Ukraine Invasion Delays Net Zero
An impact of the Russian invasion of Ukraine in early 2022 was a European energy crisis, as countries struggled to rapidly reduce their reliance on Russian fossil fuels and prices sky rocketed as a result of the supply reduction from Russia at the same time.
In the short term, this has clearly impacted European nations’ energy transition plans: the most immediate effect was a resurgence of coal and the firing up of stations that were slowly being phased out.
The EU’s REPowerEU plan, developed in response to the invasion of Ukraine, itself recognises there would need to be short term alternative sources of fossil fuels. At the same time, it clearly sets the direction towards a more rapid transition to renewables. The crucial question is whether those 'short term' alternative sources of fossil fuels become medium or even longer term crutches – and whether this ultimately results in a critical delay to the global energy transition and realisation of climate goals.
It’s estimated that overall EU coal generation rose 7% in 2022 compared to the year prior, an annual average that masks much higher increases earlier on in the year; EU coal usage increased by 35% in March 2022 versus March 2021.
In stark contrast to the emissions low in 2021 prompted by the pandemic and global lockdowns, overall global consumption of coal increased in 2022 as a result, according to the International Energy Agency (IEA), a clear setback – though it should be stressed that the IEA has also predicted that the war will also propel forward the deployment of renewables with the world set to add as much renewable power over the next five years as it did in the past 20.
The key focus here though is one of timing – faster deployment of renewables is a crucial part of realising net zero goals, but ‘faster’ does not necessarily mean ‘fast enough’.
With the real-world impacts of climate change being felt globally, any delay to realising climate goals is significant. And here there is general agreement amongst policymakers and business leaders globally that the invasion will delay net zero goals by several years – 42%/47% respectively estimate that timeframe to be two to three years. Around a quarter (26%/23%) think it will be one year meanwhile, and 20%/21% by four years.
By how much time, on average, do you estimate that energy disruption caused by the war in Ukraine will delay your country journey to net zero?
Policymakers
Business leaders
Less than 1 year
1 year
2 - 3 years
4 years
5+ years
It will not delay our country's journey to net zero
It will speed up the journey to net zero
Unsure
Globally there was very little deviation from this average, the only exceptions being the UK, where the majority of policymakers (34%) estimate one year’s delay, and German and US businesses, who are more likely than average to say four years (28%/29%).
This timeframe of several years’ delay also correlates almost exactly with how long both policymakers and business leaders believe the energy crisis will mean ageing coal plants will have to be switched on for: two to three years.
How long do you believe the switching back on of aging coal plants to mitigate the energy crisis will last, on average?
Policymakers
Business leaders
1 year
2 - 3 years
4 years
5+ years
Unsure
Coal’s Return to the Discourse in 2022
Coal became an increasingly important topic of conversation online over the course of 2022, and the surges clearly correlate to world events, chiefly the invasion of Ukraine in late February, and then the ongoing energy crisis on the continent as the EU gas price cap talks dragged on into the winter, at over a million mentions per month.
Monthly online mentions of "Coal" in 2022
An Unexpected Accelerant for Clean Energy?
Unsurprisingly, the energy crisis has hit businesses hard, particularly those in Europe.
However, while the war has impacted upon revenues for businesses in Europe, it has not altered ambitions. Interestingly, it appears this setback has only made business leaders more firm in their resolve to ‘go green’.
We asked businesses if rising energy prices had affected their sustainability strategies positively or negatively. The majority answered positively (53%).
How much, on average, do you estimate that energy disruption caused by the war in Ukraine will cost your business in percentage terms?
Has your sustainability strategy been positively or negatively impacted by rising energy prices?
Over half of all business leaders surveyed said that their sustainability strategy has been positively impacted by rising energy prices, which can be argued reflects a direct relation and realisation that driving forward sustainability strategies, including greater use of renewables and better energy efficiency, will ultimately lead to more predictable and lower energy costs.
Again, most countries are in general agreement on this; Italy is the most likely to be positively impacted (62%, +9% versus average), while the UK is most likely to say there will be no impact (37%, +16% versus average). But the largest number of respondents selected a positive answer in all six countries.
Has your sustainability strategy been positively or negatively impacted by rising energy prices?
Germany
Italy
Spain
Positively (Net)
Negatively (Net)
Positively (Net)
Negatively (Net)
Positively (Net)
Negatively (Net)
US
France
UK
Positively (Net)
Negatively (Net)
Positively (Net)
Negatively (Net)
Positively (Net)
Negatively (Net)
It also appears many businesses are putting this into practice already. We asked businesses if they sourced renewable energy or plan to: almost all (96%) said yes.
Do you currently source or plan to source renewable energy for your business?
Yes (Net)
Yes, currently, we source all of our energy from renewable sources
Yes, currently, we source part of our energy from renewable sources
Yes, we plan to source all of our energy from renewable sources
Yes, we plan to source part of our energy from renewable sources
No, we don’t currently, and we have no plans to source energy from renewable sources
As can be seen, over two fifths (44%) of those polled say they use only renewable energy already (17%) or in part (27%). A further 23% say they plan to source all their energy from renewables, and 29% plan to in part.
US and UK businesses are slightly ahead of their European counterparts in going fully renewable: 21% of UK businesses polled say they only use renewable energy already, while a quarter of US companies polled do (25%) compared to 13% of European businesses. Spanish businesses meanwhile were most likely within the EU to say they either used some or exclusively use renewable energy already (41%, -3% versus average).
Regardless of these differences, the direction of travel is clear: businesses are transitioning to renewable energy. Many are already far along the journey, and the energy crisis precipitated by the Russian invasion of Ukraine looks likely to have only speeded this up.