It’s been a hell of a year in energy. 2022 was full of historic changes—and quite a few surprises—as the world grappled with an energy crisis and reached a turning point in the energy transition. Here, we break down the top moments that made our eyebrows shoot up.
Russia’s invasion of Ukraine in late February rocked the world in many ways—including the energy space, where it left an indelible mark on the rest of the year. Oil prices were already high at the start of this year, thanks to a number of factors, but cutting off Russian gas supplies, which provided about 40% of Europe’s total imported gas at the beginning of the year, catapulted the world into an energy crisis and sent energy prices soaring throughout the summer.
Heading into 2022, the conflict is still dragging on and, experts say, could cause serious issues with energy supply in Europe this winter if problems arise. It’s also led to windfall profits for the oil and gas industry. But the conflict has helped kick off innovation in the energy space, as governments scramble to find alternative fuels and begin the clean energy transition in earnest.
More than 30 years after scientists began sounding the alarm on climate change at an international level, the U.S. has decided to do something about it.
The Inflation Reduction Act, signed into law in September, emerged from the ashes of the ill-fated Build Back Better Act, the Biden administration’s first effort to address climate change. For months, Senator Joe Manchin of West Virginia, a conservative Democrat who was the deciding vote in a split Senate, kept any hope of climate legislation hostage for months as he extracted favors for his dirty funders and waffled over certain provisions; early in the summer, Manchin said he would not vote for the Build Back Better bill with its existing climate and tax provisions intact. But in a July surprise, Manchin worked with Democratic leaders to produce the Inflation Reduction Act, which allocates $370 billion in tax cuts, rebates, and other investments to combat climate change and kickstart the energy transition.
It’s the best climate bill the U.S. has ever passed because it is, to date, the only climate bill the U.S. has ever passed. But despite Manchin’s dramatics, signing it into law was the easy part. Next year will see the real beginning of the implementation of the bill’s wide-ranging mandates—and resistance from Republicans, who seem poised to sniff out any issues with renewable energy entities receiving government money. Buckle up.
At the start of 2021, it really looked for a moment like capitalism could help save us. Big businesses were making net zero pledges and vowing to do their part to solve the climate crisis, while environmental and social governance—a set of principles intended to help corporations make ethical investments—was gaining traction in companies across the world. When Texas’s Lieutenant Governor Dan Patrick in 2021 first proposed that the state stop doing business with firms that “boycott” oil and gas companies—legislation modeled on a doomed bill to punish companies that didn’t support Israel—it was mostly seen as a ludicrous proposition.
But that idea, ridiculous as it may be, went into implementation in Texas and caught fire among red states, as the right turned to bullying financial firms into not caring about climate change again. Now, more than 15 states have laws on the books or legislation proposed that would enact similar policies, anti-ESG talking points have entered right-wing television, investment funds have been started that specifically exclude ESG investors—and big businesses like Vanguard and BlackRock are signaling that they’re looking to wiggle out or downplay their climate commitments.
Before this year, the fate of Diablo Canyon, California’s last remaining nuclear plant, seemed sealed: the plant would retire in 2025, thanks to competition from other energy sources, expensive repairs, and concerns about its location. But at the beginning of September, legislators voted to extend a lifeline to the plant, which provided 9% of California’s electricity in 2021, allowing it to close in 2030.
California isn’t alone in giving nuclear another shot. Amid the energy crisis and a resurgence of popular support for nuclear energy, governments from Germany to Japan this year reconsidered closure dates for their existing plants, while the Biden administration made $6 billion available to help bail out the nation’s struggling plants. And momentum and investment are also building for advanced nuclear technologies.
Amid soaring gas prices, and with his political party facing a tough midterm election, President Joe Biden this earlier year announced a plan to release 180 million barrels of oil over a period of several months from the Strategic Petroleum Reserve, the U.S.’s stockpile of emergency oil supplies kept in underground salt caverns in Louisiana and Texas. By the time the planned release was done, the Reserve had dropped to its lowest levels since it was started in the 1970s during that decade’s energy crisis. (There’s still quite a lot of oil left in those caverns: even at its lowest levels, there was still around 400 million barrels in the SPR.)
Releasing oil from a national energy reserve isn’t unusual during an energy crisis—even if it’s by an administration that has supposedly made climate change a top priority. But the SPR’s new low levels illustrate what a whiplash few years it’s been in the energy space. Less than three years ago, as the pandemic sent oil prices into the negative, the Trump administration was offering to fill up the SPR (the move was ultimately blocked by Democrats in Washington, who recognized it as a bailout for the struggling oil industry). The administration has already started buying oil to replenish the SPR, but with energy prices as wild as they have been over the past few years, anything could happen.
Across the world this summer, climate change supercharged extreme weather that led to droughts, wildfires, and floods. Ironically, that weather also affected the clean energy we need to fight further warming. Droughts and soaring temperatures in places including China and Spain caused hydropower output to plummet. Warm rivers in places like France, meanwhile, drove some nuclear plants offline as they were unable to keep cool. These stresses helped to drive up demand for dirty fuels like coal.
Even with those challenges, renewables had a great year. In countries across the world, wind, solar, and other sources helped fill gaps in power supply caused by the energy crisis. The International Energy Agency said earlier this month that renewable energy will overtake coal as the world’s biggest source of electricity generation by 2025, and that between 2023 and 2027, the sector is expected to grow 30% more than the agency predicted just a year ago, thanks to the huge amount of investments made in renewables as governments grappled with the energy crisis.