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The impact of the war in Ukraine on the markets will depend on the duration and extent of the conflict, but also on the possible extension of sanctions. Indeed, History shows that if local conflicts have a limited effect on stock markets, this is no longer the case when they impact energy and commodity prices.
The development of the Clean Energy sector has historically been significantly impacted by previous energy crises. The war in Ukraine and its major impact on energy markets will be no exception. Sadly, it took a tragedy at our doors for us to come to realize that renewables and energy efficiency are not only about climate change, but also about our independence, freedom, and future prosperity.
As investors and companies exit the Russian market in droves, new criteria, such as the defence of democracy and non-dependence on authoritarian regimes, are giving new lustre to previously banned sectors.
The tragedy in Ukraine could lead to a real paradigm shift and the emergence of a new world order. Some of the possible consequences, such as a slowdown in world trade, rearmament and a return to confrontation between the major strategic blocs, are a step backwards. But others, such as the realisation of our dependence on fossil fuels, could give a massive boost to the energy transition.
In 2021, the 27 EU member states and the European Parliament agreed to enshrine the goal of carbon neutrality by 2050 in a “climate law”. And this “Green New Deal” is much more than just wishful thinking, as it not only sets ambitious targets but more importantly provides for massive investments, particularly in infrastructure. So to make the most of it, the biggest winners could be direct investments in infrastructure projects.
During the synchronised sell-off in markets in January – mainly due to massive sector rotation in favour of “value stocks” – clean energy sector stocks suffered. And yet, the transition to clean energy keeps accelerating.