Climate and Ukraine: how to respond to the war by investing in renewable energy

This article was contributed by Martina Menegat.

Red pill or blue pill? Climate or Peace? Since the war in Ukraine has started, we have behaved as though it was possible to choose, but we cannot: we must swallow both pills at once. Energy security and climate security are more deeply intertwined than is generally assumed. A swift transition to renewable energies has the potential to secure a more stable future for the world, at once reducing dependency on regimes accused of rights abuses and decarbonising the energy supply.

The Adaptability Report released by the IPCC in February 2022 found that rising global temperatures have already caused substantial and increasingly irreversible losses across the word. It warns that half of humanity is already at serious risk from climate change, and this risk increases with greater warming. The report was described by UN Secretary General Antonio Guterres as ‘an atlas of human suffering’. The corresponding report on mitigation, published in April, highlights that there are 3 years left to act for keeping alive the goal of limiting warming to 1.5°C .

At the Economist Sustainability Summit, Secretary General Guterres warned that ‘the fallout from Russia’s war in Ukraine risks up ending global food and energy markets, with major implications for the global climate agenda. As major economies pursue an ‘all-of-the-above’ strategy to replace Russian fossil fuels, short-term measures might create long-term fossil fuel dependence and close the window to 1.5°C’.

Russia is the world’s largest exporter of oil, gas and fossil fuels generally, meaning that this war can reshape the world’s energy systems. The EU, a key player in the current geopolitical deadlock, imports around 40 per cent of its natural gas, 25 per cent of its oil and almost 50 per cent of its coal from Russia. However, even if the EU drastically reduces fossil fuel imports from Russia, it should be able to get through the next winter without power outages.

Moreover, the need to bring a rapid end to many nations’ reliance on Russian energy supplies may encourage faster transition to decarbonisation in Europe and beyond, as countries across the world adopt what German finance minister Christian Lindner described as ‘freedom energy’. The case for a phased decline of fossil fuels in the energy mix, however, does not rest on science and geopolitics alone. As the IPCC report on mitigation indicates, renewable energies have never been so affordable. Solar, wind, green hydrogen and batteries enjoy steep and durable learning curves that already make them cheaper than fossil fuels in many sectors and uses.

The same fossil fuels that are funding the conflict are also bringing our planet to multiple tipping points. Currently, we are about to cross 4 out of 10 planetary boundaries, including that of climate change, with others at risk. The biosphere is the fundamental ground on which to build resilient societies and economies. The decisions due to be taken in the coming months represent the last call to accelerate ecological transition.

Focusing back on Ukraine, what can finance do? As the speakers at GEFI’s recent event Responding to the War in Ukraine: Ethical Finance at a time of a crisis emphasised, finance can most effectively support Ukraine by deploying financial resources to accelerate the clean energy transition. This historical moment is well-suited to break the narrative sustained by the fossil fuel industry: that transitions must be long and slow. Deprived fossil fuel profits, amounting to a daily €700 million just from Europe, Russia would lose substantial income to support its military.

To actively support Ukraine, we can act in two ways: as investors, and as consumers. As investors, we must back clean energies, while as consumers, we must change our energy consumption patterns.  Renewable energies are clean, cheap and local, and they have the power to ensure a fairer and more democratic future for all countries.