War in Ukraine impacting the energy transition

With the global economy on a knife edge and energy prices structurally higher, there is a real risk of some global supply being lost. Europe’s push for more LNG as it looks to reduce Russian pipeline gas has pushed spot prices to record levels and is supporting strong demand for coal. At the same time, supply-chain risks are growing, and inflation is increasing costs across the energy sector.

Wood Mackenzie also found that against this backdrop, and with coal currently more resilient, further advancing the energy transition could be more expensive and potentially prove more carbon intensive.

Massimo Di-Odoardo, Vice President of Gas and LNG Research at Wood Mackenzie, said: “It is inconceivable that Europe will abandon its diversification strategies and return to any meaningful dependence on Russia.” Based on the assumption that Europe bans all Russian commodities by the end of 2024, Wood Mackenzie’s new analysis considers the impact on commodities over the next decade, as well as for investment, the energy transition and geopolitics.