The Ukraine war will not derail Europe’s energy transition

Un nuevo análisis muestra que la guerra de Ucrania no descarrilará la transición energética de Europa

As Europe struggles to build energy security in response to Russia’s invasion of Ukraine, uncertainty looms on many fronts. By turning its back on Russian oil and gas, will Europe speed or slow down its response to the more global crisis – climate change?

That is a complicated question, and hinges on the extent and duration of the war. But, as things stand, our conclusion is that improved energy security does not come at the cost of decarbonization and there is likely to be a small acceleration in Europe’s energy transition.

This feature outlines DNV’s provisional view on how the ongoing war is likely to impact Europe’s energy transition in the short, medium, and long term.

DNV’s emphasis here is on the consequences of unfolding developments and not on making policy recommendations. The present commentary is confined to the implications of current developments in Europe.

Elsewhere, in DNV’s Pathway to Net Zero Emissions (DNV, 2021), DNV sets out what they believe to be a feasible way for the world to achieve the Paris ambitions. The results from DNV’s energy transition model underpin the conclusions presented here, but we underline the uncertainty in the quantification. We also acknowledge that the small acceleration of progress towards the Paris Agreement in a geographically limited part of the world, comes at the cost of a profound humanitarian crisis.

Energy security

European policymakers are determined to slash the eu’s russian gas dependence by two-thirds this year. the replacement will be painful and costly, with increased import of LNG taking centre stage.

Roughly one third of European gas demand is used for buildings heating and cooking, and another third for electricity production. Almost twenty percent is used by the manufacturing industry, and the remainder in petrochemical industry and by the gas industry itself during production. 

European policymakers are determined to slash the EU’s Russian gas dependence by two-thirds this year. The replacement will be painful and costly, with increased import of LNG taking centre stage. 

However, there is currently insufficient regasification capacity in Europe, and production in places linked to the European gas pipeline networks in Norway, Algeria and Azerbaijan can only inch their output upwards. Replacing two thirds of Russian gas by year-end looks like a tall order, and the European energy security ambition therefore hinges on additional policies, such as those outlined by the IEA in its 10-point plan (IEA, 2022). Beyond nudging consumer behaviour towards lower energy use, there is scope for a concerted policy push for energy efficiency, a postponement of nuclear retirements, and an extensive renewable energy buildout. 

There is certainly opportunity for acceleration on these fronts: Belgian nuclear, French heat pumps, German solar and pan-European wind will all contribute to a lower dependence on imported Russian energy. Some of these options can make a difference this year; others will need multiple years to take meaningful effect. 

While non-fossil supply and energy efficiency can and will be accelerated, there are counterforces at work with respect to the energy transition. These include burning more coal to replace natural gas and increasing costs of EV batteries and PV panels. To this extent, the push for energy security works against the transition. 

Other effects of the war that are not linked to energy security like reduced global trade and cooperation, such as the realignment of global logistics to address a mounting food crisis, and a shortfall of critical minerals, could also slow down the energy transition.