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By Adewale Sanyaolu
Energy consumers including households and companies should brace up for more spending in 2022 as a report by The Economist has revealed that continued rising energy prices in 2022, could trigger more protests both on the streets and at the ballot boxes.
The development may not be unconnected with recent threat issued by the Nigeria Labour Congress, (NLC), that workers and masses will not accept any further increase in pump price of fuel by way of subsidy removal, urging workers and citizens to prepare for total war against fuel price hike.
The NLC threat is contained in a New Year message to workers titled ‘’YEAR 2022 FELICITATIONS: KEEPING OUR HOPES AND ASPIRATIONS ALIVE IN THE NEW YEAR, directed the affected states to commence indefinite strikes to force the respective state governments to implement the new wage.
In a 9-page statement, NLC among others, said Still, the government is not relenting in its determination to push through further increases in the pump price of petrol and which as usual had been dubbed as “removal of petrol subsidy”. Well, Organised Labour has made its position clear on this matter.
We have told the government in very clear terms that Nigerians have suffered enough and will not endure more punishment by way of further petrol and electricity price increases.
“Our position in this regard is predicated on four major grounds. First is our concern on the deceit and duplicity associated with the politics of “petrol price increase” by successive Nigerian governments. The truth is that the perennial increase by the government in the pump price of petrol is actually a transfer of government failure and inability to effectively govern to the poor masses of our country.
We are talking of the failure of government to manage Nigeria’s four oil refineries and inability to build new ones more than thirty years after the last petrochemical refinery in Port Harcourt was commissioned; the failure to rein in smuggling; and the failure to determine empirically the quantity of petrol consumed in Nigeria.
The shame takes a gory dimension with the fact that Nigeria is the only OPEC country that cannot refine her own crude oil.
The Economist report titled ‘The World Ahead 2022’ further disclosed that because energy investment needs to increase, bills and taxes must rise, adding that if the squeeze eases, then the year could end with energy policy on a more solid foundation.
It, however, warned that the chances of the world hitting its net-zero targets will still be remote, but grid designs, investment incentives and fiscal plans may be in better shape.
In 2022, the report maintained that attention will turn to making the energy system less fragile. The easiest bit is fairly technical.
‘‘Most grids struggle to handle the intermittent nature of renewable sources such as solar and wind energy, so more reliable base-load power is needed that is not coal-fired. Natural gas will come back in fashion and there will be a global rehabilitation of nuclear power, which produces no greenhouse-gas emissions.
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In the years since the Fukushima disaster of 2011 its share of primary energy use has faded to four per cent, but more countries will seek to emulate France, where the figure is 36 per cent. New battery, hydrogen and carbon-capture technologies may eventually help, but they are not ready for prime time,’’.
‘‘Politicians, consumers and companies are on a journey of discovery about climate change and the energy business. The first stage, in the early 2010s, was characterised by indifference. The second phase, in the past few years, has involved setting idealistic emissions-cutting targets far in the future that cost little today. In 2022 the third stage of the journey will get under way, amid dangerously volatile energy prices, fears of greenflation and rising geopolitical risks. It will require realism about the task ahead,’’.
In 2021, the report stated that the world was awash with easy promises. Some 70 countries, accounting for two-thirds of global carbon emissions, had net-zero targets, to be met by mid-century but a majority of people in the rich world, including America, expressed concern about climate change.
Companies, it said, were making ambitious carbon-neutral pledges, too—especially those that didn’t emit much in the first place while a boom in green-tech venture capital suggested that funds were being reallocated at scale and sustainable investing became one of the biggest trends in finance since subprime debt.
‘‘When it came, the reality check was brutal. A surging economy in mid-2021 pushed up energy demand. By October, the price of a basket of fossil fuels was up by 95 per cent year on year. China and India faced blackouts and Europe a lack of gas (often piped from autocratic Russia).
A shortage of fossil fuels, which account for 83 per cent of primary energy use, threatened to push global inflation above 5 per cent, hurt growth and spook the public. In response, politicians turned back the clock. China and India raised coal output, Britain turned its dirtiest power plants back on, and as the oil price hit $80 a barrel, the White House urged OPEC to boost exports,’’.
Meanwhile, the report noted that a chaos of mixed signals—stigma, virtue-signalling, subsidies, legal cases and regulations—means that investment in the energy industry is running at less than half the $5 trillion annual rate needed to get to net zero by mid-century.
‘‘Sometimes, the prevailing incentives are actively counterproductive: too little investment in new natural-gas projects is making it harder for Asia to use gas as a cleaner bridge fuel, as part of the transition from coal to renewables.
In response, governments will expand the use of carbon prices, which act as an economy-wide ratchet on emissions. They will experiment with setting prices far into the future to give investors more predictability over the 20- to 30-year life-cycle of energy projects. America will remain an outlier, with no federal carbon price, but more Republicans will realise that pricing is the capitalist way to reform the energy business.
The hardest part of the coming year of realism will involve being honest with the public. Because energy investment needs to increase from two per cent of world GDP to five per cent, bills and taxes must rise. Politicians can try to pre-empt the inevitable backlash by using the proceeds of carbon taxes to help the poor.
Huge problems will remain, though. Roughly a fifth of emissions come from industrial users, such as cement-makers. Often there is no immediate clean substitute. The dying fossil-fuel economy will amplify geopolitical risks, with OPEC and Russia’s combined share of oil output expected to reach 50 per cent by 2030. And some new electrostates may prove to be more volatile than the old petrostates: about 70 per cent of the cobalt used in electric cars comes from the Democratic Republic of Congo, a country of 90 million people, whose GDP is roughly the same as the revenue of Tesla, the leading electric-car maker.
The emerging world accounts for two-thirds of energy-related carbon emissions, yet lacks the cash and innovation base to invest or invent its way to a cleaner energy system. The realisation that this is ultimately the rich world’s problem, too, will be at the heart of the fourth stage of the climate journey, beyond 2022,’’.
