The Russian invasion of Ukraine has ushered in a humanitarian crisis of a scale not seen on European soil since the Second World War, a level of geopolitical tension not experienced since the Cuban Missile Crisis, and a set of rapidly evolving political, economic, and societal responses and counter-responses whose ramifications can scarcely be estimated at this point. Nor are there signs of an imminent resolution on the horizon.
As Russia is one of the world’s largest producers of oil, gas, and commodities, one can naturally expect that the massive and universal effort required to address the world’s looming climate crisis would also be swept up in the maelstrom. This raises the question of whether the war and its aftermath will prove to be a limited detour from the previous path of net-zero transition, or a true fork in the road and a far more consequential redirection.
It seems clear at this point the war will complicate the transition’s path in the short term. In the longer term, however, the logic of energy security and economics could converge to kick net-zero transition efforts into a higher gear. Bold moves would be needed at unprecedented speed to boost energy-efficiency measures and adopt renewable-energy alternatives to fossil fuels. If adopted, such actions could drive net-zero technologies down their respective cost curves and build a pathway to faster decarbonization in other regions.
Such outcomes would not be surprising in light of history; conflict has often accelerated energy transitions. The 19th century’s naval wars accelerated a shift from wind- to coal-powered vessels. World War I brought about a shift from coal to oil. World War II introduced nuclear energy as a major power source. In each of these cases, wartime innovations flowed directly into the civilian economy and ushered in a new era. The war in Ukraine is different in that it is not promoting the energy innovation itself but making the need for it clearer. Still, the potential impact could be equally transformative.
In this series, we attempt to offer a more granular view of what might be in store. We examine the possible effects of the war and its ramifications on the key requirements for a more orderly net-zero transition. We explore the war’s potential effect on key sectors and how shifts in energy and finance markets could play out in the aggregate, both globally and within major regional blocs. Finally, we suggest steps that stakeholders could take as they navigate this turbulent period while continuing to drive toward as orderly a transition as possible.
To read the entire series, please stay tuned to https://earth5r.org/.
Source: McKinsey