Energy crisis: The blame game has begun - but are some of the claims just hot air?

Sky's Ed Conway takes a look at where fingers of blame are pointing and says the energy crunch will likely force the country to consider bold choices and significant investment to avoid a repeat.


It’s all Vladimir Putin’s fault! This is all because of climate change policy! We are doomed to winters like this forever!

The 2021 energy crisis, if we can call it that, has barely begun.

It may well go on for months, in some form or other. Yet already there are headlines aplenty which attempt to distil what is a complex, interconnected phenomenon into a single explanation or takeaway. That’s fair enough, and many of them have more than a grain of truth. But as is often the case they are not quite the full story.

With that in mind, here are four of the things you might hear about the energy crisis, which has seen wholesale prices of gas and electricity rising to extraordinary peaks, along with a critique:


The UK is hit worst of all by this

There is certainly some truth to this, in that energy prices in the UK are higher than elsewhere in Europe.

They have risen slightly higher than in many parts of Europe, up 47% since the start of September, compared with rises of 43% in Germany and the Netherlands and 37% in France.

That said, this is certainly not a UK-specific crisis. All of Europe is facing a sharp spike in energy costs.

There are a few reasons that mean the UK’s energy crisis is slightly more intense than elsewhere.

In particular, look at the price of buying electricity for delivery the next day. For a moment last week it shot up to many times higher than the European average.

However, this was largely related to the sudden disruption of electricity flows from France to the UK following a fire at a power convertor station.

The reality is that most of Europe is facing a similar predicament to the UK; ever so slightly less intense, but intense all the same.

This is all because of Russia

It’s certainly true that gas imports from Russia into Europe via the Siberian Yamal pipeline fell sharply in August.

It’s certainly true (and entirely plausible) that Vladimir Putin wants to use gas as a form of diplomatic leverage in the coming negotiations over the administration of the Nord Stream 2 pipeline, which circumvents most of Eastern Europe and delivers gas straight to Germany.

Energy crisis: The blame game has begun - but are some of the claims just hot air?

Image: Critics of Nord Stream 2, including the US, say the pipeline leaves Germany at the mercy of Russian supply

It’s certainly true that big questions remain about the consequences of much of central Europe’s reliance on Russian gas.

But here’s the thing: Russian gas flows are now back to their July levels. In fact, when you look at where Europe’s gas is coming from, the flows from Russia are actually up, not just a little bit but a lot: up 14% since the start of the year, according to figures from consultancy Wood Mackenzie.

Indeed, according to their analysis, the main explanation for the fall in gas supplies into Europe – probably the biggest factor behind rising power prices – is a big drop-off in domestic production.

The simple reality is there have been more maintenance shutdowns than usual, and some promised projects haven’t got up and running, so Europe isn’t pumping as much gas as usual.

On top of this, there’s less LNG coming into Europe than usual. Liquefied Natural Gas – the kind that can be loaded onto ships – should theoretically help ease these kinds of issues.

But the problem is that LNG is in great demand in Asia and the US (told you this wasn’t just a UK-specific crisis) so for the time being there’s less for everybody else.


It’s all because the wind isn’t blowing

Tempting as it might be to dismiss this explanation as over-simplistic, it is at least borne out by the data.

In July the average wind speed across the UK was 5.7 knots. Not only was this slower than usual, it was slower than the July average in every single year going all the way back to 2001. And while we won’t know for sure until confirmed figures are published, August and September seem to have seen weak wind speeds too.

Wind power is a big deal for the UK. In the third quarter of 2020 a whopping 22% of all our power came from wind turbines in the sea and on land. This was more than nuclear power and coal put together.

Energy crisis: The blame game has begun - but are some of the claims just hot air?

Image: Wind power is the leading source of renewable energy across Europe

So the wind not blowing matters. So far this quarter, wind has only accounted for about 14% of Britain’s electricity generation. When you consider that since 2020 there are more, not fewer, wind turbines – you get the picture.

Eventually the wind will pick up but until it does, the UK will have to fall back on other forms of generation.

It’s all because of climate change policies

There is no doubt that shifting to intermittent forms of energy like wind and solar will mean the UK has to devise a sophisticated mix of back-ups and baseload systems which store power or kick into action when needed.

There’s no doubt we’re still a long way from having it, partly because the technology is not quite there yet, whether with batteries or hydrogen – two of the likeliest technologies. It’s also true that carbon pricing has made it less profitable to run coal-fired power stations.


All the same, it doesn’t follow that high prices are a consequence of climate change policies.

As explained above, they are as much a consequence of the lack of gas production from the North Sea. They are as much a consequence of the fact that five of Britain’s nuclear reactors are currently under maintenance.

They are as much a consequence of the unfortunate fire affecting the electricity interconnector between the UK and France.

But high energy prices will certainly concentrate the minds of politicians ahead of the COP26 meeting.

Do they choose to invest further in expensive energy storage facilities and research? Or do they go for the cheaper but more pollutive alternatives that could deliver more gas more quickly – for instance fracking?

Such questions were easy to bat away when energy seemed plentiful; less so today.

Internet Explorer Channel Network
News Related

OTHER NEWS

Why independent floors are staging a comeback this festive season

Builder floors are also gaining popularity because they combine the benefits of traditional apartments and villas. With one flat typically constructed on a single floor, occupying families have more space ... Read more »

Gati Shakti, digitisation, 'Make in India' discussed as Nirmala Sitharaman meets top CEOs in New York

Finance Minister Nirmala Sitaraman. The discussions that took place between Union Finance Minister Nirmala Sitharaman and the world’s leading business officers at the Big Apple in New York heavily emphasized on India’s ... Read more »

Congress slams 'catastrophic mishandling' of economy; says every aspect of democracy 'diminished'

19 Opposition parties including Congress will jointly launch a protest against the Centre (File image: PTI) The Congress hit out at the Centre over what it said was ”catastrophic mishandling” of the economy and also alleged ... Read more »

SIA sees moderate uptick in September passenger traffic on VTL tailwind

The group’s total passenger traffic rose by 4.4 per cent in September. SINGAPORE (THE BUSINESS TIMES) – The vaccinated travel lane (VTL) arrangement has helped lift demand for Singapore Airlines ... Read more »

"Democracy survived" Capitol riot because of police: Joe Biden

Joe Biden addressing UN General Assembly (Image: Twitter/@ANI) Framed by the Capitol, President Joe Biden paid tribute Saturday to fallen law enforcement officers and honored those who fought off the Jan. 6 ... Read more »

Investors in two-thirds of companies listed globally risk losing US$8.4 trillion because of declining ocean health: WWF

Investors in two-thirds of companies listed around the world were at the risk of losing US$8.4 trillion – or around a tenth of global gross domestic product (GDP) – due ... Read more »

Chinese realtor's $300-billion debt: Evergrande CEO in restructuring, asset sale talks

Evergrande Group’s chief executive is holding talks in Hong Kong with investment banks and creditors over a possible restructuring and asset sales, two people said, as the Chinese developer battles ... Read more »

It isn't just the UK that's suffering supply chain issues. In the US, the crisis may last until the summer

A trucker at the Port of Long Beach in California has said "sometimes drivers get mad" because they are waiting double the time they usually would for one load. Read more »

NCB raids 2 places in Palghar, seizes 505 gm mephedrone; 1 held

Representative image Over 500 grams of mephedrone were seized in two separate Narcotics Control Bureau operations in neighbouring Palghar district, leading to the arrest of one man, an official said ... Read more »

Amazon seeks to invest in SK Telecom's non-telecom operations

Amazon, the world’s largest online retailer, collaborated with SK Telecom’s e-commerce platform 11Street to launch its Korean language shopping service dubbed the Amazon Global Store at the end of August. ... Read more »

Meeting with Putin to be crucial for gas contract, says Serbian President

Aleksandar Vucic said earlier that he planned to discuss the gas price for Serbia with Putin at a meeting on November 25 Read more »

Russia warns EU: natural gas shortage could become more frequent

Novak also echoed Russian President Vladimir Putin’s message that Russia is ready to supply Europe with more gas. But requests to supply more gas have not yet come in from ... Read more »

Nike CEO makes shocking confession: ‘I used to shoot a teenager'

A prominent executive of a sports brand has revealed in a controversial interview that he shot and killed a teenage boy in the 1960s. It concerns 72-year-old Larry Miller, CEO ... Read more »

Rosatom plans launch of four hydrogen production projects in 2024-2025

The Kaliningrad and Murmansk projects are planned to focus on European markets, whereas two projects to be implemented in Sakhalin will be mainly focused on Asian-Pacific countries Read more »

Cricket-BCCI chief Sourav Ganguly hopeful IPL 2022 will be held in India

BCCI President Sourav Ganguly (Image: Reuters) Indian cricket board president Sourav Ganguly expects next year’s Indian Premier League (IPL) to be played in the country after the COVID-19 pandemic forced ... Read more »

Russia to set new domestic gas consumption record in 2021, says Novak

Deputy Chief Executive Officer of Gazprom Vitaly Markelov said earlier that the current gas consumption in Russia exceeds the levels of 2019 and 2020 Read more »

Home registrations in Kolkata jump over 2 times in July-September on stamp duty cut

Real Estate Registration of residential properties in Kolkata metropolitan area jumped more than twofold to 15,160 units during July-September period mainly driven by stamp duty reduction by the state government, ... Read more »

Elon Musk Shades Other High Earners: Wealth Above $230 Billion

Musk, who has long held the title of ‘richest person’, has built up a fortune of $236 billion, according to Bloomberg news agency. Especially the hard ride up of the ... Read more »

Gem, jewellery exports rise 29% to Rs 23,259 crore in September

Representative image Gems and jewellery exports rose by 29.67 per cent to Rs 23,259.55 crore in September 2021 compared to Rs 17,936.86 crore in the year-ago month, according to the ... Read more »

MEA S Jaishankar on Israel visit from October 17-21, will hold talks to strengthen strategic ties

(File image: External Affairs Minister S Jaishankar) External Affairs Minister S Jaishankar will pay an official visit to Israel beginning Sunday during which he will hold talks with his Israeli ... Read more »

Fed Worried About Inflation Risk as It Firmed Up Tapering Plan Central bank prepares to begin reducing asset purchases next month and eyes end to stimulus program by mid-2022

The Labor Department said consumer prices rose a seasonally adjusted 0.4% in September from August. (Photo: AFP) Federal Reserve officials last month worried that disrupted supply chains were raising the risks ... Read more »

Italy unveils G20 Innovation League to promote startups for sustainable future

The current Italian Presidency of the G20 has unveiled G20 Innovation League, a new and unique initiative designed to drive forward innovative projects that help create a sustainable future. The ... Read more »

Centralcon's Sha Tin housing project launch gets off to a slow start as buyers hold out for better options amid robust supply

A weekend property sale got off to a slow start in Hong Kong, as homebuyers balked at flats offered by lesser known developers in a market where thousands of new ... Read more »

Avenue Supermarts Ltd. Q2 Result | Profit rises 110% YOY to Rs 418 crore, revenue grows 46.6% YOY to Rs 7,789 crore

Avenue Supermarts Ltd, which operates DMart chain of retail stores, has reported consolidated profit after tax of Rs 418 crore for the quarter ended September 2021, an increase of 110% ... Read more »

Ukraine's wish to pay 20-30% higher for Russian gas surprises Moscow, says Novak

Ukraine’s wish to continue buying Russian gas through reverse-flow supplies, Russia Deputy Prime Minister said Read more »

Hut Group founder Moulding to give up golden share in bid to restore City confidence

Sky News has learnt that the owner of The Hut Group, which floated just over a year ago, will announce next week that it plans to move its listing to the premium segment of the London Stock Exchange in 2022. Read more »

HDFC Bank Q2 Result | Profit grows to Rs 8,834 crore, net interest income rises to Rs 17,684 crore

Representative image HDFC Bank, the largest private sector lender in India, has reported standalone profit at Rs 8,834.31 crore for September 2021 quarter, 17.6% percent higher compared to Rs 7,513.11 crore in ... Read more »

Novak does not rule out recurrence of energy crisis in Europe, urges its prevention

The gas shortage in Europe’s underground gas storage facilities currently stands at around 25 bln cubic meters, Russia Deputy Prime Minister said Read more »

Amid rising fuel prices, cars with lower running costs likely to gain higher traction among buyers: Report

With fuel prices going up by 35 percent over the past 15 months thereby impacting overall vehicle running costs, cars that have higher fuel efficiency and lower maintenance costs are ... Read more »

First-hand golden tips give InvestorsFair shine

Martine Hafkamp, ​​asset manager at Fintessa, kicked off with her stock market favorites for the new year. Among other things, she sees bread in ASML that will open the books ... Read more »

Hong Kong court slaps jail time on four people over plot to defraud Convoy, in a win for city's anti-corruption investigator

Three former executives of Convoy Financial Service Holdings and a local broker were sentenced to up to seven months in prison, as Hong Kong wrapped up its four-year investigation into ... Read more »

Avenue Supermarts Q2 Result | Profit rises 110% to Rs 418 crore, revenue grows 47% to Rs 7,789 crore

Avenue Supermarts, which operates DMart chain of retail stores, has reported consolidated profit after tax of Rs 417.76 crore for the quarter ended September 2021, increasing by 110.4 percent from Rs 198.55 crore in ... Read more »

Karnataka govt to decide on easing COVID curbs after consulting experts

Karnataka Chief Minister Basavaraj Bommai (File image) The Karnataka government on Saturday said it will take a call on further relaxing the COVID-19 related restrictions after consulting the experts soon, ... Read more »

Supply chain woes hit school cafeterias, leaving administrators scrambling to make meals

The supply chain shortages hitting the entire country are leaving school cafeterias short of items from utensils to syrup packets. Read more »

IMF hails India's 'swift and substantial' response to COVID-19 crisis

A healthcare worker collects a swab for a rapid antigen test from a farmer in his field, during a door-to-door vaccination drive amid the ongoing COVID-19 outbreak in Banaskantha district ... Read more »

Over 101 crore COVID-19 vaccine doses provided to states, UTs: Centre

Unvaccinated Delhi government employees will not be allowed to attend office from October 16, according to a DDMA order on Friday. (Representational Image.) More than 101 crore COVID-19 vaccine doses ... Read more »

MVA is most corrupt govt in Maharashtra's history, extortion its only agenda: Devendra Fadnavis

Maharashtra BJP leader Devendra Fadnavis Senior BJP leader Devendra Fadnavis on Saturday hit out at the Maharashtra Chief Minister Uddhav Thackeray saying the Shiv Sena-led Maha Vikas Aghadi (MVA) government was the most corrupt in the history of the state ... Read more »

The stagflation challenge What really matters to the markets is policy responses.

A man wearing a face mask walks past a student begging in Siam Square in January 2021 during the pandemic. (Photo: Varuth Hirunyatheb) After a decade of low inflation, which prompted ... Read more »

Russia discusses issue of Doing Business rating at IMF, WB session, says Deputy PM

This rating had been released for almost 20 years, and the bank decided to stop the release of this rating not long ago, Alexei Overchuk noted Read more »

Nirmala Sitharaman discusses post-pandemic economic recovery, other issues with World Bank chief

Finance Minister Nirmala Sitaraman. Finance Minister Nirmala Sitharaman discussed the post-pandemic economic recovery, India’s major role in the global fight against COVID-19, and preparations for the upcoming Climate Change Conference among other ... Read more »