How Renewable Energy Can Make This the Last Oil War

In a stark warning, the head of the International Energy Agency said last month that the immediate scale of the Iran War energy crisis was far worse than either the oil shocks of the 1970s or the gas crisis after Russia invaded Ukraine. Compared with the earlier crises, twice as large a volume of oil — 11 million barrels a day — and gas — 140 billion cubic meters — have been cut off from short-term energy supply, which has driven prices up.

Fatih Birol summed up the crisis as “two oil crises and one gas crisis put all together,” adding that the disaster goes beyond those two fuels to include “vital arteries of the global economy” such as petrochemicals, fertilizer, sulfur and helium.

Countries have already shuttered their schools, slashed their work weeks, imposed bans on popular street foods, and cancelled tens of thousands of airline flights. And it’s about to get worse: the actual fuel shortages won’t kick in until next week.

But this is quite different from the 1973 oil embargo. The good news is that while the US didn’t have an even vaguely plausible substitute for oil back then, today’s world leaders — even Donald Trump — have a pathway out of the crisis. While this pathway is not instantaneous, it will unequivocally lead to prosperity, abundance and a more secure and prosperous world.

Here’s why: this crisis is about gas, particularly liquified natural gas, not just oil.

The biggest threat this time is about gas — particularly LNG — not oil. One-third of the world’s LNG comes from a single gas field, South Pars, shared by opposite sides of the war: Iran and Qatar.

While there are potential surplus gas supplies in North America, Australia, Central Asia and Africa, it will take years to develop the pipelines and liquefication terminals, and expand the global LNG fleet, to replace the potential loss of both the Qatari and Iranian segments of South Pars.

President Trump has threatened to destroy the Iranian electric grid if Iran does not reopen Hormuz. Iran’s counter is to destroy the bulk of the oil infrastructure — particularly South Pars — that delivers Persian Gulf hydrocarbons around the world. This endangers perhaps a fifth of the world’s energy, which can be taken out with small boats and drones from sea and air.

The Hormuz blockade will, most likely, end when the war comes to a halt. When Hormuz opens again, it may take months to remove mine fields now being implanted by Iran.

To make matters worse, replacing LNG liquefaction terminals, or damaged pipelines and refineries, will take years. But most uses of oil require either electricity or heat — and both can be provided without crude oil or any of its derivatives. In fact, the biggest use of gas is to make power, which is now more cheaply available from the sun.

There are reasons for hope, especially in the context of 1973.

The magnitude of this crisis should escalate the pace of the energy transition; the decoupling phase away from fossil fuels has already reached takeoff; now we have to unleash it and shed our dependence on oil and gas now that we can’t afford or get them.

There will be demand destruction: less oil and gas for all users and hugely higher prices, for years. Renewables are the available and affordable alternative.

Unlike 1973, when the available menu of energy sources decoupled from oil markets was sparse and expensive, a global energy transition away from fossil fuels is already underway. It has been, if tepidly, embraced by all of the world’s importing economies, particularly China and the EU. There is a brighter, fairer and more abundant energy future ahead. This can be the last oil war.

However, there is still no fossil fuel hiding place. Energy security is incompatible with fossil fuel dependence. After 1973 the durable strategies were those that decoupled from fossil fuels. Japan’s energy efficiency revolution and France’s nuclear grid were the most solid solutions that emerged from the seventies. Today’s menu of decoupling strategies is vastly easier to work with than the choices faced in the 1970s.

But with honorable exceptions, most of the transition planning this decade was tepid, overweighting the costs of rapid decoupling from coal, oil and gas, and undercalculating the cumulative benefits of going clear. As recently as a month ago, the erection of solar panels was still, in many countries, a matter of “let someone else go first.”

The greatest recent success story? Pakistan, which, when it had to double the price of its fossil-fueled power two years ago, became the third-biggest importer of solar panels and now leads South Asia in reliance on solar energy.

Here are 4 key lessons:

1.  Electrify everything, as fast as you can.
2.  Get 100% off fossil fuels. Net Zero is the only secure price strategy for energy.
3.  Identify your biggest energy uses and let your industrial policy focus on becoming a market leader for those technologies.
4.  Be a first mover. The learning curves of clean energy infrastructure favor rapid buildout.

In short, do more to get off fossil fuels faster; that is the path to prosperity, abundance and security.

The UK also is showing the way: at the end of March, they were able to pull 93+% of its peak power off the sun and wind. Britain needed fossil gas only for 1 GT of its 34 GT peak power load.

The energy revolution cannot be stopped.

Let’s hope that this war can be stopped short of more massive destruction of energy infrastructure — the death toll is already cascading and water supplies are under attack. But the accelerated energy transition can, outside the battle zone, begin immediately.

We have the tools we need this time — what we do not have is much time to make the shift away from dependence on petro-power and over to the energy source every nation can enjoy without attacking its neighbors: wind, sun and rain.