War in Ukraine accelerates the redistribution of energy supply, gas storage and renewable energy


Gwenola Michaud - GM Consulting

Written by Gwenola Michaud 

pexels brett sayles 1454288

War in Ukraine accelerates the redistribution of energy supply, gas storage and renewable energy


Gwenola Michaud - GM Consulting

Writen by Gwenola Michaud 

pexels brett sayles 1454288

The world is changing following Russia’s invasion of Ukraine

The world looks different since Ukraine’s sovereignty was breached. As our thoughts turn towards Ukraine and its plight, we also reckon with the consequences of this war. In Europe, links with Ukraine are multiple and tight: besides being the world’s fifth largest wheat exporter in 2019, supplying pharmaceutical compounds for new medicines, and an IT industry that represented 5% of its GDP in 2021, Ukraine also provides a third of Russian oil and gas exports to other European countries. More importantly, thousands of lives have been lost, and millions of livelihoods have been disrupted through displacement, destroyed homes or incomes. As we move into this fifth week of war the sense of powerlessness is overwhelming, and it is difficult to find the right words. Haunted, in front of the images of devastated cities, like Kyev, Kharkiv, Mariupol, Odesa and so many others, hubs of culture and industrialization, now reduced to nothing.


Sanctions see a shift to redistribute energy dependency

From the first week of the conflict, unpreceded sanctions against Russia were put in place across Europe. Switzerland even made an exception to its longstanding neutrality regarding finance while an increase in defence spending was announced in Germany and France. On the business side, bp CEO Bernard Looney seemed to have been the first to take swift and decisive action, ending 30 years of partnership with Russia and abandoning its Rosneft stake at a cost of up to $25 billion. This exit may represent half of bp’s oil and gas reserves and a third of its production and set the example as the first major Western company to pull out of Russia. Others followed this lead alongside the US and the UK outlawing Russian fossil fuels, oil, liquefied natural gas and coal. Cutting Europe’s dependency on Russian gas at its earliest opportunity should see a reduction in gas imports from Russia of between one-third to a half. Gas previously supplied by Russia could be replaced by alternative producers, such as those in Azerbaijan or Norway. Regardless, each country’s energy supply is being redistributed.

Push towards minimum gas storage as energy policy is safety policy

In addition to fossil energy supply redistribution, the obligation to adhere a minimum gas storage could be introduced across Europe to ensure supply, reduce price volatility, and avoid peaks in demand or shortages. In general, gas storage is key to meeting the variation of seasonal demand across the year, but during wars or geopolitical tensions, it is particularly important. Unfortunately, as we approach the end of the European winter for 2022, the storage level is particularly low and in need of further gas injection at higher levels than we saw in 2021. Gas demand is thus unlikely to drop anytime soon.

Renewable Energy driving both savings and efficiency

Deployment of new wind and solar projects will most likely accelerate across Europe, alongside the maintenance of low-emission energy sources such as bioenergy and nuclear energy. Additionally, we would do well to further lower the thermostat. The average temperature of our homes and offices in Europe is above 22oC and could easily be dropped to 18oC, while switching from gas boilers to heat pumps in buildings would also improve efficiency. Rising fuel prices and transport costs is a concern in many households, perhaps a reason to continue the regular teleworking practices made necessary and rendered feasible following the events of the past two years. On top of this,  the pandemic is not yet over, although we hope that new variants will represent less of a threat over time. Europe Union presents as united, strong, and determined to initiate significant changes in the supply and consumption of energy in the pursuit of savings and efficiency. Such changes are necessary and most likely to endure. The mobilization across Europe to welcome more than 3 million civilians fleeing the war is also a strong signal. Russia will in its own way see a changing face, due to the brain drain stemming from the departure of 200,000 people over the first 10 days of the invasion, seeking freedom and intellectual opportunity. We wish and hope to see the end of this war as early as possible, particularly for those separated families and for those who have decided both to flee or to fight. Their determination and courage to resist and to resurrect their country and their land set an example which ought to keep us mobilized to continue our own efforts in support and solidarity with Ukraine. In place of the images of devasted buildings, cities, and infrastructure, we look forward to the day where those images are the more hopeful colours of the Ukraine flag; where yellow is the colour of joy and wheat, and blue the colour of a calm, blue sky.

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360° Energy and Environment Consultant

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Gwenola Michaud - GM Consulting

Gwenola Michaud

360° Energy and Environment Consultant

20 years of expertise in managing people and projects, as well as developing, testing and delivering software solutions to improve team success and business growth.

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