Shortages are leading to a policy pivot towards a cleaner energy future, but some see a lack of cash to sustain investment.
Renewable energy production in Europe reached record levels following Russia’s invasion of Ukraine, leading some energy analysts to predict that Europe is poised to surge forward in creating clean energy.
Other analysts, however, forecast a cut in European emissions through a widely expected recession, energy austerity and de-industrialisation next year.
From March to September, electricity generated from solar photovoltaics and wind in the European Union increased by a record 13 percent – from 311 terawatt-hours to 350TWh – year-on-year, according to a report by energy think-tanks E3G and Ember.
At a time when Russia was cutting gas supplies to Europe and raising fears of blackouts, this had the added attraction of being a secure supply at stable prices.
Fossil fuel producers, including Russia, made windfall profits of $2 trillion during the war, according to the International Energy Agency (IEA).
The EU’s solar and wind electricity production saved it from having to import an estimated 70 billion cubic metres of gas worth $99bn, E3G and Ember say.
“The war had two effects: It accelerated the deployment of projects already in the pipeline; and led to increased ambition by member states with an impact in the deployment pipeline for the coming years,” Artur Patuleia, one of the authors of the report, told Al Jazeera.
Professor Jonathan Stern, who leads the Oxford Institute for Energy Studies, is less sanguine.
“We are going into a huge recession in Europe. I think it could be worse than [the COVID-19 pandemic recession of] 2020, leading to de-industrialisation, forcing industries to move to the Middle East and the US. None of it is remotely good and it suggests political instability,” he told Al Jazeera.
Energy-intensive industries, such as metals, say high energy prices could drive them to relocate from Europe.
Renewable energy will remain attractive, Stern says, but there will not be enough money to scale it up because European governments have committed $500bn to subsidise industry and consumers.
That is twice as much as the EU is offering in loan guarantees for new renewable energy capacity through its flagship Recovery and Resilience Fund during 2020-27.
“The lesson of the $500bn … is that when governments become scared that people will lose their energy, they are prepared to commit almost any sum to prevent that,” Stern said.
“Ambitions need money, and one of the problems is that it looks like investment in renewables is slowing down, at least in many European countries. The way to fix that is for governments to go in and put the money to make sure it happens, but governments are short of money,” he added.
What about the war’s longer-term effects?
The IEA believes the EU-Russia energy rupture to be permanent.
Russian coal stopped entering the EU in August, crude oil will stop flowing next month and refined oil products will be banned in February, as part of EU sanctions.
In retaliation, Russia has cut gas delivery by 80 percent compared with last year.
The loss of Russian gas has led to a heavier reliance on coal, briefly, the IEA said in its annual World Energy Outlook report.
But “in all our scenarios, the European Union compensates for the loss of Russian imports with an accelerated transition away from natural gas through a surge in renewable capacity additions and a push to retrofit buildings and install heat pumps”.
Some effects are global. Fossil fuels have for decades generated about 80 percent of total energy demand. For the first time, the IEA sees this changing to 75 percent by 2030 and 60 percent by 2050, simply on the basis of stated policies. If announced pledges are honoured, those percentages would presumably fall further.
The IEA also forecasts global annual investment in renewable energy will almost double to $2 trillion by 2030.
This is not enough to meet the United Nations’ goal of net zero emissions by 2050, it says, but a great improvement on last year’s outlook.
“This can be a historic turning point towards a cleaner and more secure energy system thanks to the unprecedented response from governments around the world,” IEA Executive Director Fatih Birol said.
Europe’s green path lurches from crisis to crisis
Europe’s path to a cleaner future has lurched through recent crises.
For five years after the Paris Accord, where UN members pledged to stop global warming at 1.5 degrees Celsius (2.7 degrees Fahrenheit), global investment in renewables was flat at $1 trillion a year, said the IEA.
In 2020, during the pandemic recession, Europe launched a $730bn stimulus package, the Recovery and Resilience Fund, assigning 37 percent of it to renewable generating capacity. This was to help realise a goal to generate 32 percent of total final energy consumption from renewables by 2030.
In 2021, amid reports of accelerating climate change, the EU decided to generate 40 percent of total final energy consumption from renewables by 2030.
Three months after Russia’s February invasion of Ukraine, the EU raised that goal to 45 percent.
Total final energy consumption includes electricity production, transport, heating and cooling. Meeting it requires producing at least 69 percent of electricity from renewables.
E3G and Ember believe some member states’ ambitions are already outpacing that goal. Portugal, Austria, Denmark and the Netherlands plan to produce all their electricity from renewables by 2030, and Germany and Spain plan to produce about 80 percent by then.
In July, the European Commission asked countries to voluntarily cut down on gas use by 15 percent. Most countries have achieved that, say analysts.
“Recession is going to fix our emissions for us,” says Stern, at least in the short term. It demonstrably did so during the COVID-19 pandemic, when lockdowns led to a 4 percent drop in energy use and a 5.8 percent drop – the largest ever – in emissions.
“People are saying [the energy crisis] is a good thing, because we have to cut our emissions anyway.”