Another cause of the energy crisis and how it must be addressed

The energy crises we’ve witnessed during these last few months have generated more debate on the energy sector than at any other time in my career. Yet while some of the causes of the crisis have received substantial attention in the conversation, there are others that are underrepresented.

One is the role that environmental activists have played in pressuring policymakers to overcommit to electrification and renewables, at any cost and despite the consequences.

Another was the proposed exclusion of gas and nuclear in the EU taxonomy. France generates over 70% of its electricity from nuclear power – the largest nuclear share of any country globally – and its electricity sector emissions are one-sixth of the European average . ?Transitioning from coal to gas has saved around 500 million tonnes of CO2 - equivalent to putting an extra 200 million electric vehicles running on zero-carbon electricity on the road since 2010 . So rationally it would have made little sense to exclude these vital energy sources from the future energy mix. Good to see that ultimately sense prevailed.

At a time when many cannot afford to heat their homes and businesses are shutting down because of energy prices, each person thrown into energy poverty is one more for whom the climate will become a secondary concern. I fear that such knee-jerk approaches will put long-term solutions that facilitate the transition at risk and endanger energy security.

We’re already seeing many European countries turn to coal to avoid gas shortages and blackouts over winter. Germany - despite nearly half of its electricity being produced by renewable sources and an ambition of being greenhouse-gas neutral by 2045 - has allowed 27 coal-fired power plants to restart until March 2024 .

It’s an example of the consequences of policymakers listening and bowing to the pressure of emotional and non-factual voices. Of course, I believe we need to continue reducing our emissions and developing renewables – the droughts this summer reminded us once again of the urgency to keep our efforts going.

But our approach cannot depend on absolutes.

So what do we do?

Firstly, we need to move away from the normalization of statements and plans that cannot and will never be achieved. It is unacceptable to make people believe that an immediate switch to renewables is achievable without compromising on energy security. ?Instead, policymakers need to have clear and practical objectives with their policies - not vague targets like prosperity - and these should be enabled by diverse solutions.

Secondly, it is crucial that we adopt a technology-open approach to emissions reduction. The development of renewables remains critical to the energy transition, but we need to progress in a way that allows all solutions with the potential to reduce emissions to play a role, and not to be driven by ideology.

Thirdly, we need more global collaboration, especially on the energy supply side. The industry’s interdependency is strong and even more visible in a crisis, and we’ll need to work together to tackle the challenges ahead.

And finally, and perhaps most importantly, we can no longer pander to panic and myth. The key to worry-free long-term planning that fully appreciates future demand is to have a clear objective – climate neutrality that doesn’t threaten energy security. This needs to be enabled critically by a diversity of solutions and not a tunnel-visioned approach that sees renewables as the silver bullet for our immediate energy demand. I have met dozens of policymakers who are fully aware of the absurdity of some of these policies – but they are under such scrutiny and pressure that they’re not willing to risk their careers over it. Our policymakers need to find their courage again. Now is a good opportunity to do so.

The big risk now is to think that because gas prices are so high, demand will drop. It won’t. That is what people thought would happen after the pandemic and look where we are now - regardless of the Russia-Ukraine conflict. Once the market rebalances in the coming years and gas becomes affordable once again, demand will pick up once more. Ignoring this would be a repetition of the mistakes that have led us to where we are today: do not constrain supply, act on demand instead.

I understand policymakers telling the public that this is an opportunity to use less gas in the future, but they need to be careful not to derail investments into gas projects that are needed to meet future demand, otherwise today’s situation of high prices, unaffordable energy, and a disrupted European industrial sector will continue.

Though it’s comforting to see a more balanced debate around our sector, if it doesn’t lead to clear-sighted and constructive policies, we’ll be moving backwards rather than progressing – and we can’t afford to lose any more time. ?