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High energy prices: Accelerator or disruptor of the zero carbon energy transition?
The recent spike in energy prices and concerns over shortages is finally starting to highlight the difficult choices that governments face in trying to accelerate the zero carbon energy transition and meet their net zero targets. In this article I show some of the short and long term trade offs that they will face and whether recent events will serve to accelerate the zero carbon transition, or put the brakes on it.
In the short term high natural gas prices is likely to mean that more thermal coal — and to a lesser extent more fuel oil — will need to be burnt to generate electricity. Both fuels are significantly worse for the environment than burning natural gas. This is already happening, and its likely to get worse. Coal fired generation has made a comeback in Europe this year as gas inventories dwindle and high prices incentivise the burning of coal. As we head into winter Europe’s utilities demand for coal is set to grow in order to avoid shortages. Earlier in September, Sweden’s oil fired power station started generating electricity in response to high power prices. The facility is normally only called upon during rare periods during the winter when it is especially cold.
Energy cost increases may even push parts of the global economy into a deep slowdown, if not outright…
