Energy shocks can become political catastrophes. Perhaps a third of the rich world’s inflation of 8% is explained by soaring fuel and power costs. Households struggling to pay bills are angry, leading to policies aimed at insulating them and boosting fossil-fuel production, however dirty.
Mr Biden, who came to power promising a green revolution, plans to suspend petrol taxes and visit Saudi Arabia to ask it to pump more oil. Europe has emergency windfall levies, subsidies, price caps and more. In Germany, as air-conditioners whine, coal-fired power plants are being taken out of mothballs. Chinese and Indian state-run mining firms that the climate-conscious hoped were on a fast track to extinction are digging up record amounts of coal.
This improvised chaos is understandable but potentially disastrous, because it could stall the clean-energy transition. Public handouts and tax-breaks for fossil fuels will be hard to withdraw. Dirty new power plants and oil- and gasfields with 30- to 40-year lifespans would give their owners more reason to resist fossil-fuel phase-outs. That is why, even as they firefight, governments must focus on tackling the fundamental problems confronting the energy industry.
One priority is finding a way to ramp up fossil-fuel projects, especially relatively clean natural gas, that have an artificially truncated lifespan of 15-20 years so as to align them with the goal of dramatically cutting emissions by 2050.
If governments respond ineptly, they could trigger a relapse towards fossil fuels that makes it even harder to stabilise the climate. Instead they must follow a perilous path that combines security of energy supply with climate security https://t.co/9GshDS7r7c
— The Economist (@TheEconomist) June 23, 2022