Energy in 2022: transition time

As part of our industry outlook for 2022, EIU has taken a look at the growth prospects, top risks and key trends facing the energy sector next year. Global energy consumption will rise by 2.2% in 2022 as economies recover from the impact of the pandemic. All types of energy, apart from nuclear power, will benefit. Even coal consumption, which was on the slide before the start of the pandemic, will grow next year. While continuing to recover from the impact of the coronavirus pandemic, businesses will also need to accelerate efforts to cut emissions. 

Stronger energy demand will support high prices, at least compared with the years leading up to the pandemic. But many energy companies will need to undertake an urgent review of their strategies in 2022, as governments try to fulfil pledges made at COP26. Coal companies may find it particularly hard to get financial backing.

Ana Nicholls, director of industry operations at EIU

Key things to watch for in 2022:

  • The US will approve budget and infrastructure laws: Programmes to modernise the country’s energy systems and combat climate change form an integral part of Mr Biden’s infrastructure and budget reconciliation bills.
  • The Nord Stream 2 pipeline will open: EIU expects the Nord Stream 2 pipeline to start operations in 2022 after getting the necessary approvals from Germany and the EU. The pipeline will connect Russia through the Baltic sea to Germany, which already gets 35% of its natural gas from Russia. 
  • Coal divestment will gather pace: The European Investment Bank (EIB) has said that it will stop investing in coal projects from 2022, as well as most oil projects.
  • India will miss its renewables targets. One notable achievement of COP26 was getting India to set a target to attain net-zero emissions, although the date of 2070 is significantly later than hoped for. 

For more insights into how the consumer goods and retail sector will fare next year, download our “Energy in 2022” report.