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It’s no surprise that the effort to get the global economy back to its pre-pandemic efficacy would be quite challenging. The biggest current hurdle to that goal is what some are calling a global energy crisis. The supply of fossil fuels is struggling to catch up with recovering demand, causing energy prices to soar around the world, especially in the Northern Hemisphere as countries prepare for a cold winter. Many factors have contributed to this supply crunch, including European and Asian countries’ recent efforts to decarbonize the economy, lack of capital to natural gas drillers, and an unexpectedly low output from Russian energy suppliers like Gazprom.
One of the hardest-hit countries is the UK; Its natural gas prices jumped 420% on an annual basis in September, causing fertilizer plants that supplied 60% of the UK’s CO2 for food and beverage production to shut down operations. One such fertilizer plant was Illinois-based CF Industries, which has decided to halt operations indefinitely. UK supermarkets will now inevitably face shortages of meat and other fresh food within weeks, as current stocks of CO2 run out.
This energy-turned-food supply chain crisis will serve as a lesson that the righteous transition to clean, renewable, non-carbon energy will be difficult. The UK’s surging gas prices are the result of its decision to decrease its fossil fuel reserves over the summer, only to find that said fossil fuels will be needed in high volumes for the upcoming winter. Now, it must compete for the limited natural gas supplies of the U.S., Norway, and Russia, all of whom are filling their own reserves.
Another country that has faced consequences for trying to decarbonize its economy is China. China’s coal and gas prices have doubled in recent months, as it too has had to pay the price for the resurgence in global energy demand. Electricity producers have had to swallow these rising costs, forcing local authorities to ration electricity usage and subsequently cause power blackouts in many of China’s northern provinces. Companies like Apple and Tesla are facing a similar fate to those in the UK, as they too have been forced to announce temporary factory closures as a result of rising prices.
While the impact of the ongoing fossil fuel shortages paints a dystopian outlook for the economy, it’s important to recognize that the arising problems are growing pains that come with the transition to a greener economy. The short-term effects for countries like the UK and China will be disruptive, but are necessary kinks that need to be worked out in order to reach the long-term goal of a less emissive global economy.
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