Is the Russian energy crisis an energy opportunity for Europe?

It is a well-known fact that the world has been struggling with an energy crisis for several months now. The war between Russia and Ukraine and the associated concerns about Russian oil and gas supplies have deepened this sentiment. This has led to a further increase in the prices of these commodities on the capital markets. However, each coin has two sides, and this situation can also be seen as an opportunity for Europe. Why?

Given the European Green Deal, which aims to ensure that EU Member States achieve carbon neutrality by 2050, making Europe the first ever climate-neutral continent, it is logical that Russian gas and oil should be seen as a kind of transfer point on the road to achieving this goal. From this point of view, the war, which has been of primary interest to all investors since 24 February, could be the catalyst that speeds up the whole process of European states gaining independence from Moscow.

 

It won't work without infrastructure

Naturally, a number of processes need to be set in motion to achieve this goal. First and foremost is the building of the necessary infrastructure to ensure the supply of energy and heat from new suppliers. This requires not only large investment, but also time. From this point of view, the current disruption in the supply chain as a result of the sanctions imposed by Western countries on Russia could cause huge complications for a whole range of sectors, not to mention a possible global recession. We have already seen the prices of oil and wheat, for example, climb to record highs. The war has also affected the transport and automotive sectors. The Goldman Sachs bank is keeping its outlook for oil prices to rise to USD 135 per barrel in the coming months. This is why addressing the issue of independence from Russia's supply of key energy raw materials is becoming more and more urgent.

 

The transition to green energy

A logical step on the road to independence should be large-scale investment in renewable energy, given that part of the above-mentioned agreement is to ensure clean and affordable energy. The Investment Plan for a Sustainable Europe foresees the accumulation of investments of at least €1 trillion. Other sources of funding should include the Modernisation and Innovation Fund. 2020 was undoubtedly a landmark year for the European Union in terms of green energy, as it was the first time that Member States managed to generate more electricity from renewable sources than from fossil fuels.

 

Each country has a different energy mix

But the road to full carbon neutrality will be a long one. Each of the 28 states has a different starting position in terms of energy mix, as well as the position of renewable energy sources (RES) in it. The countries that use RES the most in Europe are Germany, Spain and Italy. Denmark is also a leader in solar and wind power generation, which enables it to meet up to 61 per cent of its annual consumption.

 

 

The Czech Republic and Slovakia lag behind in renewables

The Czech Republic and Slovakia lag behind other EU countries when it comes to the use of RES. Solar and wind power accounted for just under five per cent of their total consumption in 2020. Photovoltaic plants will only account for 2.7 percent of total production, although the real potential of both countries is several times higher.

To achieve the targets set out in the Green Deal, EU countries will need to significantly increase the share of energy produced from renewable sources over the next decade, while reducing their dependence on coal, gas and oil. Although this journey will be a long one, it can certainly be argued that it is heading in the right direction.

 

Commentary by Wonderinterest Principal Analyst Olivia Lacen

 

 

 

This text constitutes marketing communication. It is not any form of investment advice or investment research or an offer for any transactions in financial instrument. Its content does not take into consideration individual circumstances of the readers, their experience or financial situation. The past performance is not a guarantee or prediction of future results.

🍪 Cookies

We use cookies to store, access and process personal data to give you the best online experience. By clicking Accept Cookies you consent to storing all cookies and ensure best website performance. You can modify cookie preferences or withdraw consent by clicking Cookie Settings. To find out more about cookies and purposes, read our Cookie Policy and Privacy Notice.

Cookies settings


Cookie Control

What are cookies?

Cookies are small text files that enable us, and our service provides to uniquely identify your browser or device. Cookies normally work by assigning a unique number to your device and are stored on your browser by the websites that you visit as well as third-party service providers for those website. By the term cookies other technologies as SDKs, pixels and local storage are to be considered.


If Enabled

We may recognize you as a customer which enables customized services, content and advertising, services effectiveness and device recognition for enhanced security
We may improve your experience based on your previous session
We can keep track of your preferences and personalize services
We can improve the performance of Website.


If Disabled

We won't be able to remember your previous sessions, that won't allow us to tailor the website according to your preferences
Some features might not be available and user experience reduced without cookies


Strictly necessary means that essential functions of the Website can not be provided without using them. Because these cookies are essential for the properly working and secure of Website features and services, you cannot opt-out of using these technologies. You can still block them within your browser, but it might cause the disfunction of basic website features.

  • Setting privacy preferences
  • Secure log in
  • Secure connection during the usage of services
  • Filling forms

Analytics and performance tracking technologies to analyze how you use the Website.

  • Most viewed pages
  • Interaction with content
  • Error analysis
  • Testing and Measuring various design effectivity

The Website may use third-party advertising and marketing technologies.

  • Promote our services on other platforms and websites
  • Measure the effectiveness of our campaigns

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 92.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.