World’s Energy Strategies
This winter is going to be cold.
This winter is likely to be a cold one, as energy resources such as crude oil, coal, and gas have soared sharply. In New York, crude oil is trading at a seven-year high, and in many parts of Europe and Asia, oil prices have jumped as much as four times. This year’s energy crisis is happening all over the world and is by no means a stranger to the world.
We are finally recovering economically from the corona after more than two years, but this has been accompanied by a surge in demand for resources. Furthermore, in recent years, the energy shift toward renewable energy has been driven by countries’ environmental policies of decarbonization. As a result, the supply of conventional energy resources cannot keep up with the rapid changes in demand after the Corona.
At the same time, the war in Ukraine has cut off the pipeline to Russia, which has abundant resources. This resulted in a major blow to the world, especially to European countries.
In response to this energy crisis, some countries have announced the prospect of localized rolling blackouts.
On the other hand, there are bright prospects, such as an accelerated shift to green energy.
In this newsletter, we will delve into how countries around the world will be affected by the energy crisis, with a focus on future developments.
Global Energy Saving Strategies
In the wake of the war in Ukraine, European countries that depend on Russia for energy are scrambling to survive this winter.
If the power companies adjust their policies, rolling blackouts will cause all kinds of inconvenience to industry and people’s lives. To avoid such a situation, Europe seems to expect people to voluntarily save energy.
European energy-saving methods are rooted in the culture of each country. Christmas lights shining all over the city of Denmark, which is still fresh in our own memories. This year, the municipality of Copenhagen is planning to shorten the duration and time of such illumination. In Italy, Nobel laureate Giorgio Parisi has suggested that when boiling pasta, the water should be turned off when it boils to reduce electricity costs. Already in May, Unione Pastai, an association of pasta producers, has recommended the so-called “Parisi method.
While it tends to be a short-sighted goal to overcome the energy crisis this winter, the focus in France has shifted from energy conservation to protect infrastructure and to relate awareness to climate change. Energy Transition Minister Agnès Pannier-Runacher announced an electricity conservation plan and called on the entire country to achieve a “10% reduction in energy consumption” in two years. She describes this as a “first step” toward the 40% reduction by 2050, the goal of carbon neutrality recommended by climate experts.
By taking a long-term view of this energy crisis, efforts will be required to radically reduce dependence on fossil fuels.
One Vote for Freedom of Choice and Society
Historic spikes in energy prices, which are essential to people’s lives. Many people may be feeling anxious ahead of winter.
I, myself, felt a surge of anxiety as I studied the news. On the other hand, I frankly do not feel that the situation is so critical that it will strain my daily life. Since I do not drive a car, I have few opportunities to directly feel the rising price of gasoline. Although I shop for daily necessities and pay for electricity and gas, it is difficult to compare prices simply because I do not have a proper grasp of the amount of gasoline I use each month.
So how have electricity, gas, and gasoline prices actually changed? In Japan, electricity prices are 1.10 times higher, gas prices are 1.11 times higher, and gasoline prices are 1.29 times higher than in January 2019 (as of March 2022). The 1.77-fold increase in electricity prices in Italy and the 1.88-fold increase in gasoline prices in the U.K. show that they are relatively contained.
Nevertheless, price increases are undeniable. Electricity prices for Japanese households have risen about 22% in the last decade. Is there any new option for the unstoppable steady rise? With electricity deregulation starting in 2016, it would be a good idea to first consider reviewing the electricity and gas supply to suit your lifestyle. Or you could change your perspective and choose a company that fits your values if you are going to pay for it anyway. Whether it is empathy for Purpose, investment in renewable energy, or donations to support groups, it is time for our consumption to become a vote for society.
Energy Crisis and Breaking Away from Coal Dependence
The CEO of South Africa’s power utility Eskom says the fastest and most cost-effective way to solve the energy crisis is to “invest in renewable energy. Compared to coal-fired power generation, the construction cost of wind and solar power can be reduced to 1/2 and the construction period to 1/6 of that of coal-fired power generation, he says. Still, it is expected that an investment of R$1.2 trillion (about 60 trillion yen) will be required to ensure a stable supply.
Soaring Energy Costs Force Closure of Public Facilities
In Hungary, soaring energy costs are forcing the closure of public facilities such as theaters, libraries, and sports facilities. Energy prices are facing five- to ten-fold increases, and private businesses are being affected, including the closure of the country’s largest hotels.
Energy Crisis Accelerates Hollowing Out of Industry
For decades, factories in Europe have been moving offshore to countries with lower labor and other costs. Soaring energy prices may spur this trend and lead to the offshore relocation of energy-intensive industries such as aluminium and fertilizer. For example, the price of natural gas in the energy-rich U.S. is about one-fifth that of Europe, and Europe is facing a crisis of a weakened industrial base.