Uncertainty remains, green transformation is not easy - the world energy situation in 2023 prospect

In 2023, under the influence of geopolitical conflicts, climate change, exchange rate fluctuations and other factors, global energy security uncertainty will still exist
.

This energy crisis has continued since last year, causing fuel shortages, enterprise closures and economic slowdowns in some countries, which not only forces relevant countries to adjust their energy policies, but may also cause profound changes
in the international energy pattern.

The energy crisis set off a chain reaction

Since last year, the contradiction between global energy supply and demand has deteriorated sharply, international energy prices have fluctuated frequently, and market conditions are full of uncertainty
.

"This is the first truly global energy crisis, with unprecedented breadth and complexity
.
" The International Energy Agency's "World Energy Outlook 2022" report recently released reads this way
.

As an important energy producer and exporter, Russia plays an important
role in the global energy market.
After the escalation of the Ukraine crisis, the United States and the West launched severe sanctions against Russia, resulting in blockages in energy supplies, soaring prices and triggering chain reactions
such as high inflation.

Statistics released by the Bruegel Institute, a European think tank, show that wholesale electricity and gas prices in Europe have increased 15 times compared with 2021, and if government subsidies alone do not take other measures to respond, European countries' subsidy costs may reach 1 trillion euros
before energy prices fall.

The crisis highlighted the fragility
of the international energy supply architecture.
Taking natural gas as an example, the proportion of LNG imports in Europe has increased
significantly due to the sharp decline in natural gas from Russia.
However, European countries, which are accustomed to importing gas by pipeline, do not have enough LNG storage facilities
.

Data show that before the escalation of the Ukrainian crisis, 30% of the EU's oil, 45% of natural gas and 46% of coal came from Russia
.
The EU's desire to change this energy supply mix will not be achieved
in the short term.

Soaring energy prices have not only plagued Europe, but have triggered a global ripple reaction
.
LNG prices soared, and economies such as Japan and South Korea are looking for ways to save electricity while considering restarting nuclear power; India's coal imports hit a record high; Many emerging and underdeveloped economies that rely on energy imports have had to compete with developed economies at high prices for energy
.
This situation has also triggered a sharp restructuring of the global energy market, with US energy exporters soaring in profits and regions with high gas reserves such as North Africa also trying to increase exports
.

The European energy crisis and its ripple effects have exacerbated global commodity price volatility, inflation has soared in many countries, and economic hardship has deepened
in some countries.

Energy prices may remain high in the short term

Unless geopolitical factors and global supply and demand fundamentally change, energy prices will remain high for some time in the future, and energy supply tensions will continue
.

The International Energy Agency's executive director, Fatih Birol, previously said the EU could face a gas shortfall of about 27 billion cubic meters in 2023, accounting for about 6.
8%
of the EU's total gas benchmark demand.
The International Energy Agency expects that the global crude oil market may also experience a significant shortage in the third quarter of 2023, driving the price of Brent crude futures in London to around
$100 per barrel.

The World Bank's recently released Commodity Markets Outlook predicts that global prices of key energy sources such as crude oil, natural gas and coal will decline in 2023, but remain well above the average
of the past five years.

The "2023 Energy Outlook" report released by S&P Global Commodity Insights recently mentioned that although the prices of energy commodities such as natural gas, coal, and crude oil will decline in 2023, the tension in the European power market will not improve significantly, and the structural reform of the electricity market will become an important agenda
for European countries in 2023.

In the next few years, Russia's oil and gas production and export restrictions will lead to a continuous shortage of global natural gas supply, coupled with the low willingness to invest in fossil energy caused by carbon peaking and carbon neutrality, and the increase in the proportion of renewable energy, the stability of global energy supply will be significantly reduced, and even mild supply shortage crises
will occur frequently.

High energy costs may push energy-intensive enterprises in many European countries to reduce production, stop production or shift production
.
Oliver Falk, head of the Center for Industrial Economics at the Iver Institute for Economic Research in Germany, said: "If energy prices remain high for a long time, some industries will leave Germany
.
”

The energy transition is far from quenching thirst

Many experts believe that soaring energy prices will force Europe to accelerate its energy transition and "passively" introduce more green energy, but the energy transition is still difficult to fundamentally resolve the energy crisis
.

In May 2022, the EU announced that it would invest an additional €210 billion over five years to support the acceleration of green energy development
.
The content of the program includes promoting energy conservation, diversifying energy supply, and accelerating the development of renewable energy
.
The plan also proposes to increase the EU's 2030 energy efficiency target from 9% to 13%, while increasing the share of renewable energy in EU energy consumption from 40% to 45%
by 2030.

The British "Economist" article said that most countries will take measures in 2023 to increase investment in traditional fossil energy in the short term to ensure the security of energy supply, while taking long-term measures to adjust state-led industrial policies and accelerate the development of
renewable energy.

The "2022 Renewable Energy" report released by the International Energy Agency recently predicts that driven by the energy crisis, the installation of renewable energy equipment in various countries has accelerated significantly, and the global installed capacity increase in the next five years is expected to be nearly twice the increase in the previous five years, of which photovoltaic power generation and wind energy will contribute more than
90% of the new power generation capacity.
Birol said the current energy crisis could become a historical turning point
in a cleaner and safer global energy system.

However, some experts believe that although the surge in energy prices can accelerate the transition to renewable energy to a certain extent, as far as the current energy crisis is concerned, the dependence on traditional energy may increase in the short term, and green renewable energy is "far from quenching thirst"
.