Renewables and green hydrogen in Europe will accelerate in response to Russia's war: DNV

Europe will pivot away from Russian gas and actually decarbonise more quickly due to the invasion of Ukraine, consultant DNV said in an update to its energy transition outlook.

According to the analysis, 34% of the energy mix in Europe is expected to come from non-fossil fuels in 2024, two percentage points more than in DNV’s pre-war forecast. Overall gas use will drop 9% in 2024 compared with the pre-war model run. The researchers expect the biggest increase is in solar, which by 2026 is seen up 20%.

The delayed retirement of some of the continent’s nuclear capacity is another component of filling the gap, DNV thinks.

“As they did during the Covid-19 pandemic, Europe’s leaders have applied clarity of thought during a crisis to accelerate the continent’s energy transition,” DNV chief executive Remi Eriksen said.

“This time Europe is increasing energy security whilst reducing emissions.”

In a clear sign that governments are acting fast, Germany’s cabinet yesterday passed its so-called Easter package of measures to reform energy legislation and boost the renewables share in Europe’s largest economy to 80% in 2030, and nearly 100% by 2035.

“If gas were to be cut in two weeks, that would be hard for anybody to forecast,” Engel said, adding the analysts wanted to provide their best estimate for a rapid phase-out.

Russia itself won’t be able to fully compensate the loss of the European market with exports to Asia, DNV added, while Europe itself is likely to produce 12% more gas in 2030.

For consumers, there is no immediate end in sight to high power prices, DNV expects. Electricity prices will be 12% higher in Europe in 2024 than if the continent did not transition away from Russian energy. The rise in commodity costs will also impinge on the take-up of electric vehicles as battery costs rise, it adds.