Energy prices may soar this winter – IEA boss – BBC News

  • By Tom Espiner
  • Business journalist, BBC News

Energy prices could soar this winter forcing the government to step in and subsidize bills again, says the head of the International Energy Agency.

If China’s economy strengthens quickly and there is a harsh winter, gas prices could rise, putting pressure on consumers, said Fatih Birol.

He added that the government should encourage energy saving and increase renewable energy.

But a UK government spokesman said energy bills would drop by an average of £430 this month.

Gas prices soared after Russia’s invasion of Ukraine, driving up energy bills around the world.

A number of governments then stepped in with support for households, including in the UK, to try to soften the blow to consumers.

Birol told the BBC’s Today program that many European governments were making “strategic mistakes”, including relying too heavily on Russia for energy, and that foreign policy had been “blinded” by short-term commercial decisions.

He said this winter “we can’t rule out” another spike in gas prices.

“In a scenario where China’s economy is very strong, buying a lot of energy from the market, and we have a harsh winter, we may see strong upward pressure under natural gas prices, which will in turn add to the burden on consumers,” he said.

China’s economy has bounced back after Covid restrictions were lifted, but recently it has been slowing down.

Ratings agency S&P Global this week cut its forecast for China’s growth, saying “the risk is for the recovery to lose more steam amid weak confidence among consumers and in the housing market”.

Investment banks including Goldman Sachs also cut their China growth forecasts.

Nevertheless, Birol said governments including the UK should “continue to push for measures to save energy, especially as we head into the cold season”.

They should also push renewable technologies so they “see the light as soon as possible” and cut the time it takes for them to get permits, and seek “alternative energy options”, he said.

He said he “wouldn’t rule out blackouts” this winter as “part of the game”.

“We don’t know yet how strong China’s economy will recover,” he said.

National Grid said last winter that short power outages were a possibility — ultimately, they weren’t necessary.

A UK government spokesperson said: “We are spending billions protecting families as prices rise over the winter to account for nearly half of a typical household’s energy bill, with them set to fall by an average of around £430 from this month.”

Russia’s war in Ukraine led to a “gold rush” of new fossil fuel exploration, and Britain defied climate warnings by issuing a new round of licenses for North Sea oil and gas.

More than 100 applications have been submitted to drill for new oil and gas in the North Sea.

This contradicts international climate scientists who say fossil fuel projects should be closed, not expanded.

They say there will be no new projects if there is a chance of keeping global temperature rise below 1.5C.

Fatih said “if the world is serious” about “climate causes” then “we have to significantly reduce our use of oil and gas in the coming years”.

If we can reduce consumption, the existing oil and gas fields will be sufficient to meet the declining demand, he added.

He said he had discussions with the chief executive of a British oil company.

Fatih said he has “no problem” with oil companies turning a profit, but if they say: “I will increase my production by four million bpd, and my company’s strategy is in line with the Paris Climate Agreement – no it’s not working, there are problems here. “

The Rosebank field in the North Sea, which has the potential to produce 500 million barrels of oil, could be approved by the government within weeks.

The UK government said it was “committed to net zero by 2050 and has come a long way to meet that target, cutting emissions faster than any other G7 nation while maintaining economic growth and with low-carbon sources such as renewables and nuclear provision. It accounts for half of electricity generation. English”.

But a spokesman added “the transition to cleaner energy cannot happen overnight and we will continue to need oil and gas for decades to come, as recognized by the independent Climate Change Committee”.

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