in Europe, Global warming This winter has been a mixed blessing.
At least for now, the fear of massive power outages has darkened millions of homes. of the European Union inventory At least 83 percent of natural gas is full, and gas prices are a fifth of August prices, as supply exceeds demand.
Natural gas tanks in Europe were about 83 percent full at the end of December, reducing fears of a major energy shortage.
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Don’t get your hopes up about Europe’s low energy prices coming to Canada though. Experts predict volatility — fluctuating energy prices — to continue for several years, and that’s not good news for consumers.
Andreas Goldthau, professor of public policy at the University of Erfurt in Germany, says energy volatility is not good for anyone from businesses to individual consumers. Energy prices that are stable and affordable, he says, “are, in the end, what benefits consumers, because industry can plan, businesses can plan.”
Unreliable or unstable energy supplies, in other words, cost businesses money — which trickles down to the average person, Goldthau explains.
price swings
The supply and demand for energy is affected by a number of factors which cause frequent fluctuations in prices. Those factors include everything from weather, to refinery shutdowns, to the political whims of dictators.
While energy may be cheap in Europe right now, that doesn’t mean it will last.
“Anything can happen,” says Philip Andrews-Speed, a UK-based energy policy expert at the National University of Singapore. “You just need one thing to change again, and (prices) can go up again.”
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Result?
Energy volatility may be bad for consumers in the short term, but experts say it is evidence of a global energy landscape that is changing – to more diverse sources of energy and, crucially, a more reliable household energy supply. And.
Russia’s invasion of Ukraine was a major signal to energy-dependent countries that they risk their economic and political stability if they rely heavily on other countries for fossil fuel imports. Goldthau says that feeling in Germany is “about to change [energy] system from within [in] very little time.”
energy transition in action
Vladimir Putin’s fortune has long depended on fuel exports, including to Germany. But Putin’s invasion of Ukraine had an unintended consequence: a shift to clean energy.
“There’s no looking back for Russian gas,” says Goldthau.
This does not mean that Germany’s dependence on natural gas will end overnight. But the war has been a wake-up call that if their energy security depends on another country, especially a hostile country like Russia, they can be in trouble very quickly.
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Goldthau says that energy – electricity, as well as the hydrocarbon molecules contained in fossil fuels such as oil and gas – is not a commodity traded in the market. He says that energy gives countries a distinct geopolitical advantage.
“It has become quite clear that electrons and molecules are not just a commodity, they are a strategic good.”
If Germany avoids the worst this winter, it will be thanks partly to Mother Nature, but also to energy conservation measures. The German government is also practicing a modern form of real politics: More than almost any other country, it has shifted from fossil fuels to a domestic supply of renewable energy.
in Germany, about 40 percent In 2021 the electricity system was ‘fuelled’ by wind and solar, and this is only going to increase.
With renewable energy, “you have a lot of control over how much supply you’re going to get over the course of a year,” says Hari Seshasayee, energy expert and business advisor to the Colombian government. You know what your installed capacity is. is,” even with intermittent issues around wind and sun availability.
“You don’t have to depend on externalities for fossil fuels,” says Seshasayee.
Unfortunately, prices will continue to fluctuate until world energy markets adapt to the transition from fossil fuels to cleaner sources.
“We are probably facing a decade or so of volatile commodity prices when it comes to fossil fuels,” agreed Goldthau.
a ‘consequence’ of change
“It’s really not easy to transition from something the world has depended on for half a century or more,” Seshasayee says.
However, the existence of market volatility shows that the world is moving away from fossil fuels, trying to figure out what the energy mix of the future will look like.
“Because if we continue to rely on fossil fuels to the same extent we’ve had over the past few decades, you’re not going to see this kind of volatility.”
However, for some analysts, this change is taking place without taking into account the importance of maintaining a stable source of energy, first and foremost.
“We don’t have enough lithium in this world. We don’t have enough copper,” insisted Laura Lau, an analyst at Brompton Funds in Toronto, referring to elements needed for the clean-energy transition.
He fears politicians are imposing a transition on people without a good-enough plan to replace existing sources. The world needs energy, she says, and you can’t chop up what’s available without having something else to make up for the shortfall.
“In an energy-constrained world, we still need energy to grow our economies.”
The future of energy
This is not a big challenge in Canada, a country with vast reserves of cheap, reliable energy, mostly oil and gas, but also electricity, about 60 percent of which is generated from renewable sources.
In many countries, the tradeoff between energy security and energy transition is political turmoil.
The price of natural gas in Europe is a fifth higher than in August. Warm weather, energy conservation and policies to accelerate the transition to renewable energy have allayed fears of widespread energy shortages this winter.
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If the lights go out, Goldthau says, or if people go bankrupt because their energy bills are too high, “you’ll get social unrest … and that’s not what you want.”
That doesn’t mean the world can’t rely on fossil fuels for a while to keep the lights on, while also building windmills and solar panels as quickly as possible. “It’s both things together,” explains Andrews-Speed.
“Renewable energy builds will continue apace, and this year is being accelerated.”