The impact of Russia’s invasion of Ukraine for the energy transition
As the Russian invasion of Ukraine sparks a move away from Russian oil and gas by other nations, IIGCC CEO Stephanie Pfeifer comments on the response to the energy crisis and what this might mean for the longer-term net zero transition:
Russia’s deplorable invasion of Ukraine has highlighted the inescapable links between energy security, affordability and climate change. With Russia a major supplier of oil and gas to Europe, the invasion poses a number of short- and longer-term energy challenges relating to all three objectives.
In the immediate term, as nations seek to rapidly move away from Russian oil and gas, this will cause an inevitable short-term increase in demand for oil and gas from elsewhere. This could also extend into other fossil fuel assets as countries seek to quickly find alternative energy sources and is likely to drive energy prices even higher. When combined with increased food prices, this risks further exacerbating a cost-of-living crisis that could hit some of the most vulnerable members of our societies, pushing them below the poverty line.
While it is for national governments to decide how to address this, we urgently call on them to use all means available to them to prevent a disproportionate impact on the poorest in society. In addition, we would encourage them to consider what policy measures might be required in order to balance the impact of any increase in fossil fuel usage.
Looking beyond the immediate, it is important to note that additional investment in oil and gas exploration today will not address immediate energy challenges as quickly as is needed and risks locking in fossil fuel assets that are not part of the energy transition. Despite any short term need to use alternatively sourced fossil fuels, the overall trend must still be towards green energy sources in order to reduce the global economy’s susceptibility to geopolitical energy market shocks and ensure a reliable, secure and affordable energy supply.
Over the longer term, the solution is undoubtedly to move to renewable sources for the vast majority of our energy needs, as Germany plan to do by 2035. This must be coupled with continued progress to decarbonise across all sectors, reducing the demand for fossil fuels. However, it is important that the response to the invasion of Ukraine doesn’t derail investment in the renewable solutions that will drive progress towards a net zero economy and the achievement of the Paris goals.
In our view, the current energy crisis serves as yet another reason to accelerate the transition towards green energy and continue to reduce societies’ reliance on fossil fuels. Governments must not backslide on decarbonisation commitments and delay the phase out of coal or other fossil fuels.
We would not celebrate any gains for the energy transition caused by the war in Ukraine. However, it is likely to lead to increases in fossil fuel prices, which makes the economic case for renewables increasingly compelling.
Fundamentally, the shift to renewable energy sources is not just about keeping our commitments to net zero. It is also the right economic and political decision to ensure a reliable and affordable energy supply for countries around the world. While it is imperative that the energy crisis is addressed, we also cannot lose sight of the longer-term impact of unchecked global warming for the planet and some of the most vulnerable people who inhabit it.
The views expressed in this article are those of Stephanie Pfeifer, CEO at IIGCC, and may not represent those of all IIGCC members.