Energy in triple crisis

Nick Wayth CEng FEI FIMechE, Chief Executive at Energy Institute | 5 March 2021

The Energy Institute President’s Award winner, Rachel Kyte CMG HonFEI being interviewed by former BBC World anchor Kehini Navaratnam at International Energy Week

Just a few days ago, the Energy Institute hosted International Energy Week (the successor to IP Week), a three-day hybrid conference in London. Many months ago, as we prepared, one crisis was front and centre: the climate crisis, and we framed the whole agenda around the energy transition. In recent months it also became increasingly clear that we were also dealing with a second crisis: the energy price crisis, as consumers across Europe faced record high gas and power prices. And then on the final day of International Energy Week, in shock and anger, we faced a third crisis: Russia’s invasion of Ukraine. Like many organisations, the Energy Institute has acted swiftly to ensure its products and services are not used by Russian companies or in other companies’ Russian operations.

Whilst these three crises have all occurred independently, they are all intrinsically inter-linked, with major short-term and long-term implications for the energy sector.

This week the IEA set out a 10 point plan on how Europe can cut natural gas imports from Russia. I won’t go through all 10 points, but let me comment on a few aspects, as I believe, in large part these three crises can be alleviated from an energy perspective in an aligned and concerted manner.

First, improving energy efficiency is something we can all do TODAY to address all three crises. At the simplest level, turning the thermostat down a degree, replacing halogen with LED bulbs and taking a bus rather than driving.  These are small changes but if millions of people were to make them, they will reduce costs, carbon and dependence on Russian gas immediately. Beyond this, homes, businesses, schools and governments must do much more to understand their energy use and reduce it. At the Energy Institute we are proud to accredit – and are unique in accrediting – Chartered Energy Managers and run a wide range of training on energy efficiency.

Second, increasing renewable energy has been painted by some as part of the problem behind high energy prices. This is simply not true. The cost of renewables has fallen dramatically in the last decade, reducing the cost of supply to the grid. And whilst natural gas provides critical balance when the sun is not shining or the wind not blowing, without the penetration of renewables our dependence on gas and coal would only be greater. To make energy cheaper, lower carbon and more secure, accelerating the transition to net zero is more important than ever. Ultimately, a renewable grid will be cheaper, lower-carbon and more independent of global commodity prices and supply.

Third, Europe (including the UK) has been guilty of double-standards. Whilst we have opposed or banned development of natural gas on climate grounds in many geographies, we have increased our dependency on pipeline gas from Russia and more carbon-intense LNG cargoes from the Middle East, US and elsewhere. Up until now this could be conveniently ignored. That is no longer the case. Whilst we all want a lower-carbon future, we need to recognise the critical role gas has a transition fuel and as a long-term decarbonised energy source. It is also critical that industry focuses on reducing flaring and methane emissions, something the Energy Institute is supporting though the Methane Guiding Principles group. Sourcing gas domestically should be seen as part of the solution, not the problem. It has taken record prices and war in Europe for us to realise these truths.

These are scary and difficult times, but I genuinely believe that we can all make a difference in the short and long terms for the better by improving our energy system.  As citizens, consumers and voters, we all have a role to play in using energy more efficiently, not letting dogma ignore the role natural gas still plays, and helping to accelerate the transition to renewables and a low-carbon future.

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