Europe needs a more pragmatic energy transition plan to keep the lights on

The good news is that the use of green energy has been growing around the world in recent years, thanks to the drive for cleaner energy to address climate change. This has come through technology breakthroughs and government subsidies to make green programs price competitive.

But the bad news is that the global need for energy is growing at a faster pace than renewables can provide, especially after the COVID-19 pandemic and a speedy demand for energy. The Paris-based International Energy Agency said in October: “The world is not investing enough to meet its future energy needs. Transition-related spending remains far short of what is required to meet rising demand for energy services in a sustainable way.” In the power sector alone, the global supply of renewables is expected to grow by 35 gigawatts by the end of this year, while global demand will jump by 100 gigawatts over the same period. That is not good.

In fact, getting the world to meet net-zero emissions would require clean energy investment to accelerate to around $4 trillion a year by 2030, according to the IEA. That is more than three times current investment levels, and will be a challenge, to say the least.

Green energy needs to address a few challenges to reach these ambitious goals. One problem with renewables is that many sources are at the mercy of the weather. Clean energy sources can under-deliver over protracted periods, for example, a lack of less wind closes down wind turbines. This makes backup systems and storage critical.

Also, there seems to be a shortage of key minerals needed for renewables such as lithium, cobalt and nickel. Some communities resist the establishment of large solar panel parks and wind turbines in their communities, because they want the land for other uses, or due to other environmental reasons.

The EU has plans to diversify its energy and move toward renewables, but the fact remains that it continues to rely on fossil fuels — gas, oil and coal — for about 60 percent of its needs

Fuad Al-Zayer

There is a need for governments to put incentives in place to ensure the cost-effective and speedy building of renewable infrastructure. These are just some of the challenges that need to be addressed.

The world seems to be waking up to the fact that it needs to make use of all energy sources, including oil and gas, to keep investment flowing so that we do not run short of energy. UK Prime Minister Boris Johnson’s trip earlier this month to Saudi Arabia and the UAE to ask them to pump more oil is part of this realization.

Energy prices in the EU have jumped to record highs, even before the Russian-Ukrainian conflict. Just before the war in Ukraine, in February, wholesale gas prices in the EU were around 200 percent higher than the same period a year earlier.

The EU has plans to diversify its energy and move toward renewables, but the fact remains that it continues to rely on fossil fuels — gas, oil and coal — for about 60 percent of its needs. But the recent rise of gas prices and the potential shortage of oil and gas from Russia is stress testing its policy of diversifying its energy sources.

During the COP26 climate summit in Glasgow last October many countries, including several in Europe, made new commitments to phase out coal. However, some are now reconsidering these pledges. Germany and Italy for example have said they may have to reactivate their old coal power plants while Europe seeks to import natural gas from all over the world.

The IEA announced a plan last week to help cut oil and gas demand, which includes such measures as lower speed limits for cars, more people working from home, curbs on city center car access, cheaper public transport and encouraging carpooling.

While these steps are excellent in the short term, the fact remains that over a longer period, a pragmatic power transition plan with all options on the table remains the best way for Europe to avoid further energy crises.

A transition from fossil fuels may come someday, but for now, renewable energy isn’t keeping pace with rising global energy demand. This is a fact.

• Fuad Al-Zayer is an independent energy consultant. He is the former head of data services at OPEC and a former head of the JODI Global Initiative at the IEF. He is based in Alkhobar, Saudi Arabia.