The world has two energy crises but no real answers

The world is, in fact, facing two energy crises. The first is rooted in scarcity and traditional power politics. It involves the struggle by the world’s largest and most energy-hungry economies to get hold of the natural resources they need. Just yesterday the International Energy Agency warned that the world oil market would be “extremely tight” over the next five years. Demands from China and other emerging economies are rising. But Mary Kaldor – co-author of a new book called Oil Wars (Pluto) – points out the struggle to find new oil is a familiar sort of conflict, reminiscent of the 19th century “great game” or earlier imperial clashes.

The second energy crisis is new. It is driven by climate change. It demands international co-operation rather than competition. While the first crisis leads politicians and businessmen to search out ever more oil and gas, the second demands that they radically reduce their economies’ dependence on hydrocarbons.

Politicians find themselves pulled in two directions. Tony Blair, the former UK prime minister, spent much of his last few months in office trying to promote an international agreement on climate change. But he also thinks that one of his most important – if least heralded – achievements was to secure a long-term deal for Britain on gas supplies from Norway.

In theory, the two energy crises could point in the same direction. The development of alternative, “clean” energies would reduce dependence on oil and gas. It is also crucial to any effort to cut emissions of carbon dioxide. The trouble is that there is little sign that alternative energy can be developed fast enough to rein in demand for oil and gas. Mr Blair is a firm believer in the need to develop nuclear energy. But even this policy – controversial as it is – seems unlikely to fill the gap. One report published last week argued that four new nuclear reactors a month would have to be built from now to 2070 to make any difference to global carbon dioxide emissions (Too Hot to Handle? The Future of Civil Nuclear Power, Oxford Research Group).

But while the debate about global warming continues to generate more hot air than real change, the pursuit of new sources of oil and gas is now central to the foreign policies of all the world’s biggest powers.

China’s controversial foray into Africa is its first real effort to build power and influence outside Asia. The search for oil is fundamental to this policy – in particular, China’s controversial relationship with the government of Sudan. At home, China is opening a new coal-fired power station every week, to the despair of global-warming activists.

Energy is also now probably the most important – and divisive – issue facing the European Union. Tensions between Poland and Germany have been raised by a Russo-German plan to build a new gas pipeline under the Baltic Sea. But while the Germans are placing their bets on securing long-term supplies from Russia, some other EU countries are scrambling to diversify their sources of supply – alarmed by the prospect that Russia could threaten to turn off the gas, as it did with Ukraine in 2006. Britain has its deal with Norway. The Balts and the Finns are constructing big new nuclear power stations.

Financial Times