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War in Ukraine has reshaped global energy markets

Russia’s invasion has been a boon for U.S. oil and gas companies, revitalized nuclear power in Europe

Protesters call for an embargo of Russian oil and gas in front in the German Reichstag building in Berlin on April 6, 2022.
Protesters call for an embargo of Russian oil and gas in front in the German Reichstag building in Berlin on April 6, 2022. (Annette Riedl/Getty Images)

Nearly a year after Russian troops invaded Ukraine, the ongoing war has accelerated a European shift away from Russia’s fuel supplies, invigorated nuclear power in the region, isolated Russian President Vladimir Putin on the global stage and anchored a booming export business for U.S. gas companies.

The war has also generated massive profits for oil companies while raising fuel and living costs worldwide, which ironically could help speed efforts to address climate change, particularly in developing nations.

“We’ve seen record windfall profits from the oil and gas companies. That’s been delivered because of the supply shock of there being a lot less oil that people can buy,” Rob Schuwerk, North America director at financial think tank Carbon Tracker, said in an interview. “It has also intensified the race for local supply of energy,” he said. “In the long-term, that’s going to benefit renewables, which are inherently a local source of energy.”

The global oil and gas industry made a record $4 trillion in profits in 2022, according to Fatih Birol, the head of the International Energy Agency.

Since Russia launched its invasion on Feb. 24, 2022, some European countries, such as Germany, which is reopening once-closed coal mines, have turned to fossil energy to fill short-term needs once occupied by Russian gas. Before the war, about half of the monthly gas supply flowing to the European Union was from Russia. Now, that figure has dropped below 20 percent and could be zero by year’s end.

“We are working under the assumption … that there would be zero natural gas imports from Russia next winter,” said Ditte Juul Jørgensen, director general for energy at the European Commission.

At a Feb. 16 Senate Energy and Natural Resources hearing, Jørgensen said the EU has expanded its capacity to take in liquefied natural gas, or LNG, since the war began. “We in the European Union see natural gas as an important energy source for the transition.”

A month after the war began, the EU set goals to phase out all Russian fossil fuel imports — coal, oil and gas — as soon as possible, Jørgensen said, summarizing the bloc’s approach as limiting gas use, accelerating deployment of renewables, speeding energy-project permitting, bringing in U.S.-extracted LNG and electrifying households.

After the war, Ukraine wants to overhaul its industry, energy supplies and power grid, Geoffrey Pyatt, an assistant secretary for the State Department’s Bureau of Energy Resources said in January.

Speaking at the Carnegie Endowment for Peace, Pyatt said “what they want to build back is not a 1990s Soviet energy grid, but a European grid,” adding that Ukraine would be exporting electricity to the continent if Russia did not control Ukraine’s Zaporizhzhia nuclear power station, the largest plant of its kind in Europe.


In Eastern Europe, where people are familiar with nuclear technology, the war has fueled interest in new reactors.

American firm Westinghouse has signed agreements to build reactors in Poland and Ukraine in the past year, and Bulgaria, Romania and Poland have expressed interest in a new wave of reactors called “small modular reactors,” or SMRs, said Andrew Light, assistant secretary of energy for international affairs at the Energy Department. “We’ve got to work with these countries,” he said.

Kathryn Huff, assistant secretary for nuclear energy at DOE, said in December that Russia could upend global energy markets if it cut off uranium exports. The U.S. gets about one-fifth of its uranium from Russia, and efforts to decouple from Russian markets have drawn bipartisan support in Congress.

“We’ve been dependent on Russia” for nuclear fuel, Fiona Hill, senior fellow at the Brookings Institution, said of the U.S. “This is a time for us to step up into this realm as well.”

In October, German Chancellor Olaf Scholz directed government ministers to keep the last three running nuclear power stations online until April. They were slated to close by the end of 2022.

Sagatom Saha, a researcher at Columbia University’s Center on Global Energy Policy who studied in Ukraine, said the country has ingredients necessary to rebuild a low-carbon economy in a post-war period.

“It has an incredible industrial base, it has an incredible scientific, academic base,” Saha said in an interview. “It has many of the things you look for to build a clean-energy economy.”

Saha said the administration and Congress should consider establishing a national stockpile, similar in some ways to an oil reserve, of power equipment to be called upon for energy emergencies.

“Perhaps it looks like a series of rules or requirements, guidance for utilities,” said Saha, a former staffer to climate envoy John Kerry. A global network of countries sharing equipment of similar standards or at least capabilities could prove critical in conflicts to come, he said.

“The reason why this eventually could work is that we need something similar for domestic reasons as well,” he said. “We’re experiencing unprecedented not just cybersecurity but physical attacks on our infrastructure.”

Oil and gas

Dustin Meyer, vice president of natural gas markets at the American Petroleum Institute, a trade group that lobbies for U.S. oil and gas companies, said 2022 was the “most dynamic year in the history of gas.”

The U.S. became the world’s largest exporter of LNG in 2022, according to the Energy Information Administration, surpassing Qatar by export volume and opening a critical energy lifeline to Europe.

Charlie Riedl, executive director of the Center for Liquefied Natural Gas, an industry organization, said the volume of LNG U.S. companies shipped to Europe more than doubled in 2022 from 2021, climbing from 383 shipments to 841.

More than 70 percent of U.S. LNG went to Europe last year, Riedl said. That figure marks a shift from historic patterns. Since the U.S. began exporting gas in February 2016, it’s largely gone to Asia.

“That’s where the vast majority of LNG was expected to go,” Riedl said. “Rewind to Feb. 24 of last year and all of a sudden we started seeing a very different sort of supply route.”

Meyer said without the U.S. as a major global energy player, OPEC and Russia would have far more geopolitical power. “Think of the leverage they would have,” he said in an interview.

Republicans and some Democrats in Congress have browbeaten the Biden administration to accelerate exports, in part by approving more export sites and expanding drilling on federal lands.

“Unfortunately, President Biden has not learned a thing from Putin’s war of aggression and the energy crisis in Europe,” said Sen. John Barrasso, R-Wyo. “Europeans understand the crucial importance of increasing U.S. oil and natural gas production and exports. The president still does not.”

But bringing oil leases into production can take years. Building an export terminal is a lengthy process, too, Riedl said.

It can take multiple years to get approval, he said. “It’s another three to five years of construction time,” he said. “So this isn’t a quick response kind of deal.”

There are seven LNG export terminals in the country. Five are located in the Gulf Coast. One is in Georgia and another is in Maryland. Ukraine may ultimately get fuel that comes from American shores and disgorges its LNG supply. But that would only happen indirectly, Riedl said.

“Ukraine doesn’t have import capacity to actually take LNG cargo. So the molecules might be finding their way to Ukraine ultimately through pipelines, but not directly,” he said. “They don’t have an import facility.” To build a facility would take years and hundreds of millions or perhaps billions of dollars, he said.

The top four buyers in Europe of American LNG were France, the United Kingdom, Spain and the Netherlands, federal data show.

“I think 2022 will definitely go down as an inflection point in the history of energy markets,” said Meyer, referencing how the U.S. gained market share in Europe and Russia lost it.


Tom Ellison, deputy director of the Center for Climate and Security, said the war and its concomitant energy price shocks are a “stark reminder of why the transition to low-carbon energy, in addition to being good for climate change, is also good for national security.”

Beyond Europe, the reverberations of the war spilled into “fragile and developing countries that have less financial and other capacity to kind of weather those energy and food and other shocks,” Ellison said by phone.

“The war itself and then its effects on the global food and fertilizer markets have driven up prices” or limited availability, Ellison said. This financial pain “spills over to the countries in the world that are already some of the most vulnerable,” he said.

Saha said the war sped up the pace of nations’ climate goals. “The war has been a mild accelerant on climate goals and climate progress,” he said. “You’re not seeing one major economy disengaging from their climate goals or shift or meaningfully shifting policy. That’s quite remarkable.”

At a utility conference in Washington, D.C., last week, Energy Secretary Jennifer M. Granholm said the war underscored the logic in moving away from peripatetic fossil fuels. “It’s a resiliency solution,” she said.

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