15 February 2023

BP predict that Russia’s war in Ukraine is expected to weigh on long-term energy demands, accelerating the world’s transition to renewables and low-carbon power. It comes as countries seek to expand domestic supplies to guarantee energy security.

The UK’s reliance on foreign oil and gas over domestic renewables is responsible for the current energy crisis and in turn the cost-of-living situation. However, there are positive signs. BP’s analysis comes at a time when European solar and wind production is surpassing gas power for the first time.

Green Switch Capital is leading the way by laying the foundations for a sustainable, self-reliant green energy market in the UK. We’re working with hundreds of farmers and landowners across the UK to scale our renewable energy capacity through an innovative land-leasing programme that offers the agricultural industry a vital lifeline. 

Ukraine and the Energy Crisis

BP has used its 2023 Energy Outlook report to predict that the war in Ukraine will slow global economic activity by around 3% by 2035 compared to the 2022 forecast. This slowdown in economic activity is the result of rising food and energy prices as a result of the current geopolitical circumstances and reduced trade activity.

Russia is a major energy exporter with global energy trade routes experiencing drastic changes following Russia’s invasion of Ukraine. The country halted its natural gas exports to Europe, while it enforced a ban on Russian oil being imported to the region. 

It’s impossible to separate the war in Ukraine from the energy crisis. Natural gas prices are nearly 5 times what they were a year ago, sending inflation skyrocketing to over 10%, leading to knock-on effects in every industry. We’re paying the price of the energy crisis everywhere from the petrol pump to the supermarket shelves.

The war in Ukraine has focused minds on energy security and the need to ensure price stability with domestically produced renewable energy. The International Energy Agency expects renewables to be the world’s top electricity source within the next three years. 

It estimates that 2,400 gigawatts of new capacity will be built in the next five years, primarily for solar and wind energy. This expansion would equal China’s current generating capacity. This investment is estimated to be 30% higher than forecasting was predicted prior to the war in Ukraine.

With the world focused on energy security, renewables are expected to become the world’s primary electricity source by 2025, surpassing coal. Forecasting suggests renewables will account for 38% of global electricity by 2027, a 10% increase from the current level.

The Energy Security Crisis

The War in Ukraine has led to an energy security crisis across Europe, leading to rising domestic energy prices and inflation peaking in the UK at 1.7% in the fourth quarter of 2022. Hydrocarbon has seen a huge spike because of Russian export bans.

The crisis has focused the minds of policymakers and the private sector on ways to improve energy security and expand the domestic market. Renewables and non-fossil fuels present the best option for ensuring energy security and reducing reliance on foreign exports. 

It adds a new sense of urgency to the transition from fossil fuels to renewables, a hallmark policy in the Paris Climate Agreement’s ambition of achieving net-zero by 2050. Oil demand is expected to rapidly decline after 2030 according to BP’s forecasting, however, it will continue to play a major role in global energy. 

While demand will drop, global demand is expected to be between 70 to 80 million barrels per day in 2035, compared to today’s typical consumption of 100 million barrels.

The impact of the war in Ukraine and rising concern for energy security has led BP to reduce its prediction for carbon emissions in 2030 to fall by a further 3.7% compared to previous forecasting. This reduction in carbon emissions would mean that global emissions in 2050 would be 30% lower than the levels in 2019.

Transitioning to Green Energy

The world is on a journey to green energy, transitioning from fossil fuels to renewables in a bid to combat climate change and improve domestic energy capacity. Europe and Asia heavily rely on foreign energy imports with the war in Ukraine leading both regions to take affirmative action to accelerate the transition to green energy. 

The Welsh government is committing to an ‘ambitious but credible’ plan for achieving 100% renewable energy by 2035, while BP expects its renewables sector to rapidly grow by 2030 as it reduces its oil and gas output.

Renewable energy looks attractive against the ever-rising costs of fossil fuels and foreign exports. Solar farming and wind energy have a competitive edge as affordable green energy, but infrastructure and investment are holding back their full potential.

The IEA predicts that 80% of new renewable capacity will come from solar and wind with a doubling of capacity in the next five years. A key part of ensuring the transition to green energy is repurposing less desirable and unused farmland for renewable energy products, offering a lifeline for the agriculture industry while expanding capacity.

The Future is Green

The world’s future is green. Solar and wind energy are steadily boosting their market share, producing more than a fifth of the EU’s electricity in 2022. It was the first time renewables delivered more power to the EU than natural gas, which generated 20%. 

The war in Ukraine is pushing the EU towards green energy to make up for the shortfall in Russian exports. Ember, an independent energy think tank, estimates that the increase in renewable energy saved the EU an additional €10 billion in natural gas costs.

Solar is the standout statistic in the increase in renewable energy. It jumped 24%, producing an additional 39 terawatt hours of electricity compared to 2021. 20 different EU nations recorded peak solar energy generation.

At Green Switch Capital, we’re investing in a green future by repurposing land for renewable energy projects. Our programme enables farmers and landowners to gain a guaranteed, passive income for renting their land while benefitting from more affordable renewable energy. 

Repurposing land for solar farming can improve soil quality, boost biodiversity, and enable farmers to plan for the future. Contact our team today to find out more about our land leasing programme and play your part in creating a green future.