Global energy markets underwent historic transformation in 2022, with the war in Ukraine realigning trade relationships and forcing greener governments to more readily embrace fossil fuels to maintain energy security.
Here are three of the biggest energy stories of the year:
War-driven price spikes
When the war in Ukraine began on Feb. 24, prices for key energy commodities such as oil and natural gas were already on the rise as demand and overall economic activity increasingly picked up from the lulls connected to the COVID-19 pandemic.
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The invasion went on to send prices sky high in the following days as the market speculated about the consequences of war involving Russia, a leading producer and exporter of oil and natural gas.
Brent crude, the global benchmark, peaked near $128 per barrel on March 8, a nearly 41% increase from a month before. Oil prices have since fallen back to around year-ago levels.
Natural gas prices spiked, too, especially in Europe, where they have remained many times higher than prices in the U.S. for the year.
The war and ensuing price spikes drove the U.S., European Union, and other allies to more aggressively go about charting an exit from energy trade partnerships with Russia, the EU’s top external supplier of fossil fuels.
The United States quickly embargoed all Russian fossil fuel imports after the war began. In Europe, embargoes on Russian coal imports, as well as imports of most seaborne crude oil of Russian origin, are now in effect.
While the EU countries have yet to agree to a gas embargo, Russia began throttling supplies via its main pipeline arteries over the summer.
The price volatility and intent to stop paying Russia for energy are reorienting global markets to a tremendous degree. It has shaken up plans among the greenest of countries in Europe to gradually cut fossil fuels out of their energy mixes in favor of renewable sources, driving them instead to burn more coal in the short term to get through winter and approve new gas infrastructure — activities they’d sought to phase out.
In the United States, the Biden administration has pledged to help supply allies in Europe with more gas to get through the decade, while pledging to simultaneously finance renewable energy projects to reduce greenhouse gas emissions.
Solar probe
In March, the Department of Commerce launched an anticircumvention investigation into solar energy imports from Asia at the request of a competitor U.S. solar module manufacturer, which alleged that cell and module products imported from Cambodia, Vietnam, Thailand, and Malaysia were circumventing tariffs on Chinese products.
Commerce’s investigation set off a monthslong lobbying fight between domestic manufacturing interests and solar project developers. Groups like the Solar Energy Industries Association disputed the merits of the investigation, and project developers said the threat of tariffs alone was driving prices up and disrupting installations.
President Joe Biden intervened over the summer, using trade emergency power to protect the solar products subject to the Commerce investigation from duties for a two-year period.
The department has since issued preliminary conclusions in the investigation, finding that imports sourced from those Asian countries are skirting existing U.S. tariffs on China. The finding paves the way for tariffs to be extended to those products.
Inflation Reduction Act
Congressional Democrats passed the Inflation Reduction Act in August, the party’s signature achievement of this current Congress and one that deals directly with its priority of mitigating climate change by transforming the energy sector.
The green energy and healthcare spending bill marked hundreds of billions of dollars to subsidize clean energy technologies. It was a significantly smaller bill than Biden and much of the party originally sought to pass, due to the necessity of securing the vote of Sen. Joe Manchin (D-WV), a moderate who for months opposed larger versions out of concern that authorizing trillions of dollars in federal spending would worsen inflation.
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The compromise bill, which passed without any Republican support, created new tax credits to encourage companies to reshore manufacturing of renewable energy technologies and their components while beefing up existing credits such as the 45Q tax credit for carbon management technologies.
It also revamped the federal oil and gas leasing program by directing the Interior Department to hold several offshore lease sales that had been canceled, a concession for more liberal Democrats who oppose more leasing.
