- Russia's war on Ukraine is reshaping world energy order, paving the way for more renewables, the IEA said.
- The organization estimated fossil fuel demand to peak by 2025, and investment in green energy to rise 50% by 2030.
The demand for fossil fuels will peak this decade as Russia's war on Ukraine reshapes the world energy order, the International Energy Agency said in its outlook published this week.
The view comes as Europe, the US, and Asia are facing an energy crunch, with diminished Russian gas supplies and sanctions on Russian oil threatening nations with mass supply shortages this winter.
It's hiked demand for dirtier fossil fuels like coal, sparking concern that the energy crisis has undone major progress in transitioning the world to renewable power. But fossil fuel demand is set to plateau or peak over the next 10 years, according to the IEA's World Outlook report, and supply shortages stemming from Russia could actually start a seismic shift toward green energy. The report estimates investment in renewables to jump 50% to $2 trillion a year by 2030, and fossil fuel emissions to peak by 2025.
"The global energy crisis triggered by Russia's invasion of Ukraine is causing profound and long-lasting changes that have the potential to hasten the transition to a more sustainable and secure energy system," the organization said in a statement, pointing to recent green initiatives in policies like the US Inflation Reduction Act, the European Union's RePowerEU program, as well as increased interest in nuclear energy worldwide.
Russia, one of the world's largest fossil fuel exporters, has also been suffering amid the energy crisis, with exports plummeting as Western nations shun Russia as a supplier. Russian seaborne oil exports have fallen to their lowest level in over a year, and revenue from crude exports have also nosedived. Those revenues won't rebound either as the nation redirects its supplies towards Asian countries, the IEA said, predicting Russia's share of the global energy market to decline seven percentage points by 2030 – giving another boost towards the green transition.
"Energy markets and policies have changed as a result of Russia's invasion of Ukraine, not just for the time being, but for decades to come," IEA chief Fatih Birol said.
But Birol has warned of the danger Europe and other energy-strapped countries face this winter, calling it a "perilous moment" that could strain solidarity in the EU as supplies grow even tighter. Russian oil is still needed for global demand to be satisfied, Birol said at a conference on Tuesday, adding that it was "good" that Russia may be able to export as much as 90% of its oil in the face of a G7 price cap.