Current geopolitical events will have long-term implications for global oil and gas prices, which will in turn cascade through to impact not only home energy bills and forecourt prices but existing expectations and strategies around the planned energy transition to transform the global energy sector. COP26 last autumn saw a reaffirmation of commitments to embrace a Net Zero future. Whilst timelines and transition plans vary by country, there is a broad consensus for a “just transition” and the phase-down of coal between 2040 and 2060.
However, the unfolding events in Ukraine, and the magnitude of the attendant response around the world, mean such transition plans are now fraying, and many will require significant revision. As signatories to many Net Zero-linked initiatives, financial services firms have committed to supporting the transition. The current turmoil introduces further risks – but also areas for potential supplementary action. Among other steps, firms will need to revisit their own sustainable finance targets to ensure that their claims to finance the transition are in line with the revised energy requirements.
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