How the Energy Crisis Made 2021 Feel Like the ’70s

Record high power prices across Europe. Empty petrol stations in the United Kingdom. Rolling blackouts in China. And congressional hearings and televised fever dreams about gasoline prices in the United States.

This fall has been marked by an energy crisis that seemed to pistol-whip every kind of fuel—coal, oil, natural gas, even renewables—in every conceivable country. Ramifications were felt nearly everywhere. European governments came under fire as prices for natural gas and electricity skyrocketed. Some factories cut back hours or closed altogether while consumers were forced into the streets.

Russia chuckled as Europe begged for more of the gas it spent years trying to ditch. U.S. lawmakers who spent ages crowing about American energy dominance and growing oil and gas exports suddenly scrambled to raise the drawbridge. China, which has spent the last five years trying to convince the world it was going green, rediscovered the virtues of cheap coal as soon as it didn’t have any. Meanwhile, power disruptions played havoc with factories all over the world—especially in China—which made the post-pandemic global supply chain an even messier train wreck.

A series of unfortunate events colluded to create this year’s energy crisis. First was a surprisingly robust recovery after the worst of the pandemic receded: Growth roared back in the United States, Europe, and China while energy producers and the people who move things around the world were still under lockdown. That created a glaring mismatch between demand and supply, with predictable results. Then there was extreme weather: cold snaps that drove up natural gas consumption, doldrums that silenced wind farms, and flooding that wrecked coal forecasts. But it wasn’t just weather.

Bad policy and myopia also played a big part. Europe, like the United States, opted for liberalized energy markets, trusting the invisible hand to tend to the thermostat. In China, of course, it wasn’t an invisible hand but a heavy one. Either way, the results were the same: an utter mismatch between what producers were paid to produce and what consumers were prepared to put up with. The clean energy transition, meanwhile, raced ahead of any actual transition to a different source of energy. And nobody seemed to pay attention to geopolitics anymore, which is why Russia still has one foot on the hose and one hand on the valve, confident in the knowledge it remains kingmaker of Europe’s energy fortunes.

Some of the energy crisis’s causes are passing; most are not. So buckle up, and enjoy some of Foreign Policy’s best pieces from this past year on what’s in store.

1. Why This Energy Crisis Is Different

by Jason Bordoff, Sept. 24

Markets are bad at dealing with energy. Markets are especially bad when they’re trying to change their spots—like suddenly going green when the world still needs a whole lot of black. Jason Bordoff, a founding director of the Center on Global Energy Policy at Columbia University and a former White House advisor, notes climate change and efforts to come to grips with it have made for a wrenching ride in the short term. Fossil fuels are being phased out, but there’s nothing in the wings quite yet.

“But in the same way that flooding, drought, and wildfires have long existed but are now being intensified by climate impacts, so too are market forces that long existed are now being supercharged by climate change impacts and responses,” Bordoff writes.

2. Is Europe’s Energy Crisis a Preview of America’s?

by Brenda Shaffer, Oct. 5

An Asda gas station displays a sign that it has run out of fuel in Cardiff, Wales, on Sept. 26.Matthew Horwood/Getty Images

Brenda Shaffer, a professor at the U.S. Naval Postgraduate School and a senior fellow at the Atlantic Council, sees policy failures lurking behind the energy crisis. Banning nuclear power, opting for spot market prices for natural gas, and mandating renewable energy regardless of economics were all part of Europe’s plan to update its energy blueprint. The problem is Russia is ascendent, consumers are incandescent, and the world still doesn’t have the Paris Agreement.

“Just like Europe, the Biden administration has made energy policy a subset of climate policy,” she writes.

3. The Real Reasons Behind China’s Energy Crisis

by Lauri Myllyvirta, Oct. 7

China, a nominally communist country, fittingly had nonmarket failures to blame for its energy woes. Beijing wanted cheap energy to spur growth. Coal miners didn’t get the memo. The result, writes Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air, was a catastrophic breakdown of China’s main energy source, which led to a cascade of economic and political turmoil felt around the world.

4. China’s Energy Conundrum

by Melinda Liu, Nov. 5

China’s efforts to wean itself off coal hit the inconvenient roadblock of blackouts and popular unrest. So Chinese President Xi Jinping pivoted quickly back to all-out coal production to keep factories humming and the population mum. The problem, writes Melinda Liu, Newsweek’s Beijing bureau chief, is it runs entirely counter to China’s pledges to go green in the next few decades. But there’s a method to the madness.

5. Winter Is Coming, and It’s Only a Preview

by Keith Johnson, Oct. 19

Short-term issues played havoc this fall: weather, lack of natural gas storage, and the like. But the bigger issue is that after the pandemic and before the energy transition, nobody’s investing in fossil fuels like oil and gas. There are lots of terrible downsides: inflation, manufacturing shortfalls, empty shelves, and an alarming number of Sunny Jim Callaghan references.