Russia's War on Ukraine

One year on from Russia’s invasion of Ukraine, the global energy landscape has changed dramatically. Regions around the world have experienced soaring prices that have hit consumers hard, all against a geopolitical backdrop with energy security at its heart. What’s more, the world’s dependence on fossil fuel consumption, including the price and resource volatility that entails, has come into sharp focus.

The economic disruption caused by the war in Ukraine has amplified calls for an accelerated energy transition. A shift that would move countries away from highly polluting fuels, often supplied by only a handful of major producers, to sources of low carbon energy such as renewables and nuclear. Not least in Europe, where the ripple effects of the war have been felt acutely and Russian gas has historically dominated imports. A mild winter and lower-than-expected demand have seen the region’s gas stocks remain relatively stable through the coldest months of the year. While this has helped to ease the impact of supply cut-offs from Russia, the outlook for winter 2023 may be more challenging. The EU faces a potential shortfall of almost 30 billion cubic metres of natural gas this year. But the gap can be closed and the risk of shortages avoided through greater efforts to improve energy efficiency, deploy renewables, install heat pumps, promote energy savings and increase gas supplies.

High inflation and supply chain disruptions, resulting from the conflict and compounded by the fallout of the COVID-19 pandemic, have also shone a light on the risk of over-reliance on highly concentrated manufacturing and critical minerals. The culmination of these factors has led to sweeping government interventions to protect consumers and shield industry from spiralling energy and technology costs. Many countries and regions are now looking at how they can leverage policy to fast track a clean energy transition alongside economic recovery and avoid repeating past mistakes. The Inflation Reduction Act in the US, the REPowerEU plan in Europe and the GX Green Transformation programme in Japan are just a few examples of policymakers taking bold action.

Since the start of the crisis, the IEA has been monitoring the implications of Russia's invasion of Ukraine for the country’s energy system and on global markets. In support of Ukraine directly, the IEA signed a two-year joint work programme to support its recovery including short- and long-term energy priorities such as power-system security, hydrogen, renewables, biogas and collaboration on data and statistics.

More broadly, IEA member countries have agreed on two occasions to take the exceptional step of releasing oil from their emergency reserves to reduce the strains in markets and send a unified message that there will be no shortfall in supplies as a result of Russia’s invasion. In the first collective action following the invasion, agreed on 1 March 2022, IEA member countries committed to release 62.7 million barrels of emergency oil stocks. On 1 April, they agreed to make a further 120 million barrels available from emergency reserves, the largest stock release in the IEA’s history, which coincided with the release of additional barrels from the US Strategic Petroleum Reserve. The two coordinated drawdowns in 2022 are the fourth and fifth in the history of the IEA, which was created in 1974. Previous collective actions were taken in 1991, 2005 and 2011.