Written by Maia Zammit, edited by Miguel Azzopardi and AnneMarie Gonzi.
The Energy Crisis in the context of Climate Change
The energy crisis is a global socio-economic challenge, where a constrained supply of energy and its diminished availability, is increasing energy prices for consumers. Politicians seem to have, unfortunately, only recently woken up to the consequences that have emerged from a more limited supply of energy.
Russia’s war on Ukraine raging on the European border together with climate change and the repercussions of depletion will necessitate drastic action if economic and environmental disaster is to be prevented. Such action would need the replacement of both energy production infrastructure and much of our energy consumption infrastructure, which was built to take advantage of the capabilities of fossil fuels.
The false assumption that countries must pursue economic growth for the rest of the century, regardless of how rich they have already become, creates a problem as economic growth is projected to drive a significant increase in energy demand over the coming decades, making it more challenging to decarbonize the economy.
Although economic growth is commonly used by policymakers as a representative of human development and societal advancement, ecological economists suggest that high-income countries should adopt post-growth policies aimed at keeping economies stable and supporting strong social outcomes without the need for economic growth. A clear example is Spain which significantly outperforms the USA in key social indicators such as a life expectancy that is five years longer, despite having 55% less GDP per capita. Post-growth policies also contribute towards achieving the Paris Climate goals of keeping global warming below 1.5 °C or 2 °C. It is indeed a fact that if high-income nations continue to grow at usual rates, they will need to decarbonize their economic output by more than 12% per year, creating a significant challenge.
Empirical research shows a substantial link between GDP and energy use. According to post-growth research, high income countries should abandon GDP growth in favor for providing for human needs and well-being. To examine the link between GDP and resource use, the total weight of raw materials taken from the host region, plus all physical imports minus all physical imports, is the traditional metric for quantifying an economy’s resource consumption. This offers an idea of an economy’s resource efficiency. When GDP exceeds domestic material consumption, or DMC, the economy becomes more resource efficient. The European Union uses GDP/DMC to track progress toward green growth. It is also the OECD’s annual Green Growth indicators report’s lead statistic.
Empirical data demonstrates that while absolute decoupling of GDP from emissions is possible and is already happening in some regions, it is unlikely to happen fast enough to respect the carbon budgets for 1.5°C and 2°C against a background of continued economic growth. Growth increases energy demand, making the transition to renewable energy more difficult, and increases emissions from land use change and industrial processes. Models that do project green growth within the constraints of the Paris Agreement rely heavily on negative emissions technologies that are either unproven or dangerous at scale. Without these technologies, the rates of decarbonisation is significantly steeper than extant models suggest is feasible even with harsh competitive policies.
The Energy Crisis and Putin’s war on Ukraine
Russia began reducing gas supplies before the war on Ukraine began. However, Russia’s suspended supplies have exacerbated the energy crisis, particularly since Russia used to contribute 40% of Europe’s natural gas, and much more to Germany, where cheap energy was an economic cornerstone.
Russia has suspended supplies of inexpensive natural gas, on which the continent has relied on to power industry, produce electricity and heat homes. As a result, European governments are scrambling for additional sources and strategies to mitigate the impact as economic development slows and home electricity prices soar. Following the Nord Stream 1 pipeline shutdown, Russian gas supplies have dropped 89% year on year.
High energy prices are already threatening to produce a recession this winter due to record inflation, with consumers having less money to spend as food, gasoline, and utility prices surge. A total shutdown may cause even more havoc on an already ailing economy.
Companies also warn that they frequently cannot switch to alternative energy sources such as fuel, oil, or electricity to create heat overnight. In addition, as everyone looks for other sources, the prices of fuel, oil and coal have soared.
What is being done?
Energy security will continue to be a serious challenge at the center of European energy strategy and a need for a more resilient society. Despite this uncertainty, EU leaders have emphasized the significance of sticking to our goal in becoming climate-neutral by 2050.
The European Union has taken the following three major measures to reduce the cost of energy:
- Reducing electricity use
- Capping revenues of electricity producers
- A solidarity contribution from fossil fuels
The EU’s priority in its response to the energy crisis is to ensure affordable and competitive energy for its consumers, increase the EU’s energy security and preparedness in the event of emergencies and to strengthen the energy resilience and autonomy of EU countries. Malta, however, has chosen not to participate in this plan to reduce energy consumption, which will in turn make it even more difficult for Malta to work towards decarbonisation.
Nevertheless, the lack of awareness and selfish mentality must be replaced by proper education campaigns that run through each and every member state to teach children and adults to reduce their household energy costs now more than ever before.
