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Davos 2022: We are in the middle of the first global energy crisis. Here’s how we can fix it

Energy crisis: Fatih Birol and Hardeep Singh Puri on the Energy Outlook: Overcoming the Crisis panel at Davos 2022.

Fatih Birol and Hardeep Singh Puri discuss how to tackle the energy crisis at Davos 2022. Image: World Economic Forum/Manuel Lopez

Natalie Marchant
Writer, Forum Agenda
Ross Chainey
Content Lead, UpLink, World Economic Forum
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Davos Agenda

This article is part of: World Economic Forum Annual Meeting

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  • The global energy landscape and market has been massively reshaped by the Russian invasion of Ukraine.
  • The long-term answer is not to replace fossil-fuel supplies but instead to focus on the energy transition.
  • The Energy Outlook: Overcoming the Crisis panel at Davos discussed why the energy crisis needs to be tackled alongside other issues such as rising costs of living.

The world is in the middle of its first truly global energy crisis. The answer is not additional fossil fuels, but instead putting efforts into the energy transition, according to the Executive Director of the International Energy Agency.

Fatih Birol told the Energy Outlook: Overcoming the Crisis panel on the opening morning of Davos 2022, that the world needs to make energy investments that look beyond the immediate term and are viable for the future.

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The global energy landscape has been radically reshaped since the Russian invasion of Ukraine on 24 February, prompting governments, businesses and other organizations to reduce their dependence on Russian energy. Now they need to prioritize bringing to a halt the energy crisis and provide greater energy security and sustainability.

“We are in the middle of the first global energy crisis. In the Seventies, it was the oil crisis and now we have an oil crisis, a natural gas crisis, a coal crisis – all prices are skyrocketing and energy security is a priority for many governments, if not all,” Birol told the panel.

“Of course, we are not living in a dream world. The world has to replace the oil and gas from Russia with first oil and gas and then other technologies. I completely agree that the immediate response should include bringing additional oil and gas into the markets. But I would prefer that our immediate response does not look into our energy infrastructure for fossil fuels for many years to come.”

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Key to alleviating the current energy crisis, he said, is to make the most out of the existing oil and gas fields, plus using shale oil and gas because it’s quick to come to market, as well as reducing the amount of methane emissions from fossil fuel operations and ensuring that liquefied natural gas terminals are built to store ammonia or hydrogen in the future.

“But, in my view, the biggest part of the response comes from putting emphasis on clean energy, renewables, energy efficiency and, in the countries where they have nuclear capacity, increasing nuclear production there,” he added.

"We don’t need to choose between an energy crisis and a climate crisis – we can solve both of them with the right investment."

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Germany is one of the countries which had been badly hit by a dependence on Russian gas. Robert Haback, Federal Minister for Economic Affairs and Climate Action, acknowledged that this had been a strategic error and told the panel that the country is ready to fight the energy crisis and is now looking to diversify its fossil fuel imports at incredible speed – with processes that once took decades now taking months.

“We are really improving our ability to get things done, which hasn’t been done so good in the past. We are building up energy infrastructure and trying to get new suppliers for oil and coal,” said Haback.

“But this is only short term, of course. It is only one step in the direction to become not only independent of Russian fossil fuels, but of fossil fuels. From my point of view, caring about a new security of energy supply is not a contradiction to the greater goal of getting independent from fossil fuels at all.”

Haback added that global security has been rocked by at least four interwoven crises – high inflation, the energy crisis, food poverty and the climate crisis. “And we can’t solve the problems if we only focus on one,” he warned.

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“But if none of the problems are solved, I am really worried we are running into a global recession, with a tremendous effect on climate action but also on global stability. Imagine that part of the world is starving next year, it’s not only about hunger which is terrible enough, it’s about global stability.”

He added that the international community needs to stick to global markets. If countries just care about their own food and energy supplies, it will have disastrous effects on prices and other countries, Haback warned.

Hardeep Singh Puri, Minister of Petroleum and Natural Gas and Minister of Housing and Urban Affairs, Ministry of Petroleum and Natural Gas of India, agreed that such challenges needed tackling together. “The energy crisis is there, it’s real,” he said. “Let’s make no mistake. Oil at $110 a barrel constitutes a challenge for the entire world.”

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But, citing high inflation rates and the steep decline in the quality of living, he added: “We need to be able to successfully navigate out of the current crisis without adding more problems in terms of sustainability and going green.”

Catherine MacGregor, CEO of French utility giant Engie, also echoed these sentiments and stressed the importance of working together to fight the energy crisis and improve energy security and global stability and accelerating the renewable energy transition. “Because renewable energy – whether you talk about power or gas – will reinforce European energy independence, because it is energy that is produced locally.”

But she also added that there had been strong resistance against renewables such as wind farms and solar plants in much of Europe. “What I’m hoping here is that, with this crisis, this acceptability, we can transfer that and translate that into appropriation that European citizens understand that the energy transition can be a solution to that energy independence challenge that is thrown at us – of course, keeping in mind affordability.”

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The panel concluded that collaboration and tackling the energy crisis needed to be done alongside action on issues such as the rising cost of living. “All stakeholders in the global system need to do some serious introspection and subject whatever they’ve been saying and doing to a reality check,” said Puri in his closing remarks.

“We need to deal with all these crises simultaneously, without allowing the solution of one crisis to exacerbate the other crisis. You’ve got to navigate your way out of the high-cost situation – this is not sustainable – at the same time you have accelerate the green energy transition.

“Taken together, yes, we will come out of it. The cost will be there, there will be pain. But at the end of the day, we’ll be working towards a better energy world."

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