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Energy Crisis

Climate change, development and energy issues are closely connected. In 2005, the oil price crisis made its presence felt around the world. Public debate and consumer concern peaked at the end of August as oil prices briefly hit US$70 per barrel before dropping again later in the year, while still remaining around double the level of just two years earlier. The crisis was blamed on rising global demand, particularly from China and India, but extreme weather events and global security concerns also played a significant part.

The oil price rises reflect a broader emerging concern about meeting the burgeoning global demand for energy. Estimates suggest energy demand will increase more than 50 per cent between 2005 and 2030 (IEA 2005). In 2004 alone, global demand rose by 4.3 per cent – the highest increase in percentage terms in two decades. In China, it shot up by a massive 15 per cent (BP 2005). Balancing energy supply with demand in a sustainable way without stifling economic growth will prove a major challenge in the context of global warming and the need to reduce emissions. The growing energy crisis emerged as a serious public and policy issue in 2005. A number of bilateral and regional energy and renewable energy agreements were launched. Debates over the role of various forms of renewable energy also surfaced. Several governments including Australia, Brazil, China, the UK, and the US publicly contemplated the nuclear energy option, sparking heated debates.

The World Bank and regional development banks came under pressure from environmental groups to shift lending towards renewables such as wind, solar and biomass. Attention also turned to “clean coal technology” and the capture and storage of carbon produced by fossil fuels. An Intergovernmental Panel on ClimateChange (IPCC) report found that carbon capture and storage has the potential to reduce the overall costs of combating climate change (IPCC 2005). Within the United Nations system, the interagency coordinating mechanism, UNEnergy, argued that the lack of modern fuels and electricity in developing countries locks people into poverty and damages both ecosystems and human health (UN-Energy 2005) (see Feature Focus section). Global corporations also contributed to the debate.

While some lauded renewables as the way of the future, Exxon Mobil Chairman Lee Raymond suggested that the focus should be on “how to find and produce enough conventional energy to support global economic activity and prosperity” (Exxon 2005).


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