The war in Ukraine has made the security and price stability of domestically produced renewable energy so attractive to governments that it will become the world’s leading source of electricity for the next three years, according to the International Energy Agency.
The world will build 2,400 gigawatts (GW) of new generation capacity over the next five years, mostly from solar and wind power, equivalent to China’s entire current generation capacity, the IEA said in a new forecast released Tuesday.
That is an investment level that is 30 percent higher than predicted a year ago.
That rate of increase will see renewables become the world’s largest source of electricity by 2025, overthrowing coal, the IEA said.
By 2027, they will account for 38 percent of the electricity mix, up from 28 percent today.
The war led to huge spikes in hydrocarbon prices as the West banned Russian hydrocarbons and rushed to replace them.
The United States banned imports of Russian crude oil on March 8, two weeks after its invasion of Russia.
The European Union banned Russian coal a month later and Russian crude oil in June.
Brent oil, a reference oil, rose from just over $70 a barrel in January to $122 in July. Natural gas rose from less than $4 per million BTU in January to nearly $10 in August.
According to the IEA, fossil fuel producers, including Russia, made $2 trillion windfalls during the war.
“Higher fossil fuel prices worldwide have improved the competitiveness of solar photovoltaics and wind generation against other fuels,” the IEA said.
Four-fifths of new renewable capacity will come from photovoltaics and wind turbines, which will more than double all currently installed capacity over the next five years, the IEA said in its report.
And because renewables will absorb 90 percent of new investment, all other energy sources in power generation are expected to decline, including coal, oil and natural gas.
“The war in Ukraine has accelerated all energy developments, in renewables and LNG gas, because we need to replace Russian energy,” said Kostis Sifnaios, head of Gastrade, a multinational company building a new gas terminal for the Aegean port of Alexandroupolis.
“I think European policymakers have understood that this dependence on Russian gas was not a good idea and that its replacement is irreversible,” he told Al Jazeera.
The most significant progress in renewable energy is due to three major legislative initiatives.
The first is China’s 14th five-year plan, which called for a reduction in carbon intensity per unit of gross domestic product.
Last May, the EU approved the RePowerEU plan, which commits members to generate 45 percent of their total final energy consumption from renewable sources by 2030. To achieve this, they must generate at least two-thirds of their electricity from renewable sources.
The third is the US Inflation Reduction Act, which puts $370 billion over 10 years into renewable energy – the US’s largest public investment in clean energy.
But is the world on track?
The IEA’s forecast reinforces the view that the war in Ukraine is accelerating rather than stifling Europe’s green energy transition, despite the conflict forcing Germany and Eastern Europe to revert to higher domestic coal consumption in the near term.
A recent report by energy think tanks E3G and Ember showed that electricity generation from renewable energy sources in the EU increased by a record 13 percent between January and September, as countries accelerated projects already in the pipeline and increased their 2030 emission reduction targets.
Consumers, industry and governments seem to be doing more and more to combat climate change, despite the fact that at this year’s UN climate summit in Egypt, mandatory cuts in greenhouse gas emissions fell through.
Even if the IEA renewables forecast comes true, it doesn’t mean the world is doing enough to keep global warming to 1.5˚C.
The IEA’s World Energy Outlook, published in October, states that even under established policies and pledge scenarios, the world is on track for 12 billion tonnes of carbon emissions per year by 2050, rather than the net-zero target, followed by a rise in temperature. increase of 1.7 degrees Celsius by 2100.
However, Tuesday’s report includes a scenario where “global renewable capacity could increase by an additional 25 percent compared to the main forecast, if countries address policy, regulatory, licensing and financing challenges.”
But renewable energy experts warn that the IEA’s forecasts are based on assumptions that Europe has yet to meet.
“The IEA forecast assumes that all regulatory advances proposed by the European Commission will be realized,” said Ivan Pineda, director of innovation at Wind Europe, an advocacy and research group for the wind energy industry in Brussels. “That mainly means permission from EU governments. Negotiations are taking place between the European Council and the European Parliament on licensing. If there is agreement, yes, it is possible.”
The advantage of this is that many mature projects can be unlocked relatively quickly with investment support.
“Some 80 GW of wind projects are currently tied up in permits somewhere in Europe, compared to 200 GW in operation,” says Wind Europe’s Christoph Zipf. “We need to make it much faster and simpler. For example, developers are required to submit materials on paper, not digitally. We had a case in Italy where a developer told us that the paper and printing costs alone amounted to 20,000 euros.”
Wind Europe says it is optimistic that current negotiations will approve a firm two-year deadline for authorizing new projects by the second quarter of 2023.
Europe plans to eventually have 760 GW onshore and 450 GW offshore installed wind capacity.
The IEA report also pointed to possible bottlenecks in the supply of raw materials.
“[Europe] imports a number of materials for wind turbines, particularly rare-earth elements – minerals contained in magnets used in the generators,” Pineda said. “If those materials are supplied, Europe will have the production capacity to meet those targets,” he said, referring to the IEA forecast.
What happened before the war?
The war in Ukraine is the latest – and possibly the strongest – in a series of catalysts for climate action.
Five years after the 2015 landmark Paris agreement, which set emission reduction targets to keep global warming at or below 1.5˚C, global investment in renewable energy sources remained stable at $1 trillion a year, according to the IEA. But as the cost of renewables continued to fall, total installed capacity for that money increased each year to outpace increasing energy demand.
Three years after the Paris agreement, the EU has set itself the target of obtaining 32 percent of total final energy consumption from renewable sources by 2030. This led to the publication of binding national energy and climate plans in 2019.
In 2020, during the pandemic recession, Europe launched the Recovery and Resilience Fund, 37 percent of which was allocated to renewable energy to help meet the 2030 targets.
In 2021, amid reports of accelerating climate change, the EU launched Fit for 55, a target to reduce emissions by 55 percent from 1990 levels by 2030. This would be achieved by accelerating the energy transition and 40 percent of total final energy consumption from renewable energy by 2030.
All of this led to a global increase in renewable energy investment already seen in 2020-2021, after years of flat investment.