Energy prices have shot up across the globe over the past few months. Given that prices were very low a year ago in the midst of a global pandemic, a bounceback was inevitable as the world economy went into catch-up mode. However, beneath these short-term trends lies a bigger issue: green policies have pushed energy prices up – and will keep them that way.
What’s more, it’s not just the price of natural gas that has shot up as the world economy has recovered. The benchmark Brent crude-oil price has gone up over the past year, too, from $51 per barrel to $80, which has translated into sharp price increases at the pumps. Meanwhile, with all the demand for natural gas, electricity producers have been switching to coal. The International Energy Agency (IEA) predicted record electricity production from coal in a report last month, as well as rising prices for the black stuff.
Ah, say green campaigners, this just shows the danger of relying on fossil fuels: renewables are a much better bet. Not only are renewables better for the environment, we also won’t have to rely on foreign dictators for our energy supply – we can produce our own energy through wind and solar, they say. In this vein, the IEA has rejected the idea that green policies have anything to do with the current energy problems. ‘Recent increases in global natural-gas prices are the result of multiple factors, and it is inaccurate and misleading to lay the responsibility at the door of the clean-energy transition’, said the IEA’s executive director, Fatih Birol, in a statement back in September.
But green policies have had multiple negative impacts nonetheless. For starters, European countries like Poland, France and the UK could have been acquiring sizeable amounts of gas from fracking, but development has been shunned thanks to green lobbying, which has exaggerated the safety risks. Natural-gas prices are, right now, much lower in fracking-friendly America. At the same time, eco-warriors are also helping to shut down Europe’s low-carbon nuclear-energy industry, with three German plants closing at the end of last year, heaping more pressure on other energy sources.
As demand has shot up, we have not been able to ramp up existing oil and gas resources sufficiently. The worry is that energy companies see the current rise in prices as temporary and are focusing instead on the long-term regulatory shift against fossil fuels. If so, they may not make the necessary investments now to secure supplies for the future.
We are paying the price for all this in our energy bills. In the year ahead, a combination of tax rises and energy-price hikes is going to create a major squeeze on our living standards. Suspending green levies and VAT on fuel could help ameliorate those rises. But the long-term problem is that green policies mean more expensive energy – by design. Campaigners and politicians will ensure we use less fossil-fuel energy by making it as costly as possible – and for many people, unaffordable.
Rob Lyons is a spiked columnist.