Power scarcity is causing factory shutdowns and turning out streetlights in China. In Brazil, the poor are having to choose between eating food or paying electricity bills. The lack of adequate natural gas supplies in Germany is causing serious economic distress. The entire continent of Europe is in fear of blackouts, factory shutdowns, and a deep recession.
The entire world is crippled by an energy crunch, caused mainly due to the Covid-19 pandemic which was further exacerbated by the ongoing Russia-Ukraine war coupled with climate change-induced natural disasters. A lack of adequate supply has resulted in a rise in global oil and natural gas prices, making lighting and heating homes unbearable for the masses. It has further worsened the already existing inflationary pressures on the world economy. This energy crunch can easily cause a global economic crisis, having severe consequences for nations.
Europe has been the worst affected due to the squeeze on natural gas of which it imports around 90% of its entire requirement. Russia is the biggest exporter of gas to Europe and has cut down on gas exports in retaliation to western economic sanctions. The Nord Stream 1 pipeline, which is the main source of gas transport to Europe, was recently shut down by Russia. The certification of the newly constructed Nordstrom 2 pipeline was suspended by Germany in the midst of Russian aggression in Ukraine as a part of western sanctions. Russia’s decision to interrupt the gas supply has put Europe in a crisis as winter is nearing.
Climate change has caused extreme weather events in recent years globally. These events have also threatened energy security in various parts of the globe. In 2021 Brazil saw the worst drought in almost 100 years, which threatened its electricity supply, as Brazil relies heavily on hydropower for its electricity needs. Europe saw its driest summer in almost 500 years in 2022. This will have serious consequences for hydropower generation and nuclear power plant cooling systems. In Norway, hydropower generation was affected, and France also faced issues with cooling nuclear reactors. Higher than normal rainfall in South and South-East Asia has made it difficult for countries like China and India to mine coal, thereby disrupting electricity production.
In China, to deal with power shortages the government has extended power restrictions in 20 provinces in the northeastern region. The entire area where power restrictions were placed accounts for more than two-thirds of the country’s Gross Domestic Product (GDP). Due to power disruptions, factories are not performing to their optimum level, accelerating supply chain shocks. Being one of the largest consumers of coal in the world, India is facing power shortages due to scarcity of the aforementioned commodity. Several Indian states faced power cuts during the peak summer months. In Europe, the government is carrying out an awareness campaign and is asking its citizens to lower their energy use to avoid power disruptions in the coming winter. The European Union (EU) has asked member countries to cut their electricity consumption to deal with the current ongoing crisis.