Earth warming is advancing and warning signals about the energy crisis are multiplying as the ecological transition is proving more difficult than expected. The upcoming COP26 meeting in Glasgow is the last chance to avoid the culpable underestimation of the energy crisis and to start managing it properly.

The race to reduce the use of fossil fuels sees the energy agendas of governments changing with increasing conviction and commitment, especially towards electrification, research, and development of green and blue hydrogen, to produce less polluting fuel, as well as the strengthening of renewable energy. It is a race against time to comply with the Paris Agreement and in view of the next Cop26 meeting in Glasgow, which saw the preliminary meetings held in Milan under the siege of activists from all over the world. In the meantime, an energy crisis is spreading, whose media emphasis is becoming more and more suspicious and there is already talk of a conspiracy to save a COP26 that may have already failed from the start.

Energy transition and fuel shortage: is it a global crisis?

It all began with the observation of a complicated thermal year for the northern hemisphere, as reported by Australians on several occasions: low stocks, difficulty in finding ships for transport and the damage of Hurricane Ida have seen Asia and the USA take action to repair supplies, in a crucial period for the energy transition that has placed all the attention and efforts of diversification towards liquid gas. Also, not to be underestimated is the Baltic Dry Index, which tracks ship freight price trends, which closed the week at record levels since 2008.

The demand for aviation fuel has recovered almost to pre-crisis pandemic levels, and if OPEC and its allies have well managed oil supply and prices in the most difficult period of the lockdown, now it is necessary to put a cap on prices that seem unstoppable, configuring a real energy crisis for Europe but not only, as shown by the case of the UK.

The UK has a strong dependence on natural gas supplies from Russia and Norway and the out-of-control jump in prices together with numerous bankruptcies in the chain of companies in the energy sector is affecting the country’s industrial production, for which price tensions are joined by the aftermath of the post-Brexit management, above all due to barriers to incoming foreign workers.

Another victim of the energy crisis, together with India, is undoubtedly China, closely linked to global supply chains, which had already not welcomed the “belligerent” agreement and the interference generated by the so-called AUKUS between the USA, the UK and Australia, and is now pushing again on coal mines to avoid electricity rationing to factories. From the food industry related to that of fertilizers whose prices are skyrocketing, up to the processing industry. There are already fears for the Chinese technology industry in view of the appointments at the beginning of November with Single’s Day, the biggest shopping day in the world, like Black Friday in the USA, which comes after just 15 days, along with Cyber Monday.  Last year it saw a record turnover, only registered by Alibaba, of more than 74 billion US dollars compared to 38.4 in 2019!

The result of these events in the first week of October saw prices of natural gas futures with delivery in November rise by 23% to 117 euros per megawatt hour (only six months ago prices were stable at 15 euros).  The pressure of energy prices creates tensions on inflation, but above all fuels doubts on the forecasts of a global growth already put to the test by the “bottlenecks” in supplies in many industrial sectors, from automotive to microchips. On October 6, the Bloomberg Commodity Index reached the peak of the last 6 years and only Putin’s intervention, that reassured the markets on supplies, allowed prices to stabilize. The Russian President, already grappling with a new rising wave of deaths due to COVID19, has increased gas supplies, but has accused the European Union of a lack of foresight in both storage and in the stipulation of contracts that in his opinion should consider a longer term. Obviously, fears of a European energy crisis are creeping in with the approach of winter.

The U.S., worried by the high cost of energy, considers the possible use of strategic reserves, as stated by Energy Minister Jennifer Granholm, but for the EU it is certainly not possible since it imports 90% of its gas and two thirds of its oil from abroad. The President of the European Commission doesn’t mince her words when she replies to Putin that “the future is renewables and not gas”.

The former German Chancellor Merkel sides with Van der Leyen to bring back the dialogue by putting on the table the issue of the North Stream 2 pipeline, a project opposed by the U.S., which connects the northern coasts of Russia and Germany while allowing the EU to be less dependent on supplies that pass today from Ukraine, with the approval of the U.S.. A western positioning, the Ukrainian one, too close to the Russian borders not to be a real thorn in Putin’s side since the association agreement with the EU signed in 2017, after the Minsk II agreements of 2015. Russian President spokesman Peskov ended the verbal skirmishes by stating, not surprisingly, that it is the commissioning of North Stream 2 that will allow gas prices to calm down.

The new hydrogen frontier, a great hope

Against the backdrop of a possible crisis for the energy market, the hydrogen frontier seems to be more and more present and close, also thanks to the announcement of the Norwegian company Equinor Asa, which has allocated 12 billion U.S. dollars of investment in research and development of “green” hydrogen, with an obvious goal of reaching a market share of at least 10% by 2035.

In fact, the race to hydrogen passes through a first phase that will see a wider production of hydrogen from water and renewable sources, and then focus on the so-called blue hydrogen, composed of natural gas. This will happen once the problems inherent to the pollution produced by its production will be reduced, exactly as for the extraction of natural gas.

Currently Norway is the largest gas producing country in Western Europe and especially the key country for Great Britain and the European Union to supply LNG beyond Russia. An excellent opportunity for diversification that should give Europeans pause for thought.


In November in Glasgow at COP26, the twenty-sixth session scheduled under the auspices of the UN with the joint presidency of Italy and Great Britain, the game of the century will be played and above all a balance sheet will be drawn with respect to the commitments of the Paris Agreement of 2015 towards total decarbonization and reduction of CO2 emissions to contain the rise in global temperatures.

The Guardian headline and the usual rumors coming from the UN Secretariat Building, put in the spotlight the junction of voluntary national contributions and new targets on which all countries will have to commit in order not to risk sanctions within the next 5 years.

Avoiding procrastination by going beyond 2030, the pivotal date of the famous 2030 Agenda on Sustainability, would help to give a strong and convinced response, but within the European Union discontent is growing. Not to mention the “Polish” rift over the primacy between national law and European law, which should make us reflect on the allocation of European structural funds to countries that have never fully committed themselves to the euro, but have only exploited the community table.

The last 5 years have been the hottest on Earth and COP26 remains the last chance to prevent this energy crisis from being underestimated or downsized and from being correctly considered as the start of an irreversible growth spiral of growing costs, now evident because of political neglect towards environmental protection.

About the author, Claudia Segre

As a financial expert, author, speaker, and the president of Global Thinking Foundation, Claudia Segre believes the only way to build a brighter, more prosperous future is to invest in the financial education of all women and girls.

She uses her platform to fight economic violence, accelerate financial inclusion for women, support female entrepreneurs, and promote the role of fintech in closing the gender gap.

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