Russia-Ukraine War a Green Energy Boom

Russia-Ukraine War Accelerates Global Shift to Green Energy

BP’s Chief Economist Spencer Dale predicts that the current war between Russia and Ukraine will speed up a global transition away from fossil fuels towards more domestic, non-fossil fuel-based generation, such as wind, solar, and nuclear power. The war has fostered heightened concerns over energy security and will accelerate the nature of the energy transitions. Speaking at the Center for Strategic and International Studies (CSIS), Dale forecasted that oil and gas would continue to generate about 80% of the world’s energy through at least 2030.

According to BP’s annual 2023 Energy Outlook, the United States, the world’s largest oil and natural gas exporters, will see an increase in demand for fossil fuels over the next decade, before declines occur by 2035 as domestic-sourced energies become more viable. Furthermore, the passing of the Inflation Reduction Act (IRA) in the United States in November 2021 is spurring worldwide investments in renewables and nuclear power, which will begin to edge out oil and natural gas as primary electricity generators within a decade.

BP forecasts that global fossil energy consumption will reduce from the present 80% in total power generation to anywhere from 28-55% by 2050. Coal consumption will decline even more dramatically in the coming decades. Dale predicts that countries like China and India, which now import up to 85% of the oil and half of the natural gas they need, may use coal because of ample and affordable domestic supplies.

BP’s annual Energy Outlook includes projections and data that are widely used in analyses by industry leaders, government planners, economists, financial institutions, and investors. The security, affordability, and sustainability of the global energy system are assessed through three scenarios in meeting 2050 CO2 emissions standards in the 2050 Paris Accords. The Energy Outlook does not have a preferred scenario, and Dale acknowledged that all projections will be wrong.

The world has changed since Russia invaded Ukraine in February 2022, as Dale pointed out. The invasion has elevated security and affordability to form “the energy trilemma,” along with sustainability. According to Dale, “the big messages of the past year have reminded us of the importance of the other two components as we seek to decarbonize the world’s energy systems.”

The three dimensions of affordability, security, and sustainability are weighed across three scenarios: business as usual, net zero, and war-accelerated. The war in Ukraine is shifting the pendulum towards the net-zero scenario, which would exceed the 2050 Paris goals. The war has put energy security concerns in the spotlight, and many countries are examining ways to shorten supply lines by generating more domestic energy to reduce their reliance on imported fossil fuels. The result is a global transition towards green energy.