The world is facing a new energy crisis, as soaring prices and geopolitical risks threaten to disrupt the supply and demand of fossil fuels. The UK, which has committed to reaching net zero emissions by 2050, has a unique opportunity to turn this challenge into an opportunity, by accelerating its transition to a green economy.
The recent war between Israel and Hamas in Gaza has shown how fragile the situation in the Middle East is, and how easily it could escalate into a wider conflict that could affect the flow of oil and gas from the region. Europe, which relies heavily on fossil fuel imports from the Middle East, especially Qatar, which ships liquefied natural gas (LNG) through the Strait of Hormuz, a potential flashpoint for Iran’s involvement, is particularly vulnerable to such disruptions.
A further rise in tensions would compound the existing fragilities of the global economy, which faces weak growth and stubborn inflation. Mohamed El-Erian, a former IMF official and a Cambridge economist, warns that a worsening crisis would be stagflationary, meaning higher prices and lower growth.
The UK is in a better position than most of its European neighbours, as it has reduced its dependence on imported gas and increased its domestic production of renewable energy. However, it still faces significant challenges, such as upgrading its ageing infrastructure, ensuring energy security and affordability, and meeting its ambitious climate targets.
The UK can learn from the examples of the US and China, which have become more energy independent and resilient in recent years. The US has benefited from its shale gas boom, which has made it less reliant on Middle Eastern oil and more competitive in global markets. China has invested heavily in renewable energy sources and battery technology, and has become a global leader in green innovation.
The UK has an opportunity to follow China’s example and become a green pioneer, especially as it hosts the COP26 climate summit in Glasgow next month. The summit is expected to be a critical moment for the world to agree on concrete actions to limit global warming to 1.5 degrees Celsius above pre-industrial levels, as set out in the Paris Agreement.
However, the UK’s leadership on climate change has been undermined by its own chancellor, Rishi Sunak, who diluted some of the net zero policies in his budget last week. Sunak cut subsidies for electric vehicles and green home improvements, claiming that he wanted to save money for families and businesses. His decision was shortsighted and driven by political calculations, rather than economic rationale or environmental urgency.
Investing in green infrastructure and innovation would not only reduce emissions, but also create jobs, boost growth, and enhance energy security for the UK. A report by the International Energy Agency (IEA) says that reaching net zero by 2050 would require an unprecedented transformation of the global energy system, but would also bring huge benefits for the economy and society.
The UK has a choice to make: either embrace the green transition and reap its rewards, or stick to the status quo and suffer its consequences. The UK should seize the moment and lead by example at COP26, showing that net zero is not only possible, but desirable.