Energy costs will be high for a decade, warns ex-bp boss
ENERGY costs will stay high for the next decade because of massive underinvestment in oil and gas in the wake of new climate change targets, the former boss of BP has said.
Tony Hayward said people should “not be fooled” by a recent decline in wholesale oil and gas prices, warning: “High energy costs are going to be a feature of the next decade.”
The former BP chief executive said that while Russia’s invasion of Ukraine was the catalyst for the recent spike in energy prices, the crisis could be traced back to a focus on reducing emissions since the Paris Agreement in 2015.
Writing in The Daily Telegraph, he warned: “What the war has exposed is the frailty of the energy system that we have built over the last decade, particularly in Europe.”
Mr Hayward said that a push towards sustainability had led to investment in fossil fuels dropping to around 60pc of the levels seen in the decade prior to the Paris accord and well below the level needed to meet current demand.
He added that the fossil fuel industry had been “progressively demonised to the point that it was not invited to Cop26 in 2021”.
As a result, Mr Hayward said little attention had been paid to meeting global energy demand or the impact on energy security and prices of withdrawing oil and gas investment before cleaner alternatives were in place.
Global coal consumption rose to a record high in 2022, according to the International Energy Agency (IEA), as countries scrambled to find alternative energy sources after Russia cut gas supplies to Europe.
The squeeze on supplies has helped drive oil and gas prices to new highs, piling pressure on energy bills for consumers and businesses. While recent mild weather and an economic slowdown in China have helped to relieve the strain on the energy sector in recent weeks, prices remain significantly higher than historical levels.
As global energy demand continues to grow, the IEA has warned that annual investment in clean energy will need to more than triple by the end of the decade to $4trillion (£3.3 trillion).
But Mr Hayward said government bureaucracy and the slow pace of commercial deployment of new technologies were holding back the shift to renewable energy sources. He also said large improvements in energy efficiency – similar to those seen during the last energy crisis in the 1970s and 1980s – were needed to temper demand and bring prices back down.
He said: “It is extraordinary that until we were actually in the middle of the current crisis, almost no one had focused on demand and even now it is seen as little more than a short-term intervention to manage today’s problem rather than a key strategic plank of any energy policy.”
Mr Hayward, who stepped down from BP in 2010, also called for an end to the “demonisation” of the fossil fuel industry so that the sector could invest more in the energy transition.