The IEA says Russia's oil power will 'never return'. 'The break came at a speed few could have imagined'

Even as Russian missiles hit Ukraine, shattering nearly a third of Ukraine’s electricity grid, and devastating its cities and towns, President Vladimir Putin has already lost the war in a crucial aspect: Russia’s massive influence in global energy supplies – on which it has built dozens of year – shrinking greatly, probably forever.

That’s the Paris-based International Energy Agency, made up of the world’s largest producer and consumer countries, in its annual World Energy Outlook report released Thursday.

“The rupture came at a speed few could have imagined,” the organization says in its 524-page report, which outlines three different scenarios for the coming decades depending on whether major countries stick to their green energy commitments. Russia’s fossil fuel exports [will] never go back to levels seen in 2021 in any of the scenarios,” he says.

Instead, Russia’s oil and gas revenues will more than halve from $75 billion last year to less than $30 billion in 2030. And Russia’s global revenue will steadily shrink further, as Europe rapidly switches to sourcing from the US and the Middle East. This is a dizzying change for Putin, whose country provided 20% of the world’s fossil fuels until last year.

The crisis has caused deep concern among millions of people whose energy bills skyrocketed last year. Even so, the oil supergiants made an unexpected $2 trillion profit, according to the IEA report. The five Big Oil companies (ExxonMobil, TotalEnergies, BP, Shell and Chevron) will report $50.7 billion in third-quarter profits, slightly below the all-time record a quarter ago, according to Bloomberg forecasts this week.

‘No return’

The IEA, whose flagship publication has been for dry reading for years, says the effects of the energy crisis are profound; The organization was founded in 1974, in the midst of the last global oil crisis, to represent major consumers and producers.

He says this crisis is a dramatic turning point for the world, fueled by the Ukraine war that erupted as the global economy struggled to recover from the COVID-19 pandemic. The IEA, which represents major energy consumers and producers, says the double hit has created “a crisis of unprecedented depth and complexity”. “A profound reorientation of international energy trade continues,” the report says. “Many of the contours of this new world are not yet fully defined, but there is no going back like before.”

Indeed, for the first time, the IEA estimates that global fossil fuel consumption has peaked or stabilized, not because of abstract future policies, but because of changes already underway. As EV sales increase, global oil demand will peak in the mid-2020s – a decade earlier than the organization had predicted.

In fact, the IEA believes this year’s seismic events could force countries to accelerate energy transitions, as electric vehicles and solar and wind power are increasingly seen as less vulnerable to the upheavals from war and sanctions. What is unclear is whether a global recession will rein in government investment in renewable energy. “A key question for policymakers is whether the crisis will be a setback for clean energy transitions or accelerate faster action,” the IEA says.

Hours before the organization released its report, the Global Wind Energy Council, which represents companies in 80 countries, said the IEA report showed how the global oil and gas markets, concentrated in several countries, were “exploited and misused” over the past year. last year. In turn, renewable energies offer nations around the world the opportunity to tap into local, safe and sustainable energy on their own terms.”

This story was originally published on Fortune.com

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