Russian Invasion of Ukraine to Turbocharge Renewables Deals
The Russian invasion of Ukraine could provide the 'jolt' that gives renewables the scale needed to deliver the EU’s climate policies
- The shift in EU policy could spur a flurry of private renewables deals in the short term, and more public share sales once markets stabilise.
- Funding models like 'partnership capital' and 'recycling' of capital will become much more prevalent to meet the estimated 279 billion euros in private sector funds required to reach climate neutrality by 2020
- The current energy crisis may be the jolt that gives renewables the scale to remove the green premium of the past and usher in a new era of affordable, clean energy.
History may look back on Russia's invasion of Ukraine as a watershed moment in the fight against climate change as EU countries rush to adopt greener power motivated by energy security.
That shift in policy could spur a flurry of private renewables deals in the short term, and more public share sales once markets stabilise.
Fast-track climate policies
The war has underscored how geopolitics is inextricably linked to energy policy and climate outcomes.
In March, the European Commission unveiled its 'REPowerEU' plan to reduce the bloc's energy dependencies over concerns that Russia could turn off gas supplies in retaliation to sanctions from the EU and US as well as to avoid indirectly funding the invasion by buying Russian fossil fuels.
Building on the EU Green Deal targeting climate neutrality by 2050 announced in 2019 and the subsequent 'Fit for 55' interim 2030 climate plan last year, REPowerEU measures include quicker deployment of wind and solar, further developing a hydrogen market and streamlining authorisations to fast-track new power projects.
In May, the Commission is due to publish a detailed recommendation on how fast permitting for renewable energy projects would operate in practice. It is already considering revising up its ambitions by targeting a 45% share of renewable energy by 2030 up from 40%.
In 2021, the EU imported around 140 billion cubic metres (bcm) of gas by pipeline from Russia and 15 bcm of liquefied natural gas. The total 155 bcm of imports accounted for almost 40% of the EU's total gas consumption, according to the International Energy Agency (IEA).
To quantify the scale of the challenge, the EU's Green deal will cost €1 trillion ($1.1 trillion) until 2030 to put the continent on the path to climate neutrality, €279 billion of which will come from the private sector.
The full version of this article was first published by Environmental Finance on May 1, 2022. You can read it here
Contributor
Alex Wotton
Managing Director, Co-Head of Greentech Industrials and Infrastructure in EMEA
Disclaimer
This content has been prepared by Nomura solely for information purposes, and is not an offer to buy or sell or provide (as the case may be) or a solicitation of an offer to buy or sell or enter into any agreement with respect to any security, product, service (including but not limited to investment advisory services) or investment. The opinions expressed in the content do not constitute investment advice and independent advice should be sought where appropriate.The content contains general information only and does not take into account the individual objectives, financial situation or needs of a person. All information, opinions and estimates expressed in the content are current as of the date of publication, are subject to change without notice, and may become outdated over time. To the extent that any materials or investment services on or referred to in the content are construed to be regulated activities under the local laws of any jurisdiction and are made available to persons resident in such jurisdiction, they shall only be made available through appropriately licenced Nomura entities in that jurisdiction or otherwise through Nomura entities that are exempt from applicable licensing and regulatory requirements in that jurisdiction. For more information please go to https://www.nomuraholdings.com/policy/terms.html.
