This is the 'first global energy crisis' and it will only get worse

The crisis has been driven by a wave of blackouts at the coal-fired power station in the National Electricity Market; high international prices for coal and gas exacerbated by the war in Ukraine; and rising energy demand amid cold winter weather just when the contribution of solar power is at its weakest.

Clean energy ‘the greatest peace plan of all’

US Energy Secretary Jennifer Granholm said the high cost of traditional fuels – including $US5 per gallon ($1.96 per liter) for gasoline in the US – underscores the need to move more quickly to renewable energy.

No country has ever been held hostage for access to the sun or the wind, he told the forum – “therefore, our move to clean energy globally could be the greatest peace plan of all”.

Attending the Sydney Energy Forum were (from left) Andrew Forrest of FMG, Masatsugu Asakawa of the Asian Development Bank, US Secretary of Energy Jennifer Granholm, and Dr Fatih Birol, executive director of the International Energy Agency. Oscar Colman

Granholm highlighted the importance of the fossil fuel industry to help bring clean new energy sources, including hydrogen, renewables and storage, so that producers will benefit from the shift to clean energy.

He and federal Energy Secretary Chris Bowen signed an agreement at the forum to work together on technologies that will be critical to helping achieve the goal of net zero emissions, including hydrogen and long-term storage.

Dr Birol compared the current global energy situation to that of the 1970s, when the twin oil supply shocks hit hard and sparked a global recession.

Former Prime Minister Malcom Turnbull in conversation with Energy Secretary Chris Bowen.
Oscar Colman

But he noted that they are also driving policy and technical innovation, particularly in fuel efficiency of vehicles and in the development of nuclear power plants.

“Thus, the world may once again show such a reaction to current developments: we may see a leap in energy policy globally and some good results may emerge,” he said.

He voiced optimism that the transition to low-carbon energy would get a boost from the current global energy crisis, pointing to commitments by many national governments to accelerate the push to low-carbon energy.

‘Difficult but not impossible’

Dr Birol warned the tension between emission reduction goals and the need to meet immediate security of supply issues should not lead to further investments that would lock up fossil fuel production. He said resolving the conflict would be “difficult but not impossible”.

He also underlined the importance of diversifying supply chains to meet clean energy goals, in particular working to reduce the world’s dependence on China for 80 percent or more of some parts of the solar supply chain.

Dr Birol took issue with comments in several places blaming clean energy policies for exacerbating the current crisis, describing the claims as “totally false” and “misleading”.

The Asian Development Bank is contributing to solutions to “turn the tide” in the battle against climate change, the bank’s president, Masatsugu Asakawa, told the forum.

That includes a bank-backed mechanism to shut down coal-fired power plants early, which he says has the potential to “become the largest carbon reduction model in the world”.

Asakawa underlined the role of investing in renewable energy in energy security and by helping reduce dependence on expensive imports of fossil fuels.

Energy efficiency is also important as the fastest and lowest cost option for reducing energy demand, and helping to manage disruptions from crises and extreme weather.

More energy crisis coverage

• Why the energy crisis will get worse Five factors can make the current crisis worse than the oil shocks of the 1970s. In the 1970s, only oil was involved, while this crisis spans natural gas, coal, and even the nuclear fuel cycle. – Daniel Yergin
• Wholesale electricity prices break all records The extreme prices for wholesale electricity in the June quarter explain the devastation that is happening across the energy sector and which will hit consumers.
• Shell will close LNG ship after workers resisted a $30,000-a-year salary increase Shell will close floating LNG ship Prelude in response to unions stepping up industrial action, disrupting already stretched global markets. 150 union members earning more than $200,000 a year turned down a proposed salary increase of about $30,000.
• Climate change is a bigger threat to the Pacific than China Climate change is a bigger threat to the Pacific than Chinese military aggression, Defense Secretary Richard Marles said in Washington. He said the US and Australia needed to up their game in the Pacific or risk a “catastrophic failure”.

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