On February 24th 2022, the world woke up to the news that Russia launched a full-scale invasion of Ukraine by land, air and sea aiming “demilitarization and denazification” of the country. That “special military operation” announced by Putin against the second-largest country in Europe is the biggest attack by one state against another in the continent since World War Two.
That indespicable event is certainly changing many aspects of today’s life. The energy transition is not left behind. Russia is the second biggest exporter of crude oil and the largest natural gas exporter in the world. Germany alone meets more than 30% of its natural gas needs from Russia and 27 countries in the European Union get 40% of their gas from Russia-controlled sources.
The dependence of the world on Russia’s energy resources is questioning how countries would manage their energy needs if the Russian supply is cut off from the global market? There is a strategy confusion among countries on how to meet its energy needs going forward that is working to Putin’s advantage.
There are several possible scenarios of how the reality of the dreadful conflict in Ukraine could affect the energy transition. One of the possibilities is that it could serve as a major catalyst for decarbonization efforts. The EU is becoming very aware of the fact that a strong Europe cannot be so reliant on a country that starts a war on the continent. Its energy dependence on Russia could force governments to invest in expanding zero-emissions renewable energy capacities and electrification of cars and homes.
Already accelerating gas prices and now a sudden threat from supply and even higher prices are changing the political debates. The EU may need to double down on renewables to increase its strategic independence on energy which could speed up the green energy transition.
“… The long-term consequences for Russia would be very severe as Europeans would likely, belatedly, resolve to never again make themselves energy dependent on the whims of a Russian leader,” said David Kelly, chief global strategist at JPMorgan Asset Management
Even though that seems to be the discussed strategy long-term, in the short and medium term there are not many options that could replace Russian gas. That could force policy-makers to go back to fossil-fuels like coal which seems to be one of the most flexible resources of power generation. Even the short-term substitution of natural gas resources with coal could threaten Europe to reach its net zero pledges of reducing greenhouse gas emissions by 55% by 2030 compared to 1990s levels.
The Russian invasion is also a threat to inflation as oil prices are over $100 per barrel. Economies that are affected by high inflation could suspend carbon pricing in an effort to alleviate pressure from high energy bills. Legislative progress on climate policies in the US could also be challenged, especially if Republicans win back the House in November 2022.
Energy security poses a serious threat to climate movement as politicians would understandably have a difficult time justifying fossil fuel divestiture over national security.
The case for the revived fortune of fossil-fuels like coal could also make the green energy transition movement rethink carbon capture and turn towards the technology for decarbonization of the industry in the short/ medium-term until more reliable and clean technologies become available.
In conclusion, the Ukraine crisis brings more than even attention to the fact that effective decarbonization must address the issues of energy security. Without a reliable supply of green electricity to meet the energy demand, expected to more than double by 2050, the world could be stuck with fossil-fuels as its contingency plan.