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Russia Attack On Ukraine Speeds Up European Energy Transition

Russia Attack On Ukraine Speeds Up European Energy Transition

Russia’s aggression on Ukraine has had a significant impact on Europe’s energy transition, which is gathering steam as the EU seeks to reduce its reliance on Russian gas.

With fewer fossil fuels in the energy mix and lower greenhouse gas emissions, Europe’s energy transition will be expedited. According to a new study by DNV’s Energy Transition Research, non-fossil fuels will account for 34% of Europe’s energy mix in 2024, up to two percentage points from the pre-war prediction.

In 2024, overall gas consumption will be down 9% compared to DNV’s pre-war model run. Solar has the highest percentage rise, with a 20 percent increase by 2026. Filling the gap will also require the postponement of the retirement of some of the continent’s nuclear power reactors.

Although some coal is required to supply Europe’s energy demand in the short term, postponed retirements and more nuclear usage will be required to cover the natural gas gap by 2024.

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In Europe, energy-related emissions will be 2.3 percent lower in the period 2022-2030 compared to a scenario without the Ukraine conflict. This is due to a growing emphasis on low-carbon energy (renewables and nuclear), better energy efficiency, and, in the short to medium term, slower economic growth.

“Europe’s leaders have used clarity of thinking during a crisis to speed the continent’s energy transformation, just as they did during the COVID-19 pandemic.” This time, Europe is enhancing energy security while lowering emissions,” stated DNV Group President and CEO Remi Eriksen.

Because of insufficient infrastructure, Russia’s turn to the east will not fully compensate for lower gas supplies to Europe. DNV, on the other hand, predicts that Europe will produce 12% more gas in 2030, owing to the industry’s reaction to increased oil and gas prices in the short term, as well as the EU’s promise to deliver additional gas.

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Regasification capacity limits the role of imported LNG, and further infrastructure is projected to take 2-5 years to complete. It will, however, be a part of Africa’s wider energy security policy.

As corporations seek to profit from high prices and a supply imbalance, there is a risk of overcapacity in the oil and gas sector by the end of the decade. Oil’s long-term trend remains bearish, and the conflict’s implications of lower GDP development and slower globalization are likely to weaken demand even more.

Increased oil and gas capacity approaching 2030 will result in reduced prices, which would likely result in a minor increase in worldwide use in the 2030s.

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“Energy markets have been rattled by the conflict in Ukraine, but decarbonization remains the fundamental subject.” “Energy companies will have to strike a careful balance between covering short-term oil and gas supply gaps while avoiding stranded assets in the long run,” said Sverre Alvik, Director of DNV’s Energy Transition Research.

The high electricity prices have no imminent end in sight for customers. In 2024, electricity prices in Europe will be 12% higher than they would be if the region did not shift away from Russian energy.

As battery costs grow, rising commodity costs will have an impact on the adoption of electric vehicles. In Europe, this means that half of the new car sales will be electric in 2028 rather than 2027, however legislative incentives could mitigate this.

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