Russia’s war in Ukraine seems to have sped up the global energy transition from fossil fuels to renewables.
This is a big deal. Most of us take for granted that we will enter a dark room and flick on the lights, that our homes will be warm in winter, that we will look out the window of a car and watch the world go by.
But what powers our lives is undergoing a huge change.
Consider three recent developments.
First, according to the International Energy Agency, an estimated $1.4 trillion poured into “clean energy” projects in 2022, a category that includes solar farms, batteries and electric vehicle charging stations. That’s more than ever before, and more than the money that poured into new oil and gas projects. Fatih Birol, the head of the agency, described the energy crisis spurred by the Russian invasion as “an accelerator for clean energy transitions.”
Second, BloombergNEF, a research firm, described this direction of change in a report published last week. Investments in low-carbon energy “reached parity” with capital aimed at expanding fossil fuels, it said.
And finally, the oil giant BP said this week that it expected the war in Ukraine would push countries to ramp up renewable energy projects for the sake of energy security, and that oil and gas demand could peak sooner than the company had anticipated just a year ago.
Spoiler alert: The shift away from fossil fuels isn’t happening fast enough to stay within relatively safe boundaries of climate change. For that to happen, a handful of big emerging economies in Asia, Africa and Latin America will need more renewable energy projects. Financing those projects is more expensive in the countries of the global south than it would be in Europe and North America.
You’re going to hear a lot more going forward about the energy transition. It’s worth pausing for a minute today and looking at how big these changes are.
Energy security doesn’t mean fossil fuels anymore.
Nearly a year ago, right after the Russian invasion, the oil and gas industry made a full-throated pitch that it was key to energy security and affordability. For a while, there was lots of hand-wringing about whether the world’s climate goals would be sacrificed at the altar of energy security.
But since then, renewable projects have been ramped up, not just on climate grounds, but rather in the name of energy security. Renewables are increasingly affordable, once they’re built, and they offer security as well.
In Europe, wind and solar accounted for 22 percent of electricity generation last year, overtaking for the first time the share of gas (20 percent) and coal (16 percent), according to Ember, a research firm.
“In 2023, Europe is set to witness a huge fall in fossil fuels — of coal power, yes, but especially gas power,” said the Ember report, which published on Tuesday.
Globally, renewable energy installations grew by 25 percent in 2022.
China’s investments exceeded, by a long shot, that of every other country.
Especially in the industrialized world, many people are going electric.
Never mind Tesla’s troubles. The electric car transition is in high gear.
In 2022, nearly 15 percent of all new car sales globally were electric, compared to 3 percent of all new car sales in 2019, according to the I.E.A. China dominates the market. More electric cars were sold in China than anywhere else. China’s biggest electric car and bus maker, BYD, has a higher global market share than Tesla.
At this pace, Birol said in an interview with Times journalists on Friday, by 2030, every second car sold in the biggest car markets — China, the United States and Europe — will be powered by electricity, not fossil fuels.
The heat pump became a hot item, especially in Europe this winter.
That’s a huge shift. For more than a hundred years, we have heated buildings with coal, oil, gas and wood. Globally, heat pump sales grew by 15 percent, according to the I.E.A. In some European countries, sales doubled in the first few months of 2022, following the Russian invasion of Ukraine.
We’re not moving fast enough, though.
These changes, accelerated by the Russian invasion, are improving the world’s “clean energy transition prospects,” Birol said, though it will not be enough to stay within what scientists consider safe boundaries: limiting average global temperature rise to 1.5 degree Celsius between the mid-19th century and the end of this century.
That will need better financing terms for emerging economies.
I hear this often from diplomats and entrepreneurs trying to build renewable energy projects in countries like India, Brazil and South Africa. It’s still way too expensive to borrow money.
If you want to develop a solar project in Brazil or India, Birol said, you’re likely to pay three times more for financing than if you were to build the same project in Europe.
That has huge climate implications. The energy demands of these big emerging economies are growing fast. If they can’t finance renewables, they’ll turn to gas instead. Or worse, to coal.
“The biggest hurdle in front of us is the cost of capital,” Birol said
Given that wind has only 34 % capacity factor and solar 25 %, it is nearly impossible to even supply a fraction of the worlds 8 billion people.
Maybe more in the firts world, where governments are apt to highly subsidize "renewables"