The climate summit in Glasgow in November coincided with the start of the winter heating season in the northern hemisphere. Just as global leaders were racing to pledge net-zero commitments and decisive action to address the worst impacts of climate change, Europe and Asia were starting to see first-hand what tight traditional energy markets looked like.
Despite the record rise in global investments in renewables and clean energy capacity installations in recent years, renewable energy was not enough to meet the rebound in electricity consumption. Power generation and energy-intensive industries found themselves low on the key fossil fuel commodities—coal and natural gas—as the economies recovered from the pandemic slump.
Government priorities turned from actions to reduce emissions in the long term to addressing the immediate energy crunch, soaring energy bills, and catering for the near-term energy security. Even countries that have pledged net-zero by 2050, such as the United Kingdom and the United States, saw coal consumption rise as natural gas became too expensive for some power generating units.
Emissions Soar As Fossil Fuels Stage A Comeback
For example, surging natural gas prices and low wind speeds in the autumn of 2021 forced the UK to fire up an old coal plant to meet electricity demand, despite the fact that the country had pledged to phase out coal-fired power generation by October 2024.
China, the world's largest polluter and top coal consumer, ordered a ramp-up of coal production, which hit record-highs for both December 2021 and the whole of 2021. China was looking to secure energy supply for the winter, cool the high coal prices, and avoid a repeat of the autumn 2021 power crisis.
In the United States, coal is making a transitory comeback as annual U.S. coal-fired electricity generation rose in 2021 for the first time since 2014 as high natural gas prices incentivize more coal use in electricity generation. U.S. coal production will increase by almost 5 percent in 2022 and then rise by another 3 percent in 2023, the EIA says.
As a result of surging coal-fired power generation in 2021, the progress in U.S. emission reduction was reversed last year, moving from 22.2 percent below 2005 levels in 2020 to only 17.4 percent in 2021, "putting the US even further off track from achieving its 2025 and 2030 climate targets," Rhodium Group said in an estimate last month.
The economic rebound from the pandemic took world coal power generation to a new record high last year, with global coal demand likely hitting another new high this year, undermining net-zero efforts, the International Energy Agency (IEA) said in its annual Coal 2021 report in December.
"The fast rebound in overall energy demand strained supply chains for coal and natural gas, pushing up wholesale electricity prices. Despite the impressive growth of renewable power, electricity generation from coal and gas hit record levels. As a result, the global electricity sector's annual carbon dioxide emissions leaped to a new all-time high after having decreased for the previous two years," the IEA said in its Electricity Market Report - January 2022 with 2021 data.
Moreover, coal met more than half of the increase in global electricity demand last year, the IEA said.
All these consequences of the post-COVID global economic rebound are raising emissions to records once again, after a record decline in 2020.
Energy Crisis Highlights High Cost Of Transition
Governments are still committed to their net-zero courses, but they have started to realize that net-zero would probably cost much more than they had imagined, including the social cost to push forward policies to decarbonize energy use.
"We're going to have a multi-year stress test of political will to impose costly transition policies," Bob McNally, president of U.S. consultant Rapidan Energy Group and a former White House official, told Bloomberg.
While still pushing for net-zero, governments right now are trying to contain the fallout from the energy crisis that led to skyrocketing energy bills for consumers.
In the United States, Democrats are desperately seeking to resurrect the Build Back Better bill, which one of their own, West Virginia Democratic Senator Joe Manchin, blocked in the Senate. Build Back Better contains billions of U.S. dollars of provisions to support the expansion of clean energy.
At the same time, the Biden Administration is desperate to see the high U.S. gasoline prices fall, especially in view of the midterm elections in November, when the Democrats could lose majority in Congress, which could stall further ambitious climate action policies from President Biden.
Referring to the global pace of transition needed to limit global warming, John Kerry, the U.S. special envoy on climate change, said last month:
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"We're in trouble. I hope everybody understands that. Not trouble we can't get out of, but we're not on a good track."
Most countries have the ability to deploy very significant additional amounts of renewables, yet they are choosing to go with gas, but gas without affordable 100-percent emission abatement is not helping climate goals, Kerry added.
"Unless we honour the promises made, to turn the commitments in the Glasgow Climate Pact into action, they will wither on the vine," the Glasgow Summit COP26 President, Alok Sharma, said at a Chatham House event last month.
The climate policy leaders in the U.S. and the UK are urging the world to keep the pledges from the latest climate summit. Yet, a large part of the world is now focused on securing immediate energy supply, which risks undermining emission reduction targets and net-zero commitments.
By Tsvetana Paraskova for Oilprice.com
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Not long ago, clean energy held a lot of promise. Costs were falling for installing wind and solar power. Now, raw material price increases and the ability to scale up quickly are looking problematic.
But a changing climate continues to cost us money. If weather disasters cost an estimated $145 million in 2021, and will run up to almost 2 trillion annually in 2100, we have to wonder if we are taking a strong enough stance on climate.
As a variety of costs go up related to acquiring, transporting and burning fossil fuel, I hope we avoid being dependent to the point of resignation. We must clean our act up.
The geopolitics for oil are also not very good, but that's another subject. Watch latest news around the world.