High energy prices could derail COP26

Oil, coal producers push UNFCCC to go easy on fossil fuels

Business

October 29, 2021

/ By / New Delhi

High energy prices could derail COP26

Despite increase in renewable energy production, coal consumption has risen significantly in many parts of the world (Photo: Pixabay)

As COP26 opens in Glasgow, the United Nations faces a twin challenge that threatens to derail the meeting. First, record high global energy prices could test political will for faster phase out of fossil fuels. Second, many countries that are large producers or consumers of fossil fuels have asked the UN to go easy on phasing out of fossil fuels, the principal culprit in climate change.

A report by the United Nations Environment Programme, UNEP, released barely a week before the opening of COP26, the global climate change summit in Glasgow that begins tomorrow, says that the commitments made so far by different countries to cut carbon emissions by 2030 are far short of what is needed and currently the world is on track to see a 2.7°C rise in global temperatures by the turn of the century.

The Emissions Gap Report says that new and updated Nationally Determined Contributions only take 7.5 pc off the predicted 2030 emissions, while a far steeper cut of 55 pc is needed to limit the rise in global temperatures to 1.5°C, the goal set in the Paris Agreement.

The report that cast a gloom on the already low expectations from the COP26, comes in the backdrop of an energy crisis that has impacted almost every nation in the world.

Almost two years after the coronavirus pandemic erupted another phenomenon has gone viral across the world with almost the same speed, crippling most nations with energy prices that are almost 25 times as high as they were barely 15-18 months ago.

Take Europe for instance. At the peak of pandemic, prolonged lockdowns led to a collapse in energy consumption and European gas prices collapsed to historic lows of EUR 3.9/MWH. However, since the beginning of the year and especially since the onset of summer, as the economy picked up pace, energy prices have raced to record levels. As a result, wholesale European gas prices are four times as high as they were at the beginning of July this year.

With no sign of easing of gas prices, many European utilities have switched back to coal, ironically the fossil fuel that has been the focus of attacks by the EU at numerous climate change talks where the Europeans have been urging other countries, including the US, China and India to cut their coal usage and switch to cleaner fuels in order to curb carbon emissions.

But, now, barely a day before the next climate change summit, COP26, this time at Glasgow, the EU is seeing its own utilities switch from gas to coal, in view of the unprecedented rise in gas prices. This is because due to rise in gas prices as well as price of carbon, which all EU-based carbon emitters have to pay for, utilities are finding switching to coal to be cheaper than gas.

Yet the surge in wholesale power prices continues and in Italy, they were about 473 pc higher on October 5 when compared to January 1. The rise was almost identical in Spain and Portugal, while Germany and France, the two largest EU economies, saw their power prices about 364 pc higher in the same period. Consumers are already angry and there are talks of another aggressive public protest against high energy prices like the famous gilets jaunes or yellow vests that had rocked France for months at end in 2018-19.

Back to fossils

The switchover to coal in Europe comes at the same time as coal production around the world has been hit due to large-scale flooding and a rise in demand for coal due to other, coal-heavy economies like China and India rediscovering their mojo for growth. Thus, coal prices, too, have been rising and the dirtiest fossil fuel is almost twice as expensive as it was in July.

Along with coal, oil prices too have been climbing and across the world, from the US to China, oil prices have reached their highest levels since the onset of the pandemic. This has made the going especially tough for consumers due to high level of taxes. Thus, in India, for instance, petrol, diesel and cooking gas prices are at record highs and have risen 30 pc since June.

For most countries, there is little sign of any respite for the near future or even for the next six months as the economies are slowly gaining pace and energy consumption is set to rise at least for next six months, also in view of the onset of winter in the northern hemisphere which sees huge demand for heating in North America, Europe, Russia and northern Asia. The timing of this spike in energy prices – be it for domestic, industry or transport – is especially tricky for global political leaders as in under two weeks they are expected to announce aggressive carbon emission cuts at the Cop26 in Glasgow.

But as the switchover from ‘clean’ gas to ‘dirty’ coal in Europe shows how easy it is for even the most consciously ‘green’ region of the world to slip back into bad old habits when faced with a challenging situation that politicians struggle to respond to. Thus, faced with severe coal shortages that threaten bigger and longer blackouts that are already regular here, India is ramping up its coal production on an emergency footing. Earlier this year, the Indian government had already decided, in a highly controversial and unpopular move, to open up the hearts of densest and oldest forests in India to allow coal mining by companies belong to billionaire Gautam Adani.

While falling back on ‘tried and tested’ energy sources like coal and oil may seem to be the easiest options for politicians, the current energy crisis also presents an opportunity, even if apparently a difficult one, to make even larger and irretrievable switches away from dirty fuel to renewable energy sources. Certainly, a large-scale and one-way switch to green energy would be disruptive and rather expensive, up front, but that is the only way out of the current mess where the world is fighting high fossil fuel prices and record high carbon emissions simultaneously.

This is the need of the hour as one after another dozens of reports by scientists have been setting off alarms saying that the humanity is the doorstep of peril and unless it immediately and totally reverses the direction of ‘development’ the entire planet faces doom due to the after-effects of climate change which are becoming increasingly and more violently evident with each passing month and in every part of the world.

But what will happen at Glasgow? Will the political leaders follow the only obvious course of action left for them? If the world was run by scientists or science-minded politicians, certainly yes. But unfortunately, as the past actions have repeatedly shown that the politicians rarely have the spine to take the straight road and do the right thing. Most of them can be expected to once again make big platitudes and announce ambitious cuts that they know they will never be held accountable for.

This time around, they have an additional excuse of high energy prices which they will use to the fullest to find yet another fudge that looks grand on paper and will only stay there. And in the meanwhile, the Earth will continue to hurtle down the path to death by climate change.

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