三大能源极度短缺，全球市场陷入混乱

On September 15, two U.K. fertilizer plants announced they would be shutting down production indefinitely—citing not declining business or heavy tax burdens, but the cost of a precipitous rise in European gas prices.

The closures are a worrying sign that the knock-on effects of the European gas rally—the outcome of a perfect storm of hurricanes and stagnant wind farms, European climate policy and the COVID-19 pandemic—are spreading. Higher energy prices risk pushing up costs for everything from fertilizer—and, it follows, already soaring food prices—to transport, heating, and heavy industry, underlying already rising inflation and slowing down the global economic recovery. And while many of the factors are European-specific, low inventories and looming winter demand is causing hand-wringing from China to California.

The gas spike, too, carries a warning of things to come. Europe is ahead of the rest of the world in pushing forward renewable energy policy, and has a bloc-wide goal to reach net zero by 2050. That means it must also contend with a growing reliance on renewable energy—and whether that means, paradoxically, a growing dependence on gas.

Natural Gas

With prices hitting record seasonal levels across Europe, gas's cornerstone role in the continent's economy—from power generation to home heating to food production—is painfully clear. Since January, the benchmark Dutch TTF gas hub price is up more than 300%. That huge price surge is due to a whole spectrum of both supply and demand factors.

On the one hand, demand has rebounded in 2021, as the region (and the world) have lurched out of the COVID-19 pandemic—and this was paired with an unusually cold 2020/21 winter.

That left supplies on the back foot going into the summer, the traditional restocking season; today, going into autumn, regional inventory levels are near their lowest in a decade, encouraging fears that another cold winter could push prices up even further. Those lower stockpiles have been exacerbated by strained gas supplies, due to maintenance on gas infrastructure in Norway, which had been delayed due to the pandemic, and a lack of spot offers from Russia's Gazprom, one of the region's main sources of gas.

Gazprom's lack of spot offers via Ukraine and Poland has also drawn suspicious accusations that Russia is holding back supplies of its own gas, in order to make a point about how much Europe needs the politically controversial Nord Stream 2 pipeline, which is awaiting approval by German regulators.

But Russia, too, is facing its own supply crunch: higher demand is coming not just from Europe but also from Asia, and that has been paired with the pre-winter need to replenish its own stockpiles.

LNG

Russia's situation is just one of the global strains on gas markets. Because it can be transported, liquefied natural gas (LNG) operates as the "global" market for natural gas. There, supply has been taken off the market by Hurricane Ida, which hit the Gulf of Mexico and paused exports—and now by Hurricane Nicholas, which has also shut down an LNG export terminal near Houston.

Here, Europe's desperate demand for gas is further causing the price to surge. The fact that Europe is behind the LNG price surge is unusual, points out Xi Nan, vice president of gas and power markets at Rystad Energy in Oslo, as Asia is normally the main demand driver for the fuel.

Making things worse, Asia is still a center of LNG demand—and a growing one: a push by the Chinese government away from coal, paired with the general economic resurgence, is drawing gas from both the U.S. and Russia, while inventories are low globally ahead of winter.

That is raising the prospect that China, too, could see winter fuel price spikes so severe that industrial production that relies on gas-fired power will have to be curtailed—because companies simply can't cover the costs.

Wind

There's also another factor in the rise of energy prices, one that is particularly important in Europe. Wind power, which now makes up around 20% of the European energy mix on average and directly competes with gas for power generation, has long grappled with a supply conundrum: what happens when the wind doesn't blow?

This summer, that's exactly what happened—producing a shortfall that Mads Nipper, the CEO of Danish wind giant Ørsted likened to being a farmer, "and it doesn't rain".

This shortfall (and the solar equivalent: cloudy skies) hits at the problem of renewable intermittency, which forces those who rely on renewables to either store energy generated by those energy sources in batteries in order to shore up low periods, or rely on traditionally stable sources of energy like nuclear power, gas, or coal to fill the gaps.

Because battery storage on a wide scale is expensive, Europe relies on highly-interconnected systems of power, moving renewable energy around on the continent to try and balance out supply. But low renewable supplies—currently paired with tight gas supplies, which typically step into the gap—is momentarily re-carbonizing the European power system, and doing so at a high cost.

"When wind is down, solar is down, [and] gas is also quite tight, then coal has to be up, with a higher cost," said Xi. Because coal faces high carbon prices, as the highest polluting fuel, that pushes up the "baseline" energy cost, she points out.

A bump in the road?

Though many of the current conditions pushing up gas prices are temporary—the wind will probably pick up again, for example—others hint at a more fundamental shift. An increased reliance on renewable energy, higher carbon prices, weather disruptions from hurricanes and storms, and geopolitical wrangling with Russia are all long term trends that could add to price volatility in the years to come.

Meanwhile, the argument that the energy transition itself could produce a supply crunch and high prices—by deterring medium-term fossil fuel investment—is an argument that's made frequently, at least by oil and gas executives.

On September 15, Chevron CEO Mike Wirth argued to Bloomberg that, “looking out for a few years if the global economy continues to grow and recover post COVID, is there sufficient reinvestment in the energy that runs the world today? Or are we turning so quickly to the energy that runs tomorrow that we created an issue in the short term?”

While the oil and gas industry has used that argument as a case for further investment in fossil fuels, it does speak to the conundrums of managing intermittency. Germany, for example, is phasing out both nuclear and coal plants simultaneously—leaving gas in a clear swing position.

But could those dynamics truly disrupt Europe's energy shift? Unlikely—"one tight winter" isn't likely to slow down the adoption of renewables, Xi says.

"The transition will go ahead anyways," she argued. "It's more about how to handle the intermittency in a cost effective manner."