The European Union (EU) has the potential to replace Russian gas with green technologies by 2028 at a total cost of €811 billion ($890 billion), according to a new report from the Oxford Sustainable Finance Group. The report, titled The Race to Replace: The Economics of Using Renewables to Free Europe from Russian Gas, outlines the cost of completely replacing Russian gas for heating and electricity with clean energy.
Russian gas accounted for about half of the EU's gas supplies in 2021, but after the EU's response to Russia's war in Ukraine, its share dropped to 12.9% by the end of 2022. The EU is now looking to end its reliance on Russian gas by 2028.
The €811 billion required to replace Russian gas with green technologies includes a planned expenditure of €299 billion on clean energy as part of the European Green Deal and an additional investment of €512 billion in renewable energy and heat pumps.
The report found that up to 90% of the required additional investment “could be recouped over the next thirty years by eliminating the need to buy gas.” However, it also noted that policy changes are necessary to enable the transition.
According to Gireesh Shrimali, co-author of the report and head of transition finance research at the Oxford Sustainable Finance Group, “The transition from Russian gas to clean energy is not only achievable, but offers multiple benefits. Replacing natural gas with wind and solar energy eliminates the need to pay for gas in the future.”
The report highlights the need for public and private funds to facilitate large-scale deployment of renewables and heat pumps, as well as addressing permitting challenges. It also suggests the deployment of rooftop solar panels at speed and increasing support for insulation and the installation of heat pumps.
“The EU can alleviate energy security concerns, address the cost-of-living crisis through energy costs, and advance its goals to achieve net-zero emissions and tackle the climate crisis by eliminating reliance on importing a fossil fuel with volatile prices and supply,” Shrimali added.
The Centre for Research on Energy and Clean Air (CREA) estimates that the EU paid around €5 billion for Russian gas in the first four months of 2023. With the shift to green technologies, the EU can reduce its dependence on volatile energy sources and achieve its ambitious climate goals while improving energy security and affordability for its citizens.
