Recent global events could accelerate energy transition over long-term, says BlackRock's Fink

Disruption to supply chains and the ongoing conflict in Ukraine could mean the global energy transition accelerates over the long term, BlackRock CEO Larry Fink has said in an open letter to investors published today, 24 March 2022. 

As companies around the world look to reset their supply chains, and western countries phase-out dependence on Russian oil, the price of energy will climb higher, driven by demand, Fink said. On top of this as the US focus on increasing its supply of oil and gas, and the consumption of coal starts to increase across Europe and Asia, global progress on the path to net zero will inevitably be hindered in the short-term, he said.

But, as with the pandemic, current crises could act as a catalyst for action, he added. 

"During the pandemic, we saw how a crisis can act as a catalyst for innovation. Businesses, governments, and scientists came together to develop and deploy vaccines at scale in record time," said Fink. "We have already seen European policy makers promoting investment in renewables as an important component of energy security. Germany, for example, plans to accelerate its use of renewable energy and reach 100% clean power by 2035, 15 years ahead of its previous pre-war target."

Fink continued that, as countries look to develop energy self-reliance, and energy security becomes a top global priority, development in, and funding for, wind and solar power will start to emerge.

Higher food prices expected as war in Ukraine adds strain to supply chains

Over the long-term, as energy prices start to reduce the green premium on clean technology, electric vehicles and other clean energy products, could become much more "competitive economically".

For now, energy prices will burden those who can afford them least. Fink added that to ensure affordability during the transition, fossil fuels like natural gas will be vital as "transition fuel".

Natural gas pipelines in the Middle East are an important indicator of how some countries have gone from "dark brown" to "lighter brown" as gulf nations reduce the use of oil for power and implement cleaner base substitutes like natural gas.