We are but to inform the complete scale of the financial harm, however we do know that the struggle’s affect on energy costs and provide uncertainty is already right here. This “tax” on the world will finally outcome in slower financial development and hovering lighting and heating prices. Food manufacturing will change into extra expensive; so for the poorest it’ll imply selecting between the fundamental requirements of consuming, heating and lighting.
All of this might be prevented if it weren’t for the world’s reliance on fossil fuels equipped by a handful of volatile nations.
The results of energy shortage and worth will increase might be felt all over the place, however will probably be skilled extra profoundly in Africa and all growing markets that lack entry to dependable, inexpensive energy. These markets are extremely reliant upon already high-cost fossil fuels like diesel and kerosene to energy their properties and companies.
Further, the folks of those nations pays as much as 20% of their earnings in energy prices. We are actually asking them to pay exponentially extra in a world the place energy freedom introduced on by alternate options to carbon-based energy sources are simply attempting to catch up. This is untenable.
As I write this, the benchmark worth of Brent Crude is $102 versus roughly $80 as we entered 2022. It reached a peak of roughly $123 in March 2022. While a important improve, this drastically masks the affect it has on growing markets.
In Nigeria, for instance, market diesel costs have elevated from N275 a litre in January to virtually N600 a litre immediately, peaking at over N700. On my go to to Abuja, the capital of Nigeria, final month, I noticed lengthy strains at fuel stations that jogged my memory very a lot of the US fuel disaster of 1973, the place my dad and I might sit for hours ready to replenish.
The folks of Nigeria, extremely depending on diesel mills, already paying a important proportion of their earnings in energy prices, simply noticed a two-to-three-fold improve in their energy payments. This backdrop is taking part in out throughout the globe, and impacting the folks of the world that do not need the sources stand up to.
We know that this may maintain for some time frame. Announcements banning Russian oil and fuel – both now or in the close to future – are plentiful from the US, UK and EU. The EU is in search of to chop its heavy dependency on Russian fuel by 80% by winter this 12 months. We additionally know we are going to get by this episode, costs will stabilize, and sooner or later in the longer term it’ll all repeat itself.
It is vital to not ban fossil fuels. We might even must change into extra reliant upon them in the brief time period to handle by these extraordinary occasions. It is in the long term the place we should embrace the mix of renewables and distributed energy as a means to energy independence. Build resiliency in the world energy equipment and scale back our publicity to occasions such because the struggle in the Ukraine.
Of all the good issues led to by distributed renewable energy together with price reductions by photo voltaic technology, lowered carbon emissions by the inclusion of renewables, it’s truly energy independence that the world so wants immediately and tomorrow.
To be overly depending on one provider could be unwise, much more so if that provider is volatile and probably hostile. Conversely, a stability throughout numerous energy sources, each domestically and internationally, is extra secure and predictable. A comparatively peaceable world, with out energy-threatening wars, permits financial development to raise the poorest out of poverty. But if wars can’t be prevented, we should always not less than guarantee energy provides are usually not disrupted.
Seeking to unfold indigenous energy technology by way of renewables, was as soon as seen as the way in which to fight future local weather change – now it may be seen moreover because the means to ship energy independence.
Written by Bill Lenihan, the CEO of ZOLA Electric