According to the latest edition of the International Energy Agency’s World Energy Outlook, the global energy crisis prompted by Russia’s invasion of Ukraine is causing profound and long-lasting changes. Analysis by the world’s leading energy Paris-based organisation indicates that global carbon emissions will peak in 2025 due to massively increased spending on clean fuels in response to the war in Ukraine.
In its annual report, the IEA which advises energy consuming nations, said that government spending on clean energy in response to the crisis would mark a “historic turning point” in the transition away from fossil fuels.
The energy crisis triggered by the war in Ukraine has seen global gas prices surging which has caused steep inflation making households poorer across the globe. Global energy markets were already under strain at the start of this year, with prices surging as supplies failed to keep pace with the post-COVID-19 rebound in consumption. The war has been a tipping point for global energy markets that will not only shrink Moscow’s influence but has the potential to hasten the transition to a more sustainable and secure energy system.
Demand for all fossil fuels is set to reach a plateau from 2025 as governments look at ways to protect themselves from the crisis by diversifying towards clean energy. Predictions reveal that Russia’s share of world oil and gas markets will have halved by 2030.
COMPARE PRICES FROM LOCAL INSTALLERS
Compare prices from local companies fast & free
Enter your postcode to compare quotes from leading professionals. We promise to keep your information Safe & Secure. Privacy Policy
Fatih Birol, IEA executive director, one of the world’s most influential energy economists said that the wave of clean energy investment will cost Russia $1tn in lost fossil fuel revenues by 2030 compared with before the invasion. He added that Russia, previously the world’s largest exporter of fossil fuels, would have a “much diminished role in international energy affairs” as the world’s reliance on burning methane gas for power falls.
Fatih Birol, said:
“Energy Markets and policies have changed as a result of Russia’s invasion of Ukraine, not just for the time being but for decades to come. The energy world is shifting dramatically before our eyes.”
He said that the energy crisis caused by Russia’s invasion “is in fact going to accelerate the clean energy transition”.
This marks significant change as only last year the IEA said that there was “no clear peak in sight” in energy emissions.
Last year the IEA published its assessment recommending that all new fossil fuel projects should stop immediately in order for the world to hit net zero emissions by 2050. Fatih Birol said that the crisis had not changed their assessment. He said that new oil and gas extraction projects “will jeopardise our climate goals”.
He also dismissed the views of those climate deniers who thought that spending on clean energy had contributed to higher energy prices saying that the argument was “hiding who sparked the energy crisis, which is Russia”. The IEA found that higher shares of renewable energy were correlated with lower electricity prices.
Fatih Birol said:
“None of the government leaders complained about too much clean energy. They complain that they don’t have enough clean energy.”
Governments have been desperately trying to find other sources of energy. Some analysts are questioning whether fears over energy security might lead to the use of fossil fuels for longer which would slow the world’s race to net zero carbon emissions. Indeed, some countries including the US and the UK have pledged to encourage fossil fuel extraction to ease energy prices.
Despite this, the IEA said planned investments in green energy in response to the crisis meant that for the first-time government policies would lead to demand for polluting fossil fuels peaking this decade.
Under the new plans investment in low-carbon energy such as solar, wind and nuclear power will rise to $2tn (£1.7tn) a year by 2030, an increase of more than 50% from today. Global energy-related CO2 emissions are set to fall back slowly from a high point of 37 billion tonnes per year to 32 billion tonnes by 2050. The new higher investment is setting up demand for fossil fuels to peak, leading to a drop in carbon emissions.
If we are to reach net zero carbon emissions by 2050, the annual clean energy investment would have to reach $4tn by 2030 which gives you an idea of the scale of the challenge facing governments around the world.
The IEA mentioned notable contributions from the US Inflation Reduction Act and the EU’s emissions reduction package as well as actions taken by Japan, South Korea, China, and India.
However, the IEA analysis shows that current government policies would still lead to global temperatures rising by 2.5C, which would have catastrophic climate impacts. That would be far above the target of limiting global heating to 1.5C above pre-industrial levels. The 1.5C target, agreed at the Paris climate conference, would prevent the worst effects of climate breakdown.
It is widely thought among scientists that governments are not doing enough to prevent climate disaster. A separate UN study found that government pledges so far to cut emissions will lead to 2.5C of heating which is not good enough.
Laurence Tubiana, head of the European Climate Foundation and France's former climate ambassador said:
"The IEA, with all its expertise and authority is clear: clean energy investments must triple by 2030, and gas is a dead end. The current European energy crisis clearly proves the dangers of gas: high price, volatility, geopolitical dependence."
Undoubtedly, as countries look for alternatives to Russian energy there will be lasting consequences.
The demand for natural gas which has often been seen as a bridge fuel in the transition to low-carbon energy, will grind to a halt. It is likely that consumption will increase by less than 5% to the end of this decade and then virtually disappear by the middle of the century. Even the demand for Chinese gas will slow to 2% this decade from the 12% seen since 2010 as China adopts electrification and renewables.
Coal use is forecast to drop back in the next few years as more renewables come online. Oil demand is set to level off in the mid-2030s due to the uptake of electric vehicles.
Overall, the share of fossil fuels in the global energy mix in the IEA's stated policies scenario would fall from around 80 percent to just above 60 percent by 2050.
The IEA said:
“This can be a historic turning point toward a cleaner and more secure energy system. Today’s crisis makes it crystal clear why we need to press ahead.”
