background image

The “legacy” of an extraordinary year for energy and climate

author image

By Alessandro Blasi

· 6 min read

Whatever metric is applied, the year just concluded has been ‘extraordinary’ for the energy and climate sector. Here is my own selection of 10 energy and climate keywords for 2021.


2021 will probably be remembered as an year of records : global economy and oil demand rising at a pace not seen since more than half a century ; coal use in power generation jumping by an amazingly worrying 9%; natural gas prices in Europe having reached levels of more than 7 times higher than pre-pandemic; CO2 allowances skyrocketing and China breaking the wall of 1.000 GW of renewables installed (a level exceeding those in US, Japan and Europe combined together)… the latter being probably the only record we have been pleased to see in the year.


Energy prices made headlines of international media throughout the year and returned as a major preoccupation for family budgets, industry and general economy. Everything with a link to energy skyrocketed: from basic commodities to traditional fuels, from electricity to CO2 allowances in Europe, marking record after record. The implications of such trend are already quite visible with levels of inflation not seen from multi-decades. This will be a key factor for 2022 and beyond as risks of out of control inflation brings severe risks to an already fragile system. Obviously energy is not the only cause, but the persistence of such high prices might create serious difficulties in re-emerging from the pandemic – provided Omicron will not be followed by further relatives… - and for the much-needed transformation of the energy system.


It is very much linked to prices, but demand trends in 2021 have been astonishing. The world tried to emerge from the pandemic incredibly starved of energy resources. This shows clearly how the traditional link between economy growth and energy demand is far from being broken. A rebound from the ‘annus horribilis’ 2020 was expected but the growth went beyond expectations and data reminded how energy efficiency is still too much an aspirational objective rather than a concrete fact. The current season of very high prices is a stark reminder of keeping efficiency use in strict sight… always.


Despite upswings in energy and economic conditions, the global energy system proved to work properly with no major disruptions that could have harmed further the fragile international context. Power renewables have kept growing at spectacular pace, achieving a new all-time record for new capacity installed in the year, with about 290 GW, showing their resilience to bottlenecks in the supply chain and inflationary signal led by higher costs for materials and shipping around the world. And shale sector is enjoying the most profitable year of its entire era, as capital discipline, reduced investment and higher prices fill pockets of shale pioneers. But probably the throne of most resilient component of the energy source goes to coal. Despite almost unanimous agreement on the need to move beyond coal, including from some countries that rely extensively on it, coal is incredibly ‘hard to die’. Recent IEA data shows that coal demand is ‘flirting’ again with its all-time historic high leaving a bitter taste to hopes for climate goals.


There are two main themes I think that would be properly placed in this category. The first one is Electric Vehicle: 2021 has been a quite special year for this industry, and for multiple reasons. First of all, it marked a massive acceleration among car manufacturers in terms of investment in electric mobility. Beside Tesla – that also broke the iconic and stellar threshold of $1 trillion market capitalisation – all the major car manufacturers are (very heavily) in the game. And new emerging pretenders jumped in the arena with the quotation on Wall Street of EV manufacturers such as Lucid or Rivian. Ev sales have reached in 2021 a 10% share in global markets, a level simply unimaginable two years ago. In the most dynamic markets - China and Europe – such share jumped to 20%.

The second ‘surprise’ is definitely “critical minerals”: never heard by many before 2021, throughout the year they have scaled up government and companies priority agendas. Lithium, cobalt, manganese, rare earth and more has become mainstream, and for sure, we will hear a lot about those in the coming years.. to me this has been the “hottest topic” of 2021.


The ‘good’ part of the story has been for me …COP26. It might sound as a surprise – but it should not. Firstly because, differently from what might have said, the much-awaited global gathering was able to deliver on multiple fronts, although of course it did not finish the job. Pledges on methane, net zero targets of big emerging countries, cooperation initiatives among key countries are all a positive part of the story. In my view, the best of COP26 has been to see beside negotiators, officials and climate activists, a massive presence of investors, technology providers and industrial operators. This shows that there is a climate economy that is able to intercept the interest of those putting on the table the concrete resources to transform our society. It is definitely a very good news.

Recovery plans

This is the ‘bad’ of 2021, or at least the disappointing one. Governments have deployed unprecedented level of measures to boost the global economy recovery. More than $17.000 trillion have been committed worldwide. But if announcements and slogans emphasized the need to link such recovery with a new sustainable model, the reality tells another story. Only 3% of the total deployed is for clean energy spending underpinning an uneven and unsustainable economic recovery, as data for energy consumption tend to suggests as well.


The ‘ugly’ of 2021 is - once again - energy access… covid crisis is reversing progress on energy access of the last several years. Africa maintains the very sad leadership in this special ranking with about 600 million people remaining without electricity access. Sustainable recovery plans are an extraordinary opportunity to make energy poverty history and finally go back on track for the universal access target by 2030. Prioritising this remains an essential requirement – and a moral imperative - for expanding healthcare solutions, modernising agriculture and other parts of the economy, as well as protecting the poorest populations.


We have seen in 2021 several comebacks, especially of those that suffered mostly during 2020. But probably the strongest comeback of energy world in 2021 goes to nuclear. Despite the end of the year marked the closure of some plants in countries that had decided so, electricity prices on vertical rise and the widening gap between climate ambition and real data is giving new momentum to nuckear. Some countries have definitely raised their interest on such technology; others that decided differently in the past are having second thoughts; many are looking to potential technology advancements. As always, nuclear remains a controversial option, and safety concerns are not set to disappear overnight, but those that believed nuclear would have moved definitely outside of the energy scene might remain disappointed


To be honest, geopolitics never went away from the energy scene, but in 2021 it definitely regained the centre of stage…. The immediate thinking goes to gas markets in Europe and associated tensions connected to Russia, Ukraine, North Stream II and much more. In reality the topic is significantly bigger: with clean energy transitions getting centre of stage, many governments around the world have started to realise the level of implications and ramifications that such transition might have in terms of multiple economic sectors, social stability and levels of employment. It is definitely true and straightforward for the producing countries that so much depends on hydrocarbon revenues, but applies well to car industry, to technology manufacturers and so on. And here the level of attention has skyrocketed towards supply chain bottlenecks and critical minerals supply with all the major economies taking position to ensure a proper domestic (if possible) development.

Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.

Did you enjoy this illuminem voice? Support us by sharing this article!
author photo

About the author

Alessandro Blasi is a strategic advisor to the International Energy Agency (IEA) Executive Director on various topics. He is in charge of assigned priority projects and maintaining relationships with the private sector. Before he co-lead work on IEA’s World Energy Investment Report and contributed as a senior analyst to the World Energy Outlook. Before joining the IEA, he worked in Italy's Prime Minister office, World Energy Council and Eni Group.

Other illuminem Voices

Related Posts

You cannot miss it!

Weekly. Free. Your Top 10 Sustainability & Energy Posts.

You can unsubscribe at any time (read our privacy policy)