Even as Russian missiles pound Ukraine, shattering about a third of Ukraine’s electricity grid and leaving its cities and towns in ruins, President Vladimir Putin has already lost the war in one crucial respect: Russia’s huge clout in global energy supplies—which it built up over decades—is shrinking drastically, probably forever.
That’s the assessment of the International Energy Agency, the Paris-based agency comprising the world’s biggest producing and consuming nations, in its yearly World Energy Outlook, out on Thursday.
“The rupture has come with a speed that few imagined possible,” the organization says in its 524-page report, which lays out three different scenarios for the decades ahead, depending on whether major countries stick to their green-energy commitments. “Russian fossil fuel exports [will] never return in any of the scenarios … to the levels seen in 2021,” it says.
Instead, Russian oil and gas revenues will drop by more than half, from $75 billion last year to less than $30 billion in 2030. And as Europe rapidly switches to supplies from the U.S. and the Middle East, Russia’s global will steadily shrink further. That’s a dizzying change for Putin, whose country until last year supplied a whopping 20% of the world’s fossil fuels.
The crisis has brought deep concern among millions, whose energy bills have rocketed over the past year. Even so, oil supermajors have earned a $2 trillion windfall, according to the IEA report. The five Big Oil companies—ExxonMobil, TotalEnergies, BP, Shell, and Chevron—will likely post a $50.7 billion third-quarter profit, slightly down from their all-time record one quarter before, according to Bloomberg estimates this week.
‘No going back’
The implications of the energy crisis are profound, says the IEA, whose flagship publication has made for dry reading for many years; the organization was founded in 1974, amid the last global oil crisis, to represent major consumers and producers.
This crisis, it says, is a dramatic turning point for the world, sparked by the Ukraine war, which erupted just as the global economy was digging out from the COVID-19 pandemic. The double-whammy has produced “a crisis of unprecedented depth and complexity,” says the IEA, which represents major energy consumers and producers. “A profound reorientation of international energy trade is underway,” the report says. “Many of the contours of this new world are not yet fully defined, but there is no going back to the way things were.”
Indeed, for the first time, the IEA predicts that global consumption of fossil fuels reaching a high point, or leveling off, not because of abstract future policies, but because of changes already underway. As EV sales ramp up, global oil demand will peak in the mid-2020s—a decade sooner than the organization previously predicted.
In fact, the IEA believes this year’s seismic events could push countries to speed up their energy transition, since EVs, and solar and wind power are increasingly seen as far less vulnerable to upheavals from war and sanctions. What is unclear is whether a global recession might rein in government investments in renewable energy. “A key question for policy makers is whether the crisis will be a setback for clean energy transitions or will catalyze faster action,” the IEA says.
Hours before the organization published 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 a handful of countries—had been “used and abused” over the past year. “In contrast, renewables provide the opportunity for nations worldwide to benefit from homegrown, secure, and sustainable energy on their own terms.”
Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.
