added.

“This winter in Europe will be very, very difficult,” Birol said, adding: “This is a big concern and could have serious implications for the global economy.”

The implications for the global energy sector, as the US and allies push Russian President Vladimir Putin over the war in Ukraine and seek alternatives to Russian exports, highlighted the need to reduce dependence on fossil fuels, he told the same forum. US Energy Secretary Jennifer Granholm.

“Our move to clean energy globally could be the biggest peace plan,” she said. “We want and must move towards clean energy”.

Countries must guard against shifting dependence from one dominant energy supplier — Russia — to another during the transition to clean energy, Granholm said.

“China has made great advances in technology and supply chains, and that can make us vulnerable if we don’t develop our own supply chains,” he added.

The country controls about 80% of global supply chains for solar energy, which is set to rise to 95% by 2025, according to the IEA. China dominates much of the lithium-ion battery sector, is a key producer of wind turbines and is seeking to rapidly develop capacity in clean hydrogen technology.

Developments such as the U.S. restricting imports of products from China’s Xinjiang region and a long-discussed tax in Europe on the import of products produced with high-carbon energy could help diversify the solar energy supply chain by creating openings for producers such as India, Martin Green, a professor at the University of New South Wales, told the conference.

“By building resilient clean energy supply chains, we can protect our economies from the shocks of the next crisis,” Australia’s Climate Change and Energy Minister Chris Bowen said in a speech at the forum. “There is no time to waste.”