War hysteria in Gaza have put the world under tremendous muddle, apart from humanitarian grounds, there are other repercussions that have distorted the Oil Market.
“Today we are again facing a crisis in the Middle East that could once again shock oil markets,” said International Energy Agency (IEA) Executive Director Fatih Birol. That comes on top of the stress on energy markets from Russia’s cutoff of natural gas to Europe over its invasion of Ukraine, he said. The sudden surge could be of similar impact as that of what happened in 1970s unleashed efforts to conserve the non-renewables. The attack on Israel by the militant organization Hamas and the ensuing Israel military operations has raised fears of a wider Mideast conflict, prompting some moderate oil price rises.
Birol revealed that IEA are convinced that non-renewables are not a safe option. The vulnerability of sheer monopoly from certain nations has rendered the world in a tough muddle. Russia-Ukraine war and the Israel-Gaza war are prime instances of how non-renewables are subjective to human saneness. He confirmed that the world is moving towards energy transition faster than ever now.
“Fossil fuel prices are down from 2022 peaks, but markets are tense and volatile. Some of the immediate pressures from the global energy crisis have eased, but energy markets, geopolitics, and the global economy are unsettled and the risk of further disruption is ever present”, the IEA report said.
Birol pointed out towards the major sanctions implied during the Yom Kippur War in 1973. The singular act of war shot the oil prices up by 300%, which resulted in the foundation of IEA the very next year. Similar incident in 1978 because of the Iranian revolution sky-rocketed the prices. Fatih made emphatic connections among these wars and the on-going Israel-Palestine conflict, convincing it would similarly cause enormous changes in the Oil market. He also pointed out that in those times they were not any alternatives to non-renewable resources such as we have EVs and natural power sources. This could push the transition even quicker.
The report also pointed out a new role for Beijing, which was once a leading source for increased demand credits to rapid industrialisation and growth. IEA praised the Chinese government for the quick energy transition. According to their reports the Oil and Fuel demand in China could peak as soon as 2025.
“Concerted international action at the upcoming United Nations climate conference is needed to expand use of clean technologies and find new ways of financing the massive investment that is needed, especially in the developing world. The demand for fossil fuels will peak before 2030 under current policies but says governments will have to increase their efforts to speed up the transition if the world is to meet the global goal of keeping warming below 1.5 degrees Celsius (2.7 degrees Fahrenheit)”, IEA said.
The transition to renewable sources is happening at much more swift pace than we understand. The quicker this happens, the more the world has to prepare for a change in how their household and other necessities operate. According to IEA, the investment in clean energies has increased by 40% when compared to the year 2020. Economic factors as well as the desire to create green jobs and a need for energy security are increasing the momentum.
Stricter steps need to be taken to keep the Paris goals in reach, that is the only way to keep the global warming under human wrath. Despite a potential peak by 2030, demand for fossil fuels is still set to remain far too high to keep Paris Agreement goals alive, according to the IEA. This not only risks worsening climate impacts after a year of record-breaking heat but also compromises the security of the energy system, which was built for a cooler world with less extreme weather.
What is Paris Agreement?
The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. Another primary objective is to keep global warming to no more than 1.5°C – as called for in the Paris Agreement – emissions need to be reduced by 45% by 2030 and reach net zero by 2050. The Paris Agreement took place on 12th December 2015 in Paris, France.
The way things are going, by the next half a decade the world will live without fossil fuels, either by choice or by no options left. Does the world have what it takes to complete the 100% transition to green energy?