According to the IEA, the global competition in artificial intelligence will be decided not just by technology, but by the availability and cost of electricity. Data centers are incredibly power-intensive, making energy a critical, and often overlooked, factor for AI supremacy.
As a direct response to soaring natural gas prices, countries may pivot back to coal for energy security. The IEA anticipates an uptick in coal use, not just in China and India, but potentially in the US and Europe, as a pragmatic, if environmentally damaging, short-term solution.
The primary bottleneck in the global energy transition is the lack of grid capacity. While building power plants (solar, wind) is relatively straightforward, insufficient investment in transmission and distribution grids leaves vast amounts of new renewable energy stranded and unable to reach consumers.
The current energy disruption involves a loss of 12 million barrels of oil per day, exceeding the combined total of the 1973 and 1979 crises. Additionally, natural gas losses are greater than during the Russia-Ukraine crisis, making this the largest energy security threat in history.
While media focuses on Europe and Japan, the IEA head highlights that the biggest victims of the energy crisis are developing countries. Lacking hard currency to compete for expensive oil and gas, they face severe economic strain, potential energy rationing, and a repeat of the 1970s foreign debt spirals.
Recent supply crises are undermining the gas industry's image as a reliable, affordable, and flexible energy source. The IEA's head warns this 'long shadow' could permanently alter its role in the global energy mix, as trust and perception are eroded regardless of short-term price fluctuations.
Fatih Birol identifies three critical errors that have undermined Europe's energy security and competitiveness: depending on a single gas supplier (Russia), prematurely turning away from nuclear power, and failing to maintain its early lead in solar panel manufacturing, which China now dominates.