Why clean energy is part of the solution to our energy security needs
When a crisis hits, it’s human nature to prioritise the quickest fix, even if it doesn’t fit with our long-term goals.
When Russia invaded Ukraine in February, some countries shifted their energy policies back to hydrocarbons and nuclear, setting aside Net Zero. Eight months on, European leaders are facing the risk of winter power outages while still thinking about longer-term energy supplies. Around the world, governments are aiming to make their energy systems more resilient, all the while mindful of the clean energy transition.
In our view, the links between energy security and clean energy are stronger than they might initially appear. Importantly, their solutions are also closely connected.
Energy security is the priority
Energy security has climbed up the governmental agenda. Particularly in Europe, leaders have been working to reduce reliance on imported fossil fuels, especially from Russia.
Governments have pushed for greater energy efficiency, including increased electrification to lower vehicular demand for fossil fuels. With Russia’s supply of gas in doubt, EU states targeted 15% cuts in gas consumption, aiming to build reserves ahead of winter.
No U-turn on Net Zero
Reneging on Net Zero isn’t a long-term solution. Few European countries have the option of boosting domestic hydrocarbon production. So they’d still rely on external actors, whether it’s Russia or elsewhere. While some see nuclear power as an alternative to fossil fuels, support is far from unanimous and new plants take at least a decade to come online.
With domestic fossil fuel reserves scarce and support for nuclear patchy, governments are looking to renewables to help provide energy security.
Re-thinking the future of energy
Steep reductions in Russian energy supplies to Europe saw gas prices spike in August, giving a boost to other energy exporters. The long-term effect will be “a fundamental re-think on energy security which will accelerate decarbonisation.”1
There are several routes to lessening Western Europe’s reliance on imported fossil fuels. In addition to greater use of renewables, improving energy efficiency and increasing the uptake of electric vehicles can help. These would also reduce greenhouse gas emissions, supporting energy security and Net Zero. What’s more, increasing investment in alternative energy and electrification helps to keep countries in line with the climate goals of the Paris Agreement.
A $37trn investment opportunity
We believe the lasting effect of the war will be much more investment in renewable energy as countries aim to reduce their dependence on fossil fuels, and their vulnerability to oil price rises outside their control.
France’s President Macron has pledged to increase solar capacity tenfold and to build 50 new offshore wind farms by 2050. Meanwhile, Germany’s Chancellor Scholz has labelled renewables “crucial for our security”, saying “the faster we push ahead with the expansion of renewable energies, the better.”
According to one estimate, the “higher capital intensity of renewable power and rising importance of energy storage and networks” represent a $37trn investment opportunity on the path to Net Zero2.