Energy crisis today worse than 1970s: IEA

The global energy crisis triggered by Russia's invasion of Ukraine has a larger impact on energy supplies than the oil crises in the 1970s, International Energy Agency (IEA) executive director Fatih Birol has said.

The global energy crisis is worse the oil crises of the 1970s because of Moscow's role as the world's largest oil and gas exporter prior to the war, and its status as a significant coal exporter, whereas both energy shocks in the 1970s were triggered by oil producers, Birol told delegates at the Sydney Energy Forum (SEF).

But energy consumers will respond swiftly respond to supply shocks, like they did in the 1970s, and accelerate the transition to lower greenhouse gas (GHG) emissions through greater use of renewable energy, hydrogen and battery storage technology, Birol said.

"We are in the middle of the first global energy crisis," Birol said. "The world has never witnessed such a energy crisis in terms of its depth and consequences. It is interwoven by many factors including geopolitics, and I believe we may not have seen the worst of it yet. This winter in Europe will be very, very difficult."

In the 1970s, there was only an oil crisis after the Arab oil embargo in 1974 and the Iranian revolution in 1979, he said. "Today we have a crisis with oil, gas and coal where all of their prices are going up," he said. "It all has to do with Russia, as on 24 February (the day the invasion began), Russia was the number one oil exporter of the world, the number one gas exporter and a major player in the coal market and as a result we are seeing the entire energy system is going through a crisis."

Another difference between the 1970s and now is that the world has readily available clean energy technologies. The share of renewables, especially solar energy, in the total electricity supply has been increasing, he said. "In 2019 only 2pc of new car sales were electric cars, this year in 2022 we are going to see almost 15pc of all the cars sold in the world being electric cars," Birol said.

The third difference from the 1970s is that many countries around the world have greenhouse gas emissions reduction targets, he said.

The energy crisis will also prompt a response from energy consuming countries. "The current situation may also be a turning point in the history of energy," Birol said. "I believe this for two reasons, first, the drivers for a clean energy future today are economic realities, climate commitments and at the same time national energy security."

The second reason is based on historical behaviour. "In the 1970s we had two oil crisis, one after another. They also led to innovation in energy policies," Birol said. In the 1970s cars required on average 18 litres of fuel to run 100km, but new energy policies saw this requirement reduce to 10 litres, he said.

"We are going to see some tension in some countries on how they are going to align their national energy security demands with climate demand, but countries should not lock in large scale fossil fuel investments," Birol said.

By Kevin Morrison