Citi Global Wealth UNSToPPABLe TreNDS | | 61 Investments Above all, the objective is to limit greenhouse As a result, the number of people with access shortfall made up by coal burning. For now, gas emissions to avert a climate catastrophe. In to electricity worldwide has seen a decline greater energy security thus means having 2022, summer heat records in multiple regions, for the first time ever. The longer the crisis diverse sources of supply, of which more comes Arctic wildfires and disastrous floods in Nigeria persists, the greater the risk of social unrest from renewables. and Pakistan were the latest reminders of and political instability, as in 2011 when soaring the intensifying threat to people and planet. food prices stoked the “Arab spring” uprisings We believe that diversity of supply will be However, it has become even clearer that and revolutions. essential to longer term energy security too. other forms of our security also depend on Today, much of that diversity comes from fossil the transition. Fossil fuel dependence can threaten national fuels. However, this must change radically security as well as economic well-being. Russia’s if the world is to have a chance of limiting attempt to use its gas supplies as leverage has climate change. Fossil fuel reliance, at times complicated Europe’s response to the war in Ukraine. Massively increasing renewables’ share within economic vulnerability power production is clearly critical to the drive Over time, some fossil fuel–importing nations toward energy security. And yet it is still only The economic damage of Europe’s reliance on have found themselves having to adapt their part of what is needed. Electrification and Russian natural gas is mounting. With energy foreign policy in ways they would rather improving energy efficiency are also essential. prices more than 40% higher than a year not have. By striking compromises with earlier, inflation in the eurozone hit an all-time authoritarian regimes or engaging in overseas Switching from fossil fuel burning to electricity high of almost 11% in October 2022. Amid military ventures, for example, they have from renewable sources in heating and cooling the uncertainty, households and businesses suffered reputational consequences on the buildings, transport and industry has great are retrenching.1 world stage. potential to lower emissions. The same goes for increased efficiency – using less energy to do Both the eurozone and the UK look set to Shifting toward renewable energy can help more. The less energy intensive we become, the suffer recession, despite government initiatives mitigate such issues. By generating cost- more our energy security increases. to subsidize energy bills amounting to many efficient, clean energy locally, countries can hundreds of billions of euros – see “Europe: strengthen their economic resilience and their As in in the 1970s oil shocks, the drive for Bracing for winter recession”. Globally, the national security. efficiency is increasing because of the current cost of such initiatives has already breached crisis. In Germany, for example, households are $500bn.2 Deprivation is nonetheless on This is not to say that renewable energy is rapidly replacing gas heating with heat pumps. the increase. fail-safe, however. These electrical devices – which take in air from outside a building and raise its temperature Seeking high prices for their output, liquid At times, for example, the UK’s still-growing to heat the building inside – are already 300% natural gas suppliers have diverted cargoes windfarm network can already supply over half efficient. This means it takes one-third of the away from other destinations and toward of the nation’s electricity needs. But unusually energy to heat a home compared to one with a Europe. Shortages in certain developing calm and cloudy conditions in 2021 saw a countries are already a reality. dip in its renewables’ consumption, with the 1 Bloomberg, as of 4 Nov 2022 2 IEA (2022), World Energy Outlook 2022, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2022, License: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A), as of Oct 2022