2022 has been an eventful and memorable year for the energy industry. From war, to setbacks in the energy transition, to huge strides for clean energy, it has certainly been a roller coaster. Here are just a few highlights of what has happened worldwide, and what we can expect to happen in the future:
The defining moment for the industry, and the world, has been Russia's invasion of Ukraine. Along with the human suffering that has resulted, the invasion also caused a global energy crisis. Electric and gas prices have spiked world wide - straining systems and economies still struggling to recover from covid-19, inflation, and supply chain issues.
The energy crisis is predicted to accelerate the adoption of renewable energy, with the IEA recently reporting that renewable energy growth is set to nearly double in the next five years, surpassing coal as the world's largest source of energy. Countries looking to strengthen their energy security while meeting climate ambitions are propelling this investment and growth. However, the crisis has also driven short-term reliance on fossil fuels as Europe has grappled with finding adequate supply outside of Russia, and energy demand continues to increase across the globe. As rising gas prices have increased demand for cheaper energy sources, global coal use is likely to reach an all time high.
In other news, the path to 1.5 degrees celsius remains uncertain. COP27 wrapped up with little clarity on what the path forward for the energy transition will be. Agreement on the need for a Loss and Damage fund was established, but where the funding will come from remains to be seen. Even as global agreement on climate action remains opaque, regional legislative climate action pushed forward in 2022. The US passed the Inflation Reduction Act, investing $369 billion into accelerating the adoption of renewable energy. The EU is also finalizing its plan to cut green house gas emissions by 55% compared to 1990s levels by the year 2030.
Going into the new year, electricity shortages remain a very real concern. Electric grids are undergoing unprecedented change, and extreme weather events continue to occur, leading energy supply risks to continue. The North American Electric Reliability Corporation (NERC) has cautioned against retiring generation units too quickly in order to maintain adequate supply. Just last week, a winter storm wreaked havoc on the US, leaving 1.4 million homes and businesses without power.
Lastly, we head into the new year with a breakthrough in Nuclear Fusion. This month, the US Department of Energy announced that for the first time ever, they were able to produce more energy than required for the nuclear fusion process. This is an exciting event for the energy industry, putting limitless amounts of carbon free energy within reach for the first time.