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ENERGY & FORECASTS

The net-zero transition in the wake

of the war in Ukraine: a detour,

a derailment, or a different path?

The invasion of Ukraine will, at least their respective cost curves and build a pathway to
initially, complicate the transition path faster decarbonization in other regions.
Such outcomes would not be surprising in light of
to a net-zero economy, but this tragic history; conflict has often accelerated energy tran-
development could still prove to be a sitions. The 19th century’s naval wars accelerated
a shift from wind- to coal-powered vessels. World
turning point in accelerating progress War I brought about a shift from coal to oil. World
in the medium run War II introduced nuclear energy as a major pow-
er source. In each of these cases, wartime inno-
vations flowed directly to the civilian economy and
ushered in a new era. The war in Ukraine is differ-
ent in that it is not prompting the energy innovation
Hamid Samandari, Dickon Pinner, itself but making the need for it clearer. Still, the
Harry Bowcott, Olivia White potential impact could be equally transformative.
McKinsey & Company In this article we attempt to offer a more granular
view of what might be in store. We examine the
possible effects of the war and its ramifications on
he Russian invasion of Ukraine has the key requirements for a more orderly net-zero
ushered in a humanitarian crisis of a transition. We explore the war’s potential effect on
scale not seen on European soil since key sectors and how shifts in energy and finance
the Second World War, a level of geo- markets could play out in the aggregate, both
political tension not experienced since globally and within major regional blocs. Finally, we
Tthe Cuban Missile Crisis, and a set of suggest steps that stakeholders could take as they
rapidly evolving political, economic, and societal navigate this turbulent period while continuing to
responses and counterresponses whose ramifica- drive toward as orderly a transition as possible. To
tions can scarcely be estimated at this point. Nor do so, we start by considering the net-zero context
are there signs of an imminent resolution on the at the time the conflict began.
horizon.
As Russia is one of the world’s largest producers
of oil, gas, and commodities, one can naturally ex- A precarious moment
pect that the massive and universal effort required The invasion of Ukraine came at a time already
to address the world’s looming climate crisis would marked by insufficient progress toward the net-zero
also be swept up in the maelstrom. This raises the transition. Challenging economic conditions threat-
question of whether the war and its aftermath will ened its acceleration, and accumulating physical
prove to be a limited detour from the previous path risks made its necessity even more evident.
of net-zero transition, or a true fork in the road and Even before the invasion, despite the rising tide
a far more consequential redirection. of public- and private-sector commitments made
It seems clear at this point the war will complicate in 2021, the world was not on a path to achieve
the transition’s path in the short term. In the longer net-zero greenhouse-gas emissions by 2050. In-
term, however, the logic of energy security and deed, if all existing commitments were achieved,
economics could converge to kick net-zero tran- the world would still fail to stabilize global warming
sition efforts into higher gear. Bold moves would temperatures at 1.5˚C. Moreover, most of these
be needed at unprecedented speed to boost en- commitments were not yet backed by the required
ergy-efficiency measures and adopt renewable-en- financial resources and execution plans.
ergy alternatives to fossil fuels. If adopted, such As for the world economy, it was already suffering
actions could drive net-zero technologies down from several preexisting conditions. A once-in-a-

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