While Russia’s invasion of Ukraine had a devastated negative impact on the stock markets around the world, renewable technologies are outperforming remarkably as a consequence of power prices jump and investors mull the rising need for energy alternatives.  The European Renewable Energy Index surged immediately as much as 9.3 percent, the biggest jump since the pandemic lows of March 2020, posing a stark contrast to the European market’s collapse. 

Perhaps another crucial factor was the European economy which is highly dependent on Russian oil and gas supply and Brent oil on the first day of the invasion, surged above $105 a barrel for the first time since 2014 amid fears of a disruption to energy exports at a time of already tight supplies.  At the same time, there are warnings that depending on what happens next, export disruptions may drive the oil price to $130/barrel within months.

It wasn’t unusual for the global leaders to hope that countries like Saudi Arabia, Iran and Venezuela will ramp up production. No doubt all three countries have the means to do so, but they’re all close to Moscow. The Saudis’ relations with Washington have been on the wane, and there is little, if any, incentive for Iran to help the West.

Surprisingly, Venezuela voiced willingness to pump an extra 3 million barrels a day which is good but not enough to bridge the gap.

As far as the renewables are concerned, according to the International Energy Agency (IEA) the growth of renewable capacity is forecast to accelerate in the next five years, accounting for almost 95 percent of the increase in global power capacity through 2026.

  1. Renewable Electricity:

Based on stronger policy support and ambitious climate targets announced, outweigh the current record commodity prices that have increased the costs of building new wind and solar PV installations.  Globally, renewable electricity capacity is forecast to increase by over 60 percent between 2020 and 2026, reaching more than 4,800 GW which is equivalent to the current global power capacity of fossil fuels and nuclear combined.

Source: International Energy Agency (IEA)

Overall, China remains the leader over the next five years, accounting for 43 percent of global renewable capacity growth, followed by Europe, the United States and India. These four markets alone account for 80 percent of renewable capacity expansion worldwide.

Source: International Energy Agency (IEA)

China and the European Union are setting more ambitious growth trajectories:

  •  China’s commitment to reach carbon neutrality before 2060 has led to new nearer-term targets, such as 1, 200 GW of total wind and solar PV capacity by 2030 and it is expected that China will reach this target four years early due to improved grid integration, and the cost competitiveness of onshore wind and solar PV compared with coal generation in many provinces; and
  • Renewable power growth in the European Union as a whole is set to outpace what the current National Energy and Climate Plans (NECPs) envision for 2030. This trend supports the ambition of reaching the stronger targets being finalized under the “Fit for 55” programme. Rapid deployment is being driven by member countries implementing larger auction volumes, corporations contracting for more renewable electricity, and consumers continuing to install large amounts of solar panels. 

2. Biofuels:

According to some energy experts, biofuels are the only renewable energy sector that is capable to replace currently dominant fossil fuels. One of the first major discoveries in biofuel technology was developed using corn and wheat products.

Source: International Energy Agency (IEA)

According to IEA, Following a historic decline last year amid global transport disruption, total biofuel demand is on course to surpass 2019 levels in 2021.  Annual global demand for biofuels is set to grow 28 percent by 2026, reaching 186 billion litres.  Asia accounts for almost 30 percent of new production over the forecast period, overtaking European biofuel production by 2026. Recent Indian ethanol policies and blending targets for biodiesel in Indonesia and Malaysia are responsible for most of the growth in Asia. India is set to become the third largest market for ethanol demand worldwide by 2026.

3. Renewable Heat:

Under current policies, renewable heat consumption, excluding traditional uses of biomass, is expected to increase by one-quarter during the 2021-26 period. Its share of global heat consumption is only forecast to rise from 11 percent in 2020 to 13 percent in 2026. Fossil fuels are set to continue meeting much of the growing global demand for heat, leading to a 5 percent increase in heat-related carbon dioxide (CO2) emissions over our forecast period.

Source: International Energy Agency (IEA)

The lack of policy and financial incentives for renewable heat is preventing faster growth. Globally, more than one-third of heat consumption is not covered by any financial incentive for renewables, and more than half is not subject to any renewables-related regulatory measures. The fragmented nature of heat markets and local characteristics of heat demand partly explain the limited national policy coverage. This makes greater collaboration with subnational actors necessary.

According to a press release issued on 8 March 2022 by IEA:

  • Coal accounted for over 40 percent of the overall growth in global CO2 emissions in 2021, reaching an all-time high of 15.3 billion tonnes.  CO2 emissions from natural gas rebounded well above their 2019 levels to 7.5 billion tonnes.  At 10.7 billion tonnes, CO2 emissions from oil remained significantly below pre-pandemic levels because of the limited recovery in global transport activity in 2021, mainly in the aviation sector; and
  • Despite the rebound in coal use, renewable energy sources and nuclear power provided a higher share of global electricity generation than coal in 2021. Renewables-based generation reached an all-time high, exceeding 8,000 terawatt-hours (TWh) in 2021, a record 500 TWh above its 2020 level. Output from wind and solar PV increased by 270 TWh and 170 TWh, respectively, while hydro generation declined due to the impacts of drought, notably in the United States and Brazil.

According to Bloomberg Intelligence’s Rob Barnett, European lawmakers may take steps to reduce the region’s dependence on Russian gas, adding that renewables could offer the fastest path for cutting gas use from the electricity industry.  “Faster diversification away from Russian oil and gas, more spending on renewables plus nuclear power and on hydrogen for storage of energy,” are long-term impact from the Russia-Ukraine crisis, according to Berenberg’s chief economist Holger Schmieding.

It seems like things started happening:

  • At its Annual Press Conference, RWE commented on the impact of the war in Ukraine on energy supply. The company made it clear that security of supply and climate protection are more closely linked than ever before. RWE is therefore continuing to drive the expansion of its green core business as planned, with investments of €50 billion gross by 2030. In the long term, energy supply from renewable sources and the operation of flexible generation plants based on green molecules are key to becoming more independent of coal, oil and gas imports.

Hope the world is ready to learn to concentrate on faster diversification away from oil and gas, spending more on renewables, nuclear power, and hydrogen with the focus not only to become more independent of coal, oil, and gas imports but also to help accomplish ambitious global climate targets.

Ottawa, Ontario, Canada 21 March 2022