By Noah Browning
LONDON (Reuters) – The drop in Russian fossil fuel exports after its Ukraine invasion this year will transform the global energy landscape for decades and can help to hasten a green energy transition, the International Energy Agency (IEA) said on Thursday.
The IEA’s annual World Energy Outlook acknowledges the economic hit from reduced supplies of Russian oil, natural gas and coal but is keeping an environmental best case scenario in which no investment in new fossil fuel projects is needed.
The IEA’s report said the global energy crisis is causing profound and long-lasting changes that could hasten the transition to a more sustainable and secure energy system.
“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,” said IEA executive director Fatih Birol.
“The energy world is shifting dramatically before our eyes. Government responses around the world promise to make this a historic and definitive turning point towards a cleaner, more affordable and more secure energy system”, Birol added.
Short-term gaps created by the reduction in fossil fuel supplies from Russia will need to be plugged from elsewhere.
The strongest candidates are projects with “short lead times” which rapidly bring oil and gas supplies to market without locking in dependency.
Global clean energy investment is set to rise to more than $2 trillion a year by 2030, up by half from current levels, while “international energy markets undergo a profound reorientation in the 2020s as countries adjust to the rupture of Russia-Europe (energy) flows, the IEA said.
The IEA last year stunned the energy industry by saying lower demand and a rise in low emissions fuels made new oil and gas fields beyond 2021 unnecessary in its most climate-friendly Net Zero Emissions scenario.
On Russia, the IEA said the country, which is the world’s largest fossil fuel exporter, will never regain the share of the global energy supply mix it had before its invasion of Ukraine.
Russia’s supply of internationally traded energy will fall to 13% by 2030 from about 20% in 2021, the IEA projects.
The IEA also said global demand for every type of fossil fuel is set for a peak or plateau for the first time in the agency’s history of modelling.
Global emissions of fossil fuels leading to climate change will peak by 2025, as coal use falls within the next several years, natural gas demand plateaus by 2030, and oil demand levels off in the middle of the next decade before falling.
“One of the effects of Russia’s actions is that the era of rapid growth in natural gas demand draws to a close,” the IEA said, pointing to a rise in global demand for gas of less than 5% between last year and 2030.
(Reporting By Noah Browning. Editing by Jane Merriman)