Mark Campanale – Carbon Tracker Founder said:

Putin’s war in Ukraine marks the beginning of the end for the fossil fuel sector – for the first time, all scenarios within the WEO now show a peak or plateau for all fossil fuels. The writing is on the wall for investors, and there is no longer any doubt about the long-term prospects for fossil fuel production businesses, including new gas.

WEO 2022 gives clear signs of optimism. Updates to the Announced Pledges Scenario (APS), and the much faster decline in oil and gas demand through the 2030s (vs 2021), show higher revised growth rates for renewables and electric vehicles, sectors key to a faster transition than under the STEPS scenario.

The war in Ukraine has highlighted the fragility of the global fossil energy system – ​and the high costs this imposes upon society, with a handful of fossil fuel-rich countries exerting huge influence over the world. This is not the first time that energy has been used as a tool of geopolitics; however, this time, lower-cost renewable energy alternatives give countries the potential to cut the umbilical cord of fossil import dependence.

This underlines what UN Secretary-General Guterres has said (which is essentially a key pillar of the EU’s policy response to diversifying away from Russian gas): renewables are the only credible path to real energy security.

However, we should recognise that developing non-OECD economies still require International financial measures targeting managed retirement of fossil fuel generation, heat supply decarbonisation, retrofitting and repurposing of energy infrastructure extended to these countries. The lower cost of capital (associated with the country’s risk) would be critical in achieving a meaningful transformation and large-scale sustainable investment.

Companies and investors who continue to ignore the financial impacts of the energy transition face holding a huge volume of material-stranded assets and accelerating decommissioning obligations as a new world is rapidly reshaped around cheap, abundant, and distributed renewable energy.