2021–2022 global energy crisis

(Redirected from 2021 global energy crisis)

The 2021–2022 global energy crisis began in the aftermath of the COVID-19 pandemic in 2021, with much of the globe facing shortages and increased prices in oil, gas and electricity markets. The crisis was caused by a variety of economic factors, labor shortages, disputes, climate change, and was later compounded by the 2022 Russian invasion of Ukraine.

Natural gas prices in Europe and United States, 2018–July 2022
  National Balancing Point NBP (UK) natural gas prices
  Europe TTF natural gas prices
  United States Henry Hub natural gas prices

Gas shortages in particular have resulted in an increase in food prices and an increase in the use of coal. The response by governments worldwide to the energy crisis have so far been piecemeal and largely ineffectual.


Slow supply recovery after pandemicEdit

The COVID-19 pandemic in 2019–2020 caused a rapid drop in energy demand and a corresponding cut in oil production, and despite the 2020 Russia–Saudi Arabia oil price war, OPEC responded slowly to the demand recovery under new normal, causing a supply-demand imbalance. The 2021–2022 global supply chain crisis that further stressed the delivery of extracted petroleum.

Coal trade disputeEdit

In December 2020, after months of restrictions, China fully blocked coal imports from Australia, which was China's largest source of imported coal.[1]

Climate abnormality impact on renewable energyEdit

Priorities of respondents to an EU survey to address the energy and climate crisis in the EU, UK, China and the U.S. [2]

In 2021, Brazil's worst drought in almost a century threatened its electricity supply.[3][4] Brazil relies on hydropower for two-thirds of its electricity.[5]

Euractiv reported that European Commissioner for Climate Action Frans Timmermans told the European Parliament in Strasbourg that "about one fifth" of the energy price increase "can be attributed to rising CO2 pricing on the EU's carbon market".[6]

In 2022, Europe's driest summer in 500 years had serious consequences for hydropower generation and power plant cooling systems.[7][8][9] According to the New York Times, the drought "reduced hydropower in Norway, threatened nuclear reactors in France and crimped coal transport in Germany."[10] Record droughts in China and California also threatened hydropower generation.[11][12][13]

2022 Russian invasion of UkraineEdit

Russia is a leading producer and exporter of oil and gas. In 2020, it was the third largest oil producer in the world, behind the US and Saudi Arabia, with 60% of its oil exports going to Europe.[14][15]

The Russian military buildup outside Ukraine and subsequent invasion threatened the energy supply from Russia to Europe.[16][17] International sanctions were introduced after Russia's annexation of Crimea in 2014, and subsequently tightened after the Russian invasion of Ukraine in February 2022; the new Nord Stream 2 pipeline's certification was later suspended. Russia had already refused to increase exports to Europe before its invasion,[18] and the state reacted to European sanctions by reducing gas deliveries to Germany through the Nord Stream 1 pipeline,[19][20] which it fully halted in early September, although the pipelines continued to contain natural gas.[21] Gas leaks in late September resulted in the pipes becoming inoperable. European Union and NATO officials said the leaks were caused by sabotage, but did not name a responsible party.[18] Other pipelines, such as the Druzhba pipeline, largely continued to operate.[22]

Other supply-side problemsEdit

In October 2022, OPEC+ cut oil production by two million barrels per day. OPEC+ claimed it is trying to prevent price volatility, although some analysts believe the goal is to increase oil prices, which had decreased over the previous few months.[23] Saudi Arabia's foreign ministry stated that the OPEC+ decision was "purely economic" and taken unanimously by all members of the conglomerate.[24]

Global effectsEdit

2022 food crisesEdit

Fertilizer prices 1992–2022. The 2007–2008 world food crisis happened when fertilizer prices spiked then.
Commodity Prices

Natural gas is a significant key component in producing fertilizers.[25] The development of synthetic nitrogen fertilizer has significantly supported global population growth — it has been estimated that almost half of the world's population is currently fed as a result of synthetic nitrogen fertilizer use.[26]

Rising energy prices are pushing agricultural costs higher, contributing to increasing food prices globally.[27] The agriculture and food industries use energy for various purposes. Direct energy use includes electricity for automated water irrigation, fuel consumption for farm machinery and energy required at various stages of food processing, packaging, transportation and distribution. The use of pesticides and mineral fertilizers results in large quantities of indirect energy consumption, with these inputs being highly energy intensive to manufacture.[27][28] While the share varies considerably between regions – depending on factors such as weather conditions and crop types – direct and non-direct energy costs can account for 40% to 50% of total variable costs of cropping in advanced economies such as the United States. Higher energy and fertiliser prices therefore inevitably translate into higher production costs, and ultimately into higher food prices.[28]

Energy transitionEdit

Aside of inflationary pressures, the 2021/2022 energy crisis has also increased the use of coal in energy production worldwide. Coal use in Europe already increased by 14% in 2021, and is expected to rise another 7% in 2022. Soaring natural gas prices have made coal more competitive in many markets, and some nations have resorted to coal as a substitute for potential energy rationing in winter 2022/2023. With demand for coal increasing in Asia and elsewhere, global coal consumption is forecast to rise again by 0.7% in 2022 to 8 billion tonnes. Burning coal or petroleum products emits significantly higher amounts of carbon dioxide and air pollutants compared to natural gas. The return to coal slows the transition to greener and more sustainable energy sources. Both the United States and Russia are top exporters of natural gas and coal.[29][30]

Europe has been historically leading with regard to global climate policy, pledging to cut emissions to at least 55% below 1990 levels in the next 8 years. But sanctions on Russia are crushing global supplies of fossil fuels with drastic price increases. Russia's invasion of Ukraine in 2022 risks unravelling decades of hard work to reduce emissions on the European continent. After a long period of optimistic projections on reducing Europe's carbon footprint, governments there aren't keeping anything off the table, including reopening coal-fired power plants or upping oil imports, as well as prolonging the phase-out for nuclear energy.[31]


Overall, the response to this rising crisis have been to return to coal and other polluting energy sources, subsidizing prices, easing gas taxes, or even lowering the price of carbon dioxide emissions. These short-term solutions lower electricity bills but go exactly in the opposite direction of what is needed to prevent the 1.5 degree increase in temperatures, increasing the likelihood of a climate apocalypse.[32][33]

The UK government has turned to Qatar to seek a long-term gas deal to ensure a stable supply of liquefied natural gas (LNG) to the UK.[34] Prime Minister Boris Johnson asked Sheikh Tamim bin Hamad Al Thani, the Emir of Qatar, for help during a meeting at the UN General Assembly in September 2021.[35][36] EU suspended an antitrust investigation into QatarEnergy in February 2022.[37]

In October 2021, U.S. producer Venture Global LNG signed three long-term supply deals with China's state-owned Sinopec to supply liquefied natural gas. China's imports of U.S. natural gas will more than double.[38]

On 28 October 2021, natural gas prices in Europe dropped by at least 12% after Gazprom announced it would increase supplies to Europe after Russian domestic storage sites were filled on about 8 November. Norway had increased gas production and lower coal prices in China also helped lower natural gas prices.[39][40]

Hungarian Prime Minister Viktor Orbán blamed a record-breaking surge in energy prices on the European Commission's Green Deal plans.[41] Politico reported that "Despite the impact of high energy prices, [EU Commissioner for Energy] Kadri Simson insisted that there are no plans to backtrack on the bloc's Green Deal, which aims to make the EU climate neutral by 2050."[42] Speaking at the COP26 climate summit in Glasgow, Czech Prime Minister Babiš denounced the European Green Deal,[43] saying that the European Commission "continues to propose dangerous policies such as the ban on combustible engines in 2035, or carbon allowances for transport and individual housing. Due to improper legislature and speculation, the price of emission allowances has gone out of control, resulting in the surging costs of electricity."[44]

Countries by natural gas proven reserves (2018), based on data from CIA World Factbook. Iran has the world's second largest natural gas reserves after Russia.

U.S. President Joe Biden's national security adviser Jake Sullivan released a statement calling on OPEC+ to boost oil production to "offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022."[45] On 28 September 2021, Sullivan met in Saudi Arabia with Saudi Crown Prince Mohammed bin Salman to discuss the high oil prices.[46] The price of oil was about US$80 by October 2021, the highest since 2014.[47][48] USA delivered 16 billion cubic meters of LNG to Europe in January 2022, and 6 billion in February.[49]

Iranian oil minister Javad Owji said if U.S.-led sanctions on Iran's oil and gas industry are lifted, Iran will have every capability to tackle the global energy crisis.[50][51] The Biden administration was pressed on potential oil deals with Saudi Arabia, Venezuela, and Iran that would have them increase their oil production.[52]

Qatar's energy minister Saad Sherida al-Kaabi stated that there "is a huge demand from all our customers, and unfortunately we cannot cater for everybody. Unfortunately, in my view, this is due to the market not investing enough in the [gas] industry."[53]

European Commission President Ursula von der Leyen said that "Europe today is too reliant on gas and too dependent on gas imports. The answer has to do with diversifying our suppliers ... and, crucially, with speeding up the transition to clean energy."[54][55]

European Commissioner for Climate Action Frans Timmermans suggested "the best answer to this problem today is to reduce our reliance on fossil fuels."[56]

In late October 2021, Russian ambassador Andrei Kelin denied that Russia is withholding gas supplies for political reasons. According to the ambassador, delivery of natural gas through Ukraine has been increased by up to 15% for November 2021, but it was unclear whether this increase would have an immediate effect on the natural gas supply in Europe. Furthermore, such increase in gas delivery was hindered by a lack of modernization of the Ukrainian gas pipelines, according to the source.[57]

The German chemical company BASF was forced to cut production[58]

German chancellor Olaf Scholz announced plans to build two new LNG terminals.[59] Economy Minister Robert Habeck said Germany reached a long-term energy partnership with Qatar,[60] one of the world's largest exporters of liquefied natural gas.[61] Habeck said Germany plans to end imports of Russian natural gas by mid-2024.[62] In May 2022, the European Commission proposed and approved a partial ban on oil imports from Russia,[63][64] part of the economic response to the Russian invasion of Ukraine.[65] On 18 May 2022, the European Union published plans to end its reliance on Russian oil, natural gas and coal by 2027.[66]

On 13 July 2022, the Kremlin expressed hope that a visit by President Biden in Saudi Arabia to boost OPEC oil production would not foster anti-Russian sentiments there. Russia is the largest oil and gas exporter after Saudi Arabia and enjoys a highly valued cooperation with the Arab country in the framework of the OPEC group. But at current levels, major Gulf producers have little to spare, and Russia blames international sanctions for higher energy prices around the world.[67]

Since the June 2022 G7 meeting, plans had been circulating to cap the price of Russian energy commodities as initially suggested by U.S. Treasury Secretary Janet Yellen and E.U. Commission President Ursula von der Leyen, in order to lower price levels for Western nations and deprive Russia of its profits. After G7 finance ministers expressed their intention to implement a price cap, a Kremlin spokesman responded, "companies that impose a price cap will not be among the recipients of Russian oil." Energy analysts have also expressed skepticism that a price cap would be realistic because the coalition is "not broad enough"; OPEC+ called the plan "absurd". Likely the U.S. and the E.U. will attempt to follow through with the plan by limiting Russia's access to Western insurance services.[68]

In June 2022, the United States government agreed to allow Italian company Eni and Spanish company Repsol to import oil from Venezuela to Europe to replace oil imports from Russia.[69] French Finance Minister Bruno Le Maire said that France negotiated with the United Arab Emirates to replace some Russian oil imports.[69]

Additionally, on 15 June 2022, Israel, Egypt and the European Union signed a trilateral agreement to increase natural-gas sales to European countries seeking alternative sources to lessen their dependence on Russian energy supplies.[70] In July 2022, the European Commission signed an agreement with Azerbaijan to increase natural gas imports.[71]

On 29 September 2022, Germany presented a €200 billion plan to support industry and households.[72] German Economy Minister Robert Habeck complained that the United States and other "friendly" gas supplier nations were profiting from the Ukraine war with "astronomical prices". He called for more solidarity by the US to assist energy-pressed allies in Europe.[73] French President Emmanuel Macron criticized the United States, Norway and other "friendly" natural gas supplier states for the extremely high prices of their supplies, saying that Europeans are "paying four times more than the price you sell to your industry. That is not exactly the meaning of friendship."[74][75]

See alsoEdit


  1. ^ "China needs more coal to avert a power crisis — but it's not likely to turn to Australia for supply". CNBC. 2021-10-26.
  2. ^ "2022-2023 EIB Climate Survey, part 1 of 2: Majority of Europeans say the war in Ukraine and high energy prices should accelerate the green transition". EIB.org. Retrieved 2022-11-16.
  3. ^ "Brazil warns of energy crisis with record drought". Al-Jazeera. 2021-09-01.
  4. ^ "Brazil's Drought Pressures Power Grid, Boosting Case for Renewables—and Fossil Fuels". The Wall Street Journal. 2021-10-11.
  5. ^ "Drought squeezes Brazil's electricity supply". France 24. 2021-09-03.
  6. ^ "The Green Brief: Europe's energy price crunch dilemna [sic]". Euractiv. 2021-09-29.
  7. ^ "Europe's drought is a problem for coal, nuclear, and hydro plants—but the economic impact goes way beyond energy". Fortune. 2022-08-05.
  8. ^ "Droughts rattle Europe's hydropower market, intensifying energy crisis". S&P Global. 2022-08-05.
  9. ^ "Europe's driest summer in 500 years threatens crops, energy production". Reuters. 2022-08-22.
  10. ^ "Heat and Drought in Europe Strain Energy Supply". The New York Times. 2022-08-18.
  11. ^ "China's Drought Threatens Nation's Energy, Food and Economic Security". VOA News. 2022-08-31.
  12. ^ "Extreme drought could cost California half its hydroelectric power this summer". The Verge. 2022-06-01.
  13. ^ "How the Western drought is pushing the power grid to the brink". Vox. 2022-08-16.
  14. ^ Staff, Al Jazeera. "Infographic: How much of your country's oil comes from Russia?". www.aljazeera.com. Retrieved 2022-10-17.
  15. ^ "Oil Market and Russian Supply – Russian supplies to global energy markets – Analysis". IEA. Retrieved 2022-10-17.
  16. ^ "Business EU moves to speed up energy investments amid Ukraine war, rising gas prices". Deutsche Welle. 2022-03-01. Archived from the original on 2022-03-01.
  17. ^ Davies, Rob (2022-03-04). "Gas prices hit record high again as Ukraine invasion disrupts markets". The Guardian.
  18. ^ a b "What caused the UK's energy crisis?". the Guardian. 2021-09-21. Retrieved 2022-10-17.
  19. ^ Eddy, Melissa; Cohen, Patricia (2022-07-20). "Seeking Leverage Over Europe, Putin Says Russian Gas Flow Will Resume". The New York Times. ISSN 0362-4331. Retrieved 2022-10-01.
  20. ^ Chambers, Madeline; Marsh, Sarah (2022-02-22). "Germany freezes Nord Stream 2 gas project as Ukraine crisis deepens". Reuters. Reuters. Retrieved 2022-02-24.
  21. ^ "Why has Russia stopped gas supplies to Europe?". Al Jazeera English. 2022-09-04.
  22. ^ Strzelecki, Marek; Murray, Miranda (2022-10-12). "Druzhba pipeline leak reduces Russian oil flows to Germany". Reuters. Retrieved 2022-10-17.
  23. ^ "OPEC+ cuts oil production by 2m barrels a day despite US pressure". www.aljazeera.com. Retrieved 2022-10-17.
  24. ^ "Saudi Arabia: OPEC+ oil production cut 'purely economic'". Deutsche Welle. 2022-10-13.
  25. ^ Mulvaney, Dustin (2011). Green Energy: An A-to-Z Guide. SAGE. p. 301. ISBN 978-1-4129-9677-8.
  26. ^ Erisman, Jan Willem; MA Sutton, J Galloway, Z Klimont, W Winiwarter (October 2008). "How a century of ammonia synthesis changed the world". Nature Geoscience. 1 (10): 636–639. Bibcode:2008NatGe...1..636E. doi:10.1038/ngeo325. S2CID 94880859. Archived from the original on 2010-07-23.{{cite journal}}: CS1 maint: multiple names: authors list (link)
  27. ^ a b "Russia-Ukraine war worsens fertilizer crunch, risking food supplies". NPR. 2022-04-12.
  28. ^ a b Levi, Peter; Molnar, Gergely (2022-06-14). "How the energy crisis is exacerbating the food crisis". Paris: International Energy Agency. Retrieved 2022-06-16.
  29. ^ "Global coal demand is set to return to its all-time high in 2022 – News". IEA. Retrieved 2022-10-01.
  30. ^ Meredith, Sam. "Russia is squeezing Europe's gas supplies, sparking a bitter and reluctant return to coal". CNBC. Retrieved 2022-10-01.
  31. ^ "Europe must not backslide on climate action despite war in Ukraine". Nature. 607 (7917): 8. 2022-07-05. Bibcode:2022Natur.607....8.. doi:10.1038/d41586-022-01820-x. PMID 35790829. S2CID 250312094.
  32. ^ Gillespie, Todd (2022-09-05). "Can Europe's $375 Billion in Relief Keep People Warm Enough?". Bloomberg. Retrieved 2022-09-21.
  33. ^ "Global reaction to energy crisis risks zero carbon transition". climateactiontracker.org. Retrieved 2022-09-21.
  34. ^ "Why Boris Johnson's Qatar gas plan is a cop out". Evening Standard. 2021-11-17.
  35. ^ "UK asks Qatar to become gas 'supplier of last resort' amid energy crisis". Doha News. 2021-11-07.
  36. ^ "UK seeks long-term gas deal with Qatar, asks to become 'supplier of last resort' -FT". Reuters. 2021-11-06.
  37. ^ Chee, Foo Yun (2022-02-11). "Qatar Petroleum no longer in EU antitrust crosshairs – sources". Reuters. Archived from the original on 2022-02-20.
  38. ^ "Sinopec signs huge LNG deals with US producer Venture Global". Financial Times. 2021-10-20.
  39. ^ Millard, Rachel (2021-10-28). "Gas prices slump as Putin boosts supplies to Europe". The Daily Telegraph. Retrieved 2021-10-28.
  40. ^ "Russia seen starting to fill Europe's gas storage after Nov. 8". Euronews. 2021-10-27.
  41. ^ "The Green Brief: East-West EU split again over climate". Euractiv. 2021-10-20.
  42. ^ "Putin promises gas to a Europe struggling with soaring prices". Politico. 2021-10-13.
  43. ^ "COP26: Babiš to focus on European energy crisis, EU Green Deal's economic impact". Czech Radio. 2021-11-01.
  44. ^ "Andrej Babiš: It is absolutely crucial for individual states to choose their own energy mix to achieve carbon neutrality". Government of the Czech Republic. 2021-11-01.
  45. ^ "Turning to foreign leaders to fix our energy crisis is a shameful solution". The Hill. 2021-08-16.
  46. ^ "Top White House aide discussed oil prices with Saudi Arabia". Reuters. 2021-10-01.
  47. ^ "U.S. crude oil price tops $80 a barrel, the highest since 2014". CNBC. 2021-10-08.
  48. ^ "Oil analysts predict a prolonged rally as OPEC resists calls to ramp up supply". CNBC. 2021-10-05.
  49. ^ "Europe Is Running Out Of Space For LNG". OilPrice.com. 2022-02-18. Archived from the original on 2022-02-19.
  50. ^ "Iran ready to resolve global energy crisis if sanctions lifted: minister". Tehran Times. 2021-10-05.
  51. ^ "Iran Rises Above Russia On The Oil Market Radar". OilPrice.com.
  52. ^ Knickmeyer, Ellen; Bussewitz, Cathy (2022-03-10). "Pariahs no more? US reaches out to oil states as prices rise". Associated Press. Retrieved 2022-03-10.
  53. ^ "Soaring gas prices not a crisis, reflect lack of investment -Qatar minister". Reuters. 2021-09-21.
  54. ^ "EU chief says key to energy crisis is pushing Green Deal". Associated Press. 2021-10-20.
  55. ^ "Europe's energy crisis: Continent 'too reliant on gas,' says von der Leyen". Euronews. 2021-10-20.
  56. ^ "EU countries look to Brussels for help with 'unprecedented' energy crisis". Politico. 2021-10-06.
  57. ^ "Russia denies withholding gas supplies for political reasons". The National. Retrieved 2022-10-01.
  58. ^ "How gas rationing at Germany's BASF plant could plunge Europe into crisis". The Guardian. 2022-09-16.
  59. ^ "German minister heads to Qatar to seek gas alternatives". Deutsche Welle. 2022-03-19.
  60. ^ "Germany Signs Energy Deal With Qatar As It Seeks To reduce Reliance On Russian Supplies". Radio Free Europe/Radio Liberty. 2022-03-20.
  61. ^ "Qatar Says Talks With Germany on LNG Contracts Ongoing". Bloomberg. 2022-09-21.
  62. ^ "Germany seeks to wean itself off Russian energy imports". Deutsche Welle. 2022-03-25.
  63. ^ Bill Chappell (2022-05-04). "The EU just proposed a ban on oil from Russia, its main energy supplier". NPR.
  64. ^ Steve Rosenberg (2022-05-31). "Russian oil: EU agrees compromise deal on banning imports". BBC.
  65. ^ "Oil prices jump after EU leaders agree to ban most Russian crude imports". CNBC. 2022-05-31.
  66. ^ "EU unveils 210 bln euro plan to ditch Russian fossil fuels". Reuters. 2022-05-18.
  67. ^ Reuters (2022-07-13). "Kremlin hopes Biden will not seek to turn Saudi Arabia against Russia". Reuters. Retrieved 2022-10-01.
  68. ^ "Why The Russian Oil Price Cap Won't Work". OilPrice.com. Retrieved 2022-10-01.
  69. ^ a b "Oil from sanctioned Venezuela to help Europe replace Russian crude as soon as next month: report". Business Insider. 2022-06-05.
  70. ^ Harkov, Lahav (2022-06-15). "Israel, Egypt, EU sign initial gas export agreement". The Jerusalem Post. Retrieved 2022-06-21.
  71. ^ "EU signs deal with Azerbaijan to double gas imports by 2027". Al Jazeera. 2022-07-18.
  72. ^ "Germany to mobilise €200bn economic 'shield' to field energy crisis". Euractiv. 2022-09-30.
  73. ^ "German minister criticizes U.S. over ‘astronomical’ natural gas prices" cnbc.com. 5 October 2022.
  74. ^ "Macron Pledges to Talk Tough on Gas When G-7 Meets". Bloomberg. 2022-09-06.
  75. ^ "Macron Accuses US of Trade 'Double Standard' Amid Energy Crunch". Bloomberg. 2022-10-21.