By Matt Jellicoe, Co-founder & Director of OnePlanetCapital
Recent news has been very stark in terms of climate change with stark warnings from the met office that we have a 50% chance of hitting 1.5% global warming in the next 5 years.
As recently as 2015, there was zero chance of this happening in the following five years. But this surged to 20% in 2020 and 40% in 2021. The global average temperature was 1.1C above pre-industrial levels in 2021.
There are countless examples of how this is materialising around the world, the current heatwaves in India and Pakistan are unprecedented. India has recorded the highest temperatures for 122 years, Pakistan recorded temperatures of 49.5c in May this year. Ironically this also ramps up fossil fuel usage, with India having to export huge volumes of coal to cope with associated energy demand.
So, against this backdrop of surging climate change and increasing short term fossil fuel consumption what is the likely impact of the Ukraine war?
In the short term the impact does not look good. EU countries are falling back onto coal use as gas prices soar, Holland, Germany and the UK are looking at re-opening North Sea exploration. The same pressures are playing out in Poland and Eastern Europe as coal use rises and renewable plans are pulled forward to circumvent both price and security issues around Russian gas.
However, it is possible that in the medium- and long-term events in Ukraine and the associated geopolitical fallout might just have given climate initiatives in Europe and beyond a shot in the arm. Unfortunately, the war looks like to drag on for years, which likely means to death knell of both Russian oil and gas in global markets and almost definitely for the EU and associated western countries. In turn, this creates huge price inflation which is providing a win for medium- and long-term climate policy. Combine this with the energy security issue and renewables now look critical for security, future economic growth and climate change mitigation.
From a political point of view the climate change crisis and the push to renewables has been historically dominated by the left in politics. What is interesting is that defence and security has always been a pillar of conservative policy. So, what you have now is the emergence of energy security and climate policy combined – likely it means more buy in to the energy transition that is required from both the left and right wing. Ironically it is likely that a new cold war, if that is what we call it, might well be a very powerful driver for countries to finally dump fossil fuels at greater speed.
In terms of examples of this in the last month, Germany, famously reliant on coal plants and gas, has made several announcements about speeding up the transition to renewables as fast as possible. In April Clean Energy News reported ‘’Germany plans to source almost all electricity from renewables by 2035 up from 42% currently’’. The previous target date was 2050. Massive investment in onshore and offshore wind targets has also been announced – potentially reserving 2% of Germany’s land mass for wind power.
The recently announced EU action plan in response to the war spells out a 13% cut in energy consumption whilst increasing renewables to 45% of the energy mix by 2030, accelerating planning applications for renewable projects and doubling solar capacity by 2028.
In the short term there will be some hurdles in terms of developed markets transitioning at warp speed to net zero. Energy security is now the buzz word and strategy for most of Europe. In the short term this may lead to re-looking at areas such as North Sea gas, but in the long term it means a greater shift to renewables as a national security issue and another nail in the coffin for oil and gas.
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