This article is part of our special report on the annual meeting of the World Economic Forum in Davos, Switzerland.
As world leaders, chief executives and leaders of non-profit organizations descend next week in Davos, Switzerland, for the annual meeting of the World Economic Forum, war will be raging about 1,000 miles away.
The Russian invasion of Ukraine nearly a year ago reordered the geopolitical landscape, sending ripples through the global economy and bringing trench warfare back to Europe.
But aside from the enormous human suffering and catastrophic damage inflicted on Ukraine, its people and its cities, one of the most profound impacts of the war has been on global energy markets, and by extension, the global fight against climate change.
For much of the past year, the effects of the war have driven up energy prices in many parts of the world, with Europe being particularly hard hit.
Even without that market, Russia remains an energy giant. And coal has seen a resurgence, dampening hopes of meeting targets to curb greenhouse gas emissions.
Still, the outlook is not all bleak, and almost a year after the war, the story is not so simple. The invasion of Ukraine has had mixed results when it comes to energy and climate, especially in the long run.
Across Europe, gas bills nearly doubled and electricity costs rose by some 70 percent in the first six months of the war, according to the Household Energy Price Index, which tracks energy costs.
Costs were driven up for various reasons. European countries began to wean themselves from Russian fossil fuels in an attempt to hurt Vladimir V. Putin’s economy. Russia, in turn, sharply cut its oil exports to European countries, and natural gas exports to Europe in July.
But with tight supplies on the world market, Russia was able to remain a dominant exporter even without Europe, selling more of its supplies to China and India in the past year.
“In the short term, Russia is a winner because of the rise in oil prices,” said Daniel Yergin, vice chairman of S&P Global and energy historian.
In addition, energy costs began to rise as European countries tried to buy gas and oil from other sources. As a result, some countries were pushed to use coal.
“Today’s energy crisis has given countries like India and China a reason to accelerate their coal plans,” said Jason Bordoff, cofounder and dean of the Columbia Climate School at Columbia University.
All in all, that was not a good scenario for the climate, which continues to warm up rapidly due to the consumption of fossil fuels.
The vast majority of climate scientists say that to limit the magnitude of warming, people should switch to renewable energy as soon as possible.
High prices and scarce supplies led to calls to produce more fossil fuels, and for a time it seemed that decades of progress in the fight against climate change would be wiped out.
But that may not be the case.
While Russia has managed to sell its oil and gas elsewhere in recent months, it has lost the European market for the time being.
“Putin has destroyed 22 years of economic integration with the West. And he has also slammed the door on his main market, which is Europe,” said Mr. Yergin. “This is Russia’s last breath as an energy superpower.”
More importantly, the war – and Russia’s sudden unreliability as an energy exporter – has prompted many countries to accelerate their renewable energy development.
From England to Spain to Albania, countries across the European continent are rushing to deploy wind and solar power at record speed.
“Despite the fact that Europe burns a little more coal, Europe is making a double bet on green. Despite India buying up as much cheap Russian fossil fuels as possible, Asia is investing in green,” said Rachel Kyte, the dean of the Fletcher School at Tufts University.
“There’s a kind of short-term shock story, but the moral of the story is you don’t want to be dependent on fossil fuels. The moral of the story is to be as green as possible.”
The European Union is working to streamline permits for renewable projects, countries are rushing to build wind and solar farms, and some countries, including Germany, are delaying plans to phase out nuclear power.
“Overall, the energy crisis we are experiencing, the most severe we have seen since the 1970s, will accelerate the clean energy transition,” said Mr. Bordoff. “It will probably have a negative effect on emissions in the short term, but a positive effect in the longer term.”
Similar dynamics are at play in the banks and financial firms that finance the energy sector. While many financial institutions have embraced environmental, social and governance goals – known as ESG – including reducing the amount of capital they commit to fossil fuels, some have relaxed those restrictions.
“Some banks have moved away from some of their ESG commitments over the past year simply because of the urgency to address the energy crisis,” said Ian Bremmer, founder of Eurasia Group, a research and advisory firm.
At the end of the day, however, Mr. Bremmer believes that “all of this contributes to a faster transition to renewables in the long run.”
There are caveats.
For example, while Europe and the United States have the money to quickly build wind and solar capacity, poorer countries in Africa and Asia are struggling to meet their immediate needs.
“I fear that this energy crisis will accelerate the clean energy transition in the developed world, but not in the developing world,” said Mr Bordoff.
And in the United States, the past year has also been a story of short-term energy shocks and longer-term investments in renewables. Gas prices rose in 2022 as oil markets tightened. Oil reserves were depleted when the Biden administration attempted to lower gas prices last year, and will need to be replenished in the coming years.
At the same time, President Biden signed into law the inflation reduction bill, which includes a record $370 billion in spending and tax credits to fight climate change.
While prices have stabilized and Europe has so far benefited from a relatively mild winter, there are nagging concerns about the future. Even if European countries embrace renewable energy, it will be years before those sources can fully replace fossil fuels.
“Europe is already on track to get through this winter,” Yergin said. “The big concern now, and we’re going to hear this in Davos, is next winter when they’ll run out of Russian gas to store.”
And while that’s a dire scenario, it only reinforces what many experts say is one of the most important lessons from the war so far: that renewable energy is not only good for the climate, but also good for national security.
“If we were less dependent on globally traded oil and gas,” said Mr. Bordoff, “would we be more energy secure.”
