Dr. Jeff Colgan is Director of the Climate Solutions Lab at the Watson Institute for Public and International Affairs at Brown University, and a keen observer of the interplay between energy and security. His new white paper,  “Letting Europe’s Energy Crisis Go to Waste: The Ukraine War’s Massive Fossil Fuel Costs Fail to Accelerate Renewables,” co-authored by Alexander S. Gard-Murray and Miriam Hinthorn, offers a new window into how an event with the broad potential to reshape energy policy to more sustainable ends has failed to meet the moment. Colgan spoke to us about the institute’s new research and the lessons learned about conflict’s influence on the energy transition more than a year into the Ukraine conflict.

ECSP: Numerous headlines over the last few years have reference the war in Ukraine as an “accelerator” of the renewable energy transition. But your research suggests that Europe incurred over €1 trillion in extra fossil fuel costs due to the energy crisis sparked by the war. How were these costs incurred? And what does this mean for the global energy transition?

Colgan: We estimate that between October 2021 and December 2022, Europe paid 643 billion Euros more for oil, gas, and coal compared to what these nations would have spent if Russia hadn’t invaded—or manipulated energy markets. That’s over ten times the amount of aid that Europe sent to Ukraine over the same time period. In addition, European governments announced €908 billion of fiscal spending on things like energy company bailouts, price caps, and energy infrastructure—much of which was geared towards enabling fossil fuel imports. That €908 billion of government spending can’t be added directly to the €643 billion in market costs, because of some overlap between the two categories. But together, they are certainly over 1 trillion euros. (To clarify, by “Europe,” we mean the EU’s 27 member states plus the United Kingdom.)

ECSP: Despite announcing intentions for a rapid transition, you also found that new investment in wind farms fell by more than 40 percent in 2022, as compared to 2021. What contributed to this decline? Why are Europe’s leaders struggling to escape fossil fuel dependence?

Colgan: While the causes of the decline in investment in wind energy weren’t a focus of our research, we see three factors as the likeliest causes. One is an increase in interest rates, to which renewable energy projects are very sensitive because they are capital-intensive. A second factor is various supply chain problems and labor shortages. The third factor is energy policy in Europe, which often creates headwinds against renewables. For instance, many European governments decided to create subsidies for fossil fuels (to bring residential natural gas prices down for heating, for example) even as they put windfall taxes on electricity producers, which hurt the revenues and profits of renewable energy generators. So while the first two factors might be mostly outside of policymakers’ direct control, the third factor is especially frustrating to watch if one considers the national security and environmental benefits of renewable energy projects.

ECSP: Your research also quantifies the value of energy security—and highlights the risks associated with geopolitical disruptions to fossil fuel markets. How should policymakers, energy utilities, and private industry change their approach to energy planning and investment?

Colgan: Quantifying Europe’s energy security costs from the Ukraine war is important because policymakers, energy utilities, and companies often fail to fully incorporate the risks associated with fossil fuels into cost estimates, investment decisions, or energy planning. While previous research identified energy security risks for fossil fuels, the magnitude has been uncertain and not quantified. This new research takes the first step towards allowing analysts to incorporate the expected costs of geopolitical volatility into “levelized costs of energy” (LCOE) estimates or other tools for energy policy decisions. Unlike private sector analyses of geopolitical risks that focus on the costs for individual firms, national energy policies should be informed by the full social costs of geopolitical disruptions—which includes government spending designed to cushion the impact of such disruptions.

ECSP: One key point you raise in the report is the blind spot many decision-makers have when it comes to recognizing the energy security advantages of renewables. Why are these advantages often overlooked? How can this mindset be changed?

Colgan: Let’s start with an example. When Germany was forced to bail out one of its major energy utilities (Uniper), at a cost of €25 billion because of the sudden spike in fossil fuel prices, German economy minister Robert Habeck claimed the bailout was needed because of the “energy scarcity that Russia has artificially created,” and that it was “not the kind of ordinary fluctuation that the market can still digest.” The problem with this viewpoint is that it treats geopolitical shocks to fossil fuel prices as extraordinary, and thus, not factored into policy or investment decisions. In reality, geopolitical shocks to oil and gas prices occur unpredictably but regularly. For instance, see the 1973 oil crisis; the Iranian Revolution of 1978-79; the Iran-Iraq War in the 1980s; the Gulf War of 1990-91, the ISIS insurgency 2011-2014; and Russia-Ukraine gas disputes in 2006, 2008-2009, 2014-15. Not only do these events create price volatility, they also impose public costs as governments suddenly need to fill reserves, build infrastructure, or provide subsidies and rescue packages to economic interests affected by the disruptions. By contrast, renewable energy, unlike fossil fuels like oil and gas, is safe and secure from political disruption because nature provides the basic “fuel” of wind and sunshine. And while it’s true that wind and solar energy do face a different kind of geopolitical risk, like access to critical minerals and components, those risks are much lower and different. Critical minerals and materials are not fuels, which completely changes the geopolitical dynamics.

ECSP: You’ve written extensively on the connections between oil politics and global security, as well as on energy security and international governance. Russia’s war in Ukraine has shocked the international order and shined a light on Russia’s outsized role in global energy production at a time when many countries are seeking to transition to renewable energy. How has this research changed (or further validated) your own thinking in regards to energy security, foreign policy, and international security? 

Colgan: The evidence we’ve collected, in my mind, adds to the long rap sheet against dependence on oil and gas. My 2013 book Petro-Aggression showed how oil producing “petrostates” like Russia are, on average, about 50 percent more likely to instigate international conflicts than non-petrostates. That means that by consuming oil as consumers, we are often unintentionally providing the money for some distant dictator’s war chest. So oil and gas are not only environmentally destructive, but they are also a real source of problems for international security. Europe’s experience with fossil fuel dependence since Russia’s invasion of Ukraine is yet another instance where fossil fuels—despite their low cost and convenience for our economy—generate big economic, environmental, and political problems.