Countries across the globe are experiencing an energy crunch that is stressing reserves and boosting prices. Although the power shortages aren’t expected to translate into deep cuts in emissions, they will get dented.

Global energy shortages set to dent anticipated emissions growth

Jeremy Beaman October 14, 11:00 PM October 14, 11:01 PM

Countries across the globe are experiencing an energy crunch that is stressing reserves and boosting prices. Although the power shortages aren’t expected to translate into deep cuts in emissions, they will get dented.

The strained electricity supply and steep and rising costs for fossil fuels are already interrupting emissions growth as some countries, especially the No. 1 global emitter, China, turn to electricity rationing to manage shortages.

To be sure, the swift global economic rebound responsible for the shortages is pushing producers to grow the use of oil, gas, and coal to make up, a response experts anticipate will drive global emissions back toward pre-pandemic levels.

“The rapid but uneven economic recovery from last year’s Covid-induced recession is putting major strains on parts of today’s energy system, sparking sharp price rises in natural gas, coal, and electricity markets,” the International Energy Agency said in a summary of its recently released World Energy Outlook report. “For all the advances being made by renewables and electric mobility, 2021 is seeing a large rebound in coal and oil use. But, largely, for this reason, it also sees the second-largest annual increase in CO2 emissions in history.”

The IEA estimated earlier this year that it does not expect global CO2 emissions to return all the way to peak pre-pandemic levels, but it does expect them to be close.

The agency projected energy-related emissions to grow by 4.8% in 2021, or the most significant annual increase since the recovery from the 2008 financial crisis. That would put emissions back at about 1.2% below 2019 levels.

A 2021 rebound of global carbon emissions over last year’s levels was a virtual certainty, as it was the coronavirus pandemic’s shutdown of economies that led to the significant drop in emissions in 2020 and not so much any large-scale expansion of carbon-free renewables.

Still, the current energy supply-demand dynamic will dampen and is already reducing those emissions, according to Helsinki-based Lauri Myllyvirta, lead analyst for the Centre for Research on Energy and Clean Air.

“To me, it’s clear that the overall impact is to suppress emissions growth, especially as what’s happening in China and increasingly in India is not consumers facing high prices but consumers facing power cuts or power rationing,” he said.

China’s rationing has targeted large industrial customers, with as many as 19 of its provinces experiencing power rationing in some form by the end of September. Those outages took affected factories offline anywhere from four to 10 days. Some blackouts continue in China, and they have expanded to India, itself a significant emitter.

High prices on fossils also have their inherent effect on emissions, Myllyvirta said.

“That’s the very basic economic point … And I’ve been explaining to a lot of people that high prices will suppress demand, and sky-high prices will do that quite forcefully,” he said.

“The effect is certainly to reduce fossil fuel consumption,” Myllyvirta added. “The only thing that can work in the other direction is the short-term effect of switching from gas-fired to coal-fired power generation, which has been happening in Europe and the U.S., as well as gas prices rise, so it becomes more effective for utilities to generate power from coal.”

That switch is indeed happening due to steep gas prices. In Europe and elsewhere, demand for carbon-emitting fossils has shot back up over last year, and select countries, such as the United Kingdom, have turned back to coal, while they had reduced its use previously.

It’s critical to understand the point of reference, though, said Myllyvirta, who argues the rapid rate of change from lower to higher energy demand is driving the shortages rather than insufficient global capacity.

IEA’s projected emissions increase of 4.8% is relative to last year’s global number, not 2019, which saw record emissions. While it’s still a bit early to say just how much, Myllyvirta suspects that estimate doesn’t adequately account for the effect of emission on the crunch, especially in China.

“It’s clear that it’s suppressing emissions growth, but it’s suppressing that emissions growth from a baseline for emissions that are rebounding from the lows during the COVID-19 lockdown,” he said.

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