Mar 25, 2022
“Let’s dash into renewable energy at lightning speed,” said Frans Timmermans, the European Commission (EC)
Reminiscent of the 1973 global oil crisis, international energy markets and the global economy are set to receive a similar jolt. The Russia-Ukraine war is now partly an energy war. Since Russia attacked Ukraine on February 24, the price for crude oil has twice soared as high as $105 a barrel—a level last seen in 2014. The current sanctions imposed on Russia do not explicitly target the energy trade; however sanctions on banks and other entities will impede Russia’s oil, natural gas, and coal exports, wreaking havoc on global energy markets. All of this translates to the world being plunged into an enormous energy crisis. Even prior to the current crisis, oil prices were high and on an upward trend.
This was mainly because U.S. oil production plummeted at the start of the COVID-19 pandemic and has returned nowhere near pre-pandemic levels. Even a renewed nuclear deal with Iran seems to be a short lived solution for the US due to growing scarcity and uninhibited oil trading. Interestingly, amidst all the chaos has emerged a new ray of hope. The silver lining of the Ukraine-Russia crisis is that this war has provided the needed impetus for a decisive and drastic shift towards renewable energy. “Let’s dash into renewable energy at lightning speed,” said Frans Timmermans, the European Commission (EC) vice-president responsible for the European Green Deal – the EU’s energy transition masterplan. The European Commission believes it can replace 24 billion cubic meters (bcm) of Russian gas with zero-emissions renewable energy sources this year. Another promising development is the 10 point plan outlined by the International Energy agency (IEA) to ensure energy independence.
One of the key points in the plan is free audits to identify and implement energy efficiency measures. Energy security has always been a key pillar of national security. U.S. and European policymakers are fundamentally reassessing the energy directives to recognize this basic fact and act accordingly. A growing concern is that while the massive shift towards renewables by the EU is commendable, this transition could cause temporary blackouts and factory shutdowns.
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