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What Ukraine means for energy markets and the net zero transition

Tom Nelson
Tom Nelson5/12/2022 11:28 AM GMT+08  • 4 min read
What Ukraine means for energy markets and the net zero transition
The war in Ukraine has put the world’s reliance on Russian oil and gas supply into the spotlight / Bloomberg
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The move away from Russian oil and gas — with Russia currently providing 40% of Europe’s natural gas — is the largest structural shift in global energy markets for decades. This seismic change coincides with a key phase in the global transition away from fossil fuels more broadly, towards a clean energy system able to support a low-carbon economy.

For investors, this means that pricing signals in the market indicate we have moved from a decade of energy abundance and relatively stable prices to a period of high and volatile prices, in fossil fuels in particular. The wider and more important question is how recent events will affect the overall energy transition.

The energy system is often characterised as driven by a shifting balance between three pillars: Security of supply, economics of supply and environmental impact of supply — the ‘energy trilemma’.

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