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By Ronald B. Silvestri
Energy Transformation in a Post-Ukraine World Order: Might Today's Crisis Be Just the Catalyst We Need?
Winston Churchill reportedly said "Never let a good crisis go to waste" while contemplating the devastation wrought by World War II and, importantly, the resulting formation of the United Nations that followed in 1945.
While a comparison of those historic milestones with today's circumstances in Ukraine may be a stretch, the global energy crisis resulting from the world's response to Russia's actions in the region have the potential to serve an analogous good. That is, while tragic, the devastation in Ukraine and the unfolding energy shock triggered by Russian sanctions could provide precisely the crisis needed to accelerate an unwavering, coordinated, global energy transformation. (Russia produces roughly 13% of world oil supply - a geography-specific energy source upon which Europe and the world remain dependent.)
Where nascent concerns regarding climate change, energy independence, and de-carbonization goals may not have decisively - on their own - delivered a global consensus, recent events in Ukraine could provide precisely the energy transformation crisis we need as a catalyst.
Over the coming 30 years, roughly $50 trillion in capital investment is anticipated in support of energy infrastructure that we expect to help transition global energy production, transmission and utilization toward a more carbon-neutral condition. Only a portion of this structural change is expected to address world dependence upon oil per se. Nevertheless, the fundamental pivot toward lower carbon, more sustainable energy production and usage is expected to bring about extraordinary change that aligns well with de-risking other oil and energy dependencies.
For example, according to Bloomberg New Energy Finance by 2050 roughly 50% of worldwide electricity is expected to be generated from renewable sources alone, including wind (30% of global electricity) and solar (40% of global electricity). Compared with deposits of oil and gas found underground (or underwater), sunlight and wind generally are less geographically specific, of course. And as a result, the prospect of an increasingly sustainable and renewable global energy future also is an increasingly geography-independent energy future.
Recently, the push for low-carbon, renewable and sustainable energy has been apparent from developed nations and the United Nations, alike, with 2030 and 2050 sustainability objectives frequently front-page news. While these initiatives have helped commit corporate and government capital to the structural energy transition task at hand, today's circumstances in Ukraine - and nations' reactions to it - could provide just the post-Ukrainian acceleration this global transformation may need.
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