Callum Robinson's hat trick got me thinking about the role of Qatar in the world, as did the Biden administration's unveiling of a plan to develop large-scale wind farms along the entire coast of the US.
In its first long-term commitment to produce electricity from off-shore turbines, Washington is to lease federal waters from the Gulf of Mexico, the Carolinas, California, Oregon and the Gulf of Maine to wind-power developers. These lease sales are expected to take place by 2025.
Furthermore, Biden is pushing for a $150 billion spending package which would pay electricity utilities to switch to zero-carbon sources, such as wind and solar, and penalise those that continue to burn fossil fuels.
The switch away from fossil fuels spells disaster for Qatar, the world’s leading supplier of liquefied natural gas. The country is right to get the World Cup now; in a few decades it might not have the cash.
As the world switches to renewables, Ireland has the potential to be the Qatar of renewable energy. We are blessed with so much latent wind and rain that becoming a net exporter of energy is a distinct possibility. The American commitment and the European Green Deal reveal that both continents are confident they will overcome the engineering and technical challenges of storing such electricity to compensate for the erratic power surges of nature. Let the engineers and battery technologists figure that one out, as they will.
The economic implications are enormous. Taking full advantage of an energy industry that will be as renewable as agriculture, which has been about for more than 8,000 years, requires that Ireland build a proper energy infrastructure, from harvesting to storage, distribution, and maintenance. We are talking about building an integrated energy supply chain from scratch. What an opportunity.
Initially, we could become self-sufficient in renewables, but in time we could be exporters. Like Qatar today with its domestic gas industry, it would be sensible to own every stage of the production process rather than auction leases for others to commercialise. Once we have an energy source, everything else falls into place.
The key to all human progress is energy and movement. The industrial revolution, with all its mechanical innovations, wouldn’t have happened without a new source of energy: coal to burn to generate heat to generate molecular movement to power turbines. The possibility of having our own energy opens all sorts of innovative possibilities.
Ireland and the world share the same trilemma. First, how do we reconcile the infinite demands of the world’s soon-to-be nine billion consumers with the fact of the world’s finite natural resources? Second, how do we achieve this without burning the last of the world’s fossil fuels? Third, how do we power the world without heating it up and ensuring devastating climatic consequences?
Although renewables are part of the medium-term solution, right now the energy crisis is acute. In recent months, the precariousness of energy supply sources has become evident, and the geopolitics of the recent energy price spike are fascinating.
European benchmark natural gas prices are up dramatically. This will only get worse over the coming months as demand surges.
Inflation in energy, particularly gas might not transitory, like other inflation we are seeing in the economy. Elsewhere prices in certain sectors are rising quickly. This is due to what could be termed the toothpaste effect. Do you know when you have not used a tube of toothpaste for a while and then try to squeeze the tube? The top of the tub is coagulated with calcified old toothpaste, and the top becomes from so much an opening as a tight bottleneck. The paste squirts out unevenly.
Something similar is happening all over our economy. Sectors that have been in lockdown and shutdown for close to two years are now expected to open as if nothing happened and the entire operation is expected to resume smoothly as if we had no pandemic.
This is not how this work. Supply chains have been disrupted, shipping and transport costs have gone up, staff have stayed at home, and everywhere, the smooth operation of the economy has been interrupted. Like the uneven toothpaste, certain previously free-flowing systems are calcified, and prices are spiking up where there are bottlenecks. It will take time for the economy to work these through. As a result, this type of inflation is likely to be transient.
But the rises in energy may well be more permanent. According to the Financial Times, the UK experienced a 37 per cent spike in gas prices in just 24 hours last week. This is not normal, and the reason is a combination of fundamental factors that are likely to remain with us.
Qatari gas is essential to keep Europe warm in the winter. Europe's domestic gas supplies have declined by around 30 per cent over the past decade. Given dwindling domestic supply in the North Sea, Europe has to import more gas from Russian through existing pipelines or increase shipments of liquid nitrate gas (LNG) from the places such as Qatar. Russia accounts for roughly a third of European gas demand; LNG accounts for around 20 per cent.
Europe is also huge competition for the same LNG supplies as the rapid-growth economies of India and China.
China is adding the demand equivalent of Belgium and Netherlands every year, at a time when the Dutch are cutting, not expanding, their gas supply due to environmental fears of modest earthquakes in the North Sea.
Finally, Russia – angered by European support of Ukraine – has limited the gas that flows through the Ukraine in order to accelerate the approval of the Nord Stream 2 pipeline (which will go across the Baltic Sea to Germany, cutting the Ukrainians out).
With this type of chaos in the market for energy, the alternatives, wind and wave become even more attractive, and Ireland’s climate make it a mecca for renewables. We should focus our industrial energies to build new state-of-the-art energy infrastructure. It’s an open goal. Ireland just needs to shoot.