Who Better to Reflect on the “Global Energy Crisis”?

Post-pandemic demand for energy combined with the war in Ukraine and subsequent oil and gas shortages have created a global energy crisis. That’s the core assessment offered by global energy expert Daniel Yergin in the newest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” a podcast produced by the Harvard Environmental Economics Program. Our complete conversation is here.

It would be much too easy for a New York Times crossword puzzle to include the clue, “Twelve letters for a world-renowned global energy expert,” because the absolutely obvious answer would be “Daniel Yergin.”  So, I was delighted to host Dan for my most recent podcast.  As you probably know, in these podcasts, I converse with leading experts from academia, government, industry, and NGOs, who are working at the intersection of economics, energy, and environmental policy.  Dan Yergin surely belongs in this group. 

He’s known as an author, historian, educator, energy analyst, and the founder of Cambridge Energy Research Associates (or CERA), which was acquired by IHS Markit in 2004, which itself recently merged with S&P Global, of which Yergin is now Vice Chair.  To some audiences, Dan is best known for his books, including The Prize: The Epic Quest for Oil, Money, and Power (1991 – Pulitzer Prize), The Quest:  Energy, Security, and the Remaking of the Modern World (2011), and The New Map:  Energy, Climate, and the Clash of Nations (2020).

But the book that first brought this remarkably productive gentleman to my attention was Energy Future (1979, co-authored with the late Professor Robert Stobaugh of Harvard Business School).

It’s striking that in his most recent book, “The New Map: Energy, Climate, and the Clash of Nations” (2020), Yergin writes prophetically that Ukraine would soon become a significant source of tension between Russia and the West.  

“I could see that Putin did not accept the outcome of the end of the Cold War and he said Ukraine’s not a country. And it tied together geopolitics and energy in a very vivid way. And it just seemed to me that a collision was going to come,” Yergin says. “I wouldn’t have imagined a war that would go on more than a hundred days specifically, but I just could see that this was going to happen.”

He observes that the war in Ukraine, coming on the heels of the post-pandemic surge in demand, has further squeezed energy supplies around the world.

“We have … moved into a period of … shortage,” he says. “I think that right now at this point we’re in a pretty dire short-term energy situation. In fact, I would say that since last October, we’ve been in a global energy crisis.”

Yergin says he believes Russian President Vladimir Putin is seeking to test the strength and resolve of the West with his actions in Ukraine.

“It seems to me that the situation is going to get worse over the next several months. That’s because it’s not only the question of markets now and investment, but it’s also this clash with Russia, and Putin is doing what Russia … and the Soviet Union did not do for half a century. He is manipulating energy supplies to make the situation in Europe more difficult by cutting back on gas.  And his strategy is pretty clear – which is to create shortages in Europe, which will cause fissures in the Western unity on Ukraine so that the Alliance falls apart.”

The energy crisis, Yergin notes, is forcing many governments to temporarily pause efforts to reduce CO2 emissions with the short-term goal of increasing oil and gas supplies to offset the loss of Russian fuel.

“Natural gas is in short supply globally, and coal is in short supply, and you can’t build enough wind turbines and solar quickly enough to accommodate for that. And politicians react to voters, and voters react to their pocketbooks when these prices get as high as they are,” he states.

Yet Dan Yergin also says he believes that the clean energy transition is continuing to gain momentum, in part due to the current crisis.  

“Europe has come out with even a stronger commitment to renewables. And so, I think that the longer-term outcome of this is an acceleration of renewables, renewable electricity as the longer-term alternative. So that’s why you’ve got to deal both with the short-term crisis, and at the same time lay the basis for a different kind of future,” he explains.

For all this and much more, I hope you will listen to my compete conversation with Daniel Yergin, which is the 37th episode in the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.