Russia-Ukraine war will change the way the world uses energy
In just over a month,Russia-Ukraine has displaced millions of people and killed thousands on both sides. At the same time, the war has triggered historic shifts in the world of energy. Many countries have long depended on oil and gas from Russia, which is one of the world’s top exporters of fossil fuels. But with those exports now politically toxic, they are scrambling to find other ways to meet their energy needs.
Russia-Ukraine war is further driving up the price of renewable energy projects, which were already facing supply chain strains and rising raw materials before the war.The new pressures, which hit two years after the pandemic created bottlenecks for wind and solar developers, are adding to delays in the completion of many projects.
U.S. projects have also faced long waits to obtain the necessary permits to connect new projects to the grid, as developers rush to bring wind and solar farms online to take advantage of aggressive government regulations to reduce emissions and overwhelm the networak operators. These delays increase uncertainty for project investors.
The Biden administration and other governments around the world have called for speeding the transition to renewable-energy sources to avoid reliance on Russia for oil and gas. But project developers say it might be nearly impossible to move faster in the near term.
But like many other businesses, renewable-energy projects are now being hit by soaring Russia-Ukraine war prices for key materials such as aluminum and steel, as well as higher transportation costs stemming from higher oil prices, which have surged by more than 50% this year.
The world’s energy systems have been going through a slow transition to lower-carbon fuels for decades. But the war in Ukraine has changed everything and energy security is now the most pressing priority. A crucial question is how this will play out for the environment. Will it mean a renewed race towards renewables, or a rush to exploit domestic fossil fuels and new suppliers of oil and gas?
Even before the war, the world had energy problems. Gas production outages and increased demand from the post-covid-19 economic bounceback saw oil and gas prices rising fast by last September. The shocks were felt around the world. In the UK, some petrol stations ran out of fuel in October and electricity prices quadrupled in 2021.