While the war waged by the USA and Israel against Iran and Hezbollah in Lebanon has come at an atrocious cost in human lives and suffering, it has also had a profound effect on global energy markets.
According to Fatih Birol, executive director of the International Energy Agency and the world’s leading energy economist, the war has changed the fossil fuel industry ‘for ever’ and boosted the demand for both renewables and nuclear power.
How has this happened? Consider this: about one fifth of the world’s supply of natural gas and oil is exported through the Straits of Hormuz which lie at the epicentre of the conflict, making it one of the world’s most consequential chokepoints.
Since the war began on 28th February, the straits have been all but closed, blockaded first by Iran and then by USA. For consumers the world over this has forced up the price of diesel, petrol, fertiliser, food and much else besides.
But even if the Straits re-opened tomorrow, the long-term effects of their closure on energy markets will have been momentous.
‘The vase is broken,’ Birol said, ‘the damage is done – it will be very difficult to put the pieces back together. This will have permanent consequences for the global energy markets for years to come.’
He added that continuing high fossil-fuel prices could tempt developing countries to turn to coal, but solar was competitive with coal on cost and was growing faster.
Renewables offered a ‘no-regrets alternative’, he said, and nuclear power was also likely to be increased. ‘I don’t see any downsides for renewable energy.’
He also cautioned against the UK granting exploration licences for further new fields on commercial grounds.
‘They won’t provide any significant quantities of oil and gas for many years to come,’ he said. ‘They will not lower the bills; the UK will remain a significant importer and price taker on international markets.’
This counters the view of some politicians and some journalists that we should now double down on new North Sea oil and gas exploration.
Ed Matthew, of the think tank E3G, said: ‘Birol is simply reflecting what every sane, independent energy analyst can see …. The only effective path to energy and economic security is homegrown clean energy.’
Last year renewable power accounted for 85.6% of all new energy capacity installed worldwide. Renewables now make up a record 49.4% of the world’s energy capacity.
One of the key arguments for renewables is that while petroleum and gas reserves are confined to specific regions, wind and sunlight are everywhere and could theoretically meet the entire planet’s energy demand 100 times over, according to Carbon Tracker, another think tank.
The war has acted as a brutal demonstration of fossil fuel vulnerability, and most analysts expect it to accelerate the renewable transition – especially in Asia and Europe. That has to be good news, though the human cost has been catastrophic.
Joe Human
sustainablekeswick@gmail.com
Recent Comments