Executive Summary
This paper presents an analysis of the impact of the Russia/Ukraine hostility on the UK Oil and Gas industry. The ongoing Russia-Ukraine crisis means that the UK has to rethink its £4 billion oil and gas imports from Russia. The upheaval is triggering numerous problems that are affecting different industries and local citizens in the country. The ongoing crisis could also disorient the UK’s sustainability since the available energy resources could be unable to meet the needs of the economy. The completed analysis has revealed that the UK would need to consider evidence-based solutions to address the recorded consequences due to the ongoing crisis and the subsequent sanctions against the Kremlin. Based on these observations, the report goes further to evaluate the viability of wind energy as an alternative source of energy for the UK. Using Kurt Lewin’s change theory, the involved leaders will address the possible opposition from different stakeholders and encourage them to support the new solution. The presented recommendations include the promotion of private-public partnership, supporting the ideas of employee empowerment and data sharing, and provision of resources to launch the required projects. The significance of this report, by overcoming the identifiable potential barriers, is that the UK could succeed to have a new energy mix comprised of more renewable sources.
Introduction
The United Kingdom (UK) is one of the leading importers and users of oil and gas from Russia. A report released in early 2022 by the Office for National Statistics revealed that the UK received around £4 billion of oil from this country in 2021 (Bil, Przybylski and Zaborowski, 2022). Specifically, the imports for refined totalled £3 billion while those for crude oil stood at £1 billion (Department for Business, Energy & Industrial Strategy, 2022). However, the report went further to indicate that Russia was not the dominant source of oil and gas for the UK since it only amounted to around 8 percent of the imported energy products (Department for Business, Energy & Industrial Strategy, 2022). However, any loss of the current oil and gas obtained from Russia could impact the country’s future economic performance.
Currently, the ongoing invasion of Ukraine by Russia has led to numerous challenges that have disoriented the UK’s oil and gas imports. Specifically, the sanctions announced earlier by the United States and the European Union (EU) have compelled Vladimir Putin’s government to put harsh terms regarding the exportation of Russian oil. While the UK’s dependence on Russian oil has remained quite low, the ongoing turmoil could have negative implications for most of the sectors. For instance, the road and transport industry has been taking the lion share of all the available oil at around 57 percent (Bartrum, 2022). Industrial reliance on oil in the country is 7 percent (Bartrum, 2022). Around 18 percent of the available gas and oil is dedicated to air transport (Davies and Ambrose, 2022). The chemical feedstock sector requires around 10 percent of the energy supply while domestic or household use sands at 8 percent (Shiryaevskaya, Burton and Durisin, 2022). The key sectors play a significant role towards supporting the country’s economy.
Based on the outlined arguments, it becomes clear that the crisis in Ukraine could have significant implications on the overall supply of oil. As such the purpose of this report is to analyse the negative consequences of this ongoing hostility and how it could affect a wide range of economic activities. The research will identify and propose a number of efforts that have the potential to mitigate some of these possible implications within a period of two years (McDonnell, 2022). By considering such aspects, it would be appropriate for the UK government to consider wind power and include it in the country’s energy mix (Jnews, 2022). This paper is broken down into these three sections: analysis of the possible consequences of the ongoing Russia-Ukraine hostility on UK’s oil and gas industry, mitigation strategies, and the role of wind power in the country’s future energy mix.
Analysis of Negative Consequences of Ukraine/Russia Hostility on UK Oil and Gas Industry
The invasion of Ukraine is an unexpected event that has triggered a sudden rise in the prices for natural gas and oil. The first emerging negative consequence is the increasing price for oil and gas. After the pronouncement of a number of sanctions targeting the Kremlin, the price for crude oil in the Europe rose to around 105 pounds/barrel, the highest to be recorded since 2014 (McDonnell, 2022). Many investors and policymakers have been concerned about the possible impacts of such sanctions on the oil and gas industry. This price has also been rising steadily every week (Mbah and Wasum, 2022). While the UK’s use of Russian oil and gas is still low, the invasion could affect the transport and aviation sectors because they rely mostly on such products. This trend could have negative impacts on the major sectors of the economy, including aviation, transport, and energy production. The absence of proper solutions could disorient the overall performance of the economy in the future. More citizens would also be unable to achieve their social and economy goals.
The second negative impact arising from this invasion is the disorientation of the channels of acquiring natural gas and oil from other leading partners, including Qatar, Norway, and the Middle East. With these countries becoming the immediate alternatives for getting gas and oil, the UK will record short-term negative consequences. More people and industrial could be unable to run smoothly due to the lack of adequate gas and oil. With this outcome and the increasing level of panic buying, the country’s deposits would become depleted and have increased consequences on the economy’s future sustainability (Griffiths, 2017). If the current sanctions and military missions continue in the coming months, experts acknowledge that more industries could be crippled or stagnate because the country would be unable to access around 4 billion pounds of oil and gas.
The third possible consequence is the ability to expose the unsustainable nature of the country’s energy mix. Over the years, the UK has failed to capitalize on the opportunities that have emerged from the challenges associated with climate change. The move to identify alternative sources could strain other sectors of the economy, including healthcare and social services. In the short-term, the government could be compelled to identify other energy sources (Welt, 2021). With the nature of these issues, more households would suffer the most since they will have to incur additional expenses for energy and liquefied gas. Despite these realities, the UK government will be compelled to allocate adequate resources to improve the country’s energy mix (Stukalo and Simakhova, 2018). Failure to do so means that the specific challenge will become more pronounced than ever before.
Mitigating the Impact
Many countries in the globe are experimenting and considering a wide range of options to reduce dependency on the oil and gas industry for energy production. McDonnell (2022) reveals that there are numerous approaches that could work effectively in different regions to improve electricity production and help meet the needs of the people. The current political turmoil in East Europe needs to become a wakeup call for the UK to end its current reliance on Russian oil. Experts need to identify the best ideas that are workable, capable of delivering timely results, and acceptable to the greatest majority.
First, the government needs to liaise with key stakeholders in the transportation, retailing, and manufacturing sectors to implement better business models (Vishwanathan et al., 2020). For instance, the power of online shopping and e-commerce appears reasonable and capable of minimizing the current need for physical transportation of finished products (Valdez-Juárez and Castillo-Vergara, 2021). The model will allow consumers to shop online and have their items delivered conveniently by the company. Second, companies compelling workers to visit their offices could shift to remote or home-based approaches to reduce the demand for oil and gas needed for transportation (Peimani, 2021). The involvement of all key partners is essential towards reducing the current demand for oil and gas in the country.
Third, the UK is located in a strategic geographical region that could support the use of renewable energy sources. Specifically, a new focus on wind generators appears plausible since the country could install them in different regions and at sea (Wong, 2020). The most important strategy would be to expedite most of the projects and ensure that additional energy supply is available in the national grid (Potisomporn and Vogel, 2021). This approach will make it easier for the country to stop relying on oil for generating electricity for industrial and household use (Gielenet al., 2019). Additionally, individuals and companies could receive timely guidelines for integrating solar-based systems in their premises to generate additional energy (Gross, 2020). Fourth, the involvement of key players could push the idea of electric cars much further to reduce dependency on oil and gas (Gross, 2020). Increased production and uptake of such vehicles among members of the public would help reduce the current need for oil in the country.
Unfortunately, a number of challenges are possible that the UK government and other stakeholders could encounter when pursuing these alternatives. For instance, the processes amount to new changes and would definitely encounter increased resistance from members of the population (Gielenet al., 2019). The country could also be required to redesign its economic needs by diverting national resources to the construction and operation of wind generators (Gross, 2020). Another possible barrier is the fact that wind power is associated with various ecological problems, such as destruction of natural habitats and increased noise from the turbines (Gielenet al., 2019). Nonetheless, the move to renewable energy appears to be a practical and sustainable solution that has the potential to address some of the challenges outlined above (Jianzhong, Assenova and Erokhin, 2018). The inclusion of partners and sensitization of more members of the public is a powerful strategy that has the potential to deliver timely results and take the UK closer to its economic objectives.
The successful implementation of the proposed wind energy generators will reshape the UK’s energy mix. This outcome means that the nation will no longer have to rely on natural gas and oil to meet the demands of most of the sectors (Jianzhong, Assenova and Erokhin, 2018). The government will also start a new journey towards introducing additional renewable energy sources, including biomass and solar power (Gielenet al., 2019). These initiatives will eventually reduce the demand for Russian oil, an achievement that could help support the country’s future geopolitical interests and foreign policies towards the Kremlin in the future.
Role of Wind Energy in Uk’s Future Energy Mix
Sustainability theory has emerged as a powerful model for helping nations to deal with the challenge of climate change. The framework entails the promotion of practices that can deliver long-lasting and stable societies. The ultimate aim is to maximize the justice for all generations (Radzka, Rymuza and Michalak, 2019). The ongoing crisis in Ukraine allows the UK government to focus on this issue and pursue the idea of an effective energy mix while promoting sustainability. The concept of wind energy is part of the wider framework of sustainability since it revolves around the need to harness electricity from a source that is renewable in nature (Woldeyohannes, Salem and Yahaya pudza, 2017). Currently, the UK energy mix includes these key sources: oil and gas at 27 percent, liquefied gas at 11 percent, and electricity at 56 percent (Potisomporn and Vogel, 2021). However, the generated electricity comes from different sources, including renewable and non-renewable methods (see Fig. 1).
Focusing on this kind of mix, the increased use of wind generators means that the country would be relying more renewable energy sources than ever before (Tate and Bals, 2018). The possibilities remain endless since the country has the required resources and finances to pursue such projects and eventually ensure that timely results are recorded. With this move, the country will no longer have to worry about the issues surrounding the acquisition and use of Russian oil and gas (Charabi and Abdul-Wahab, 2020). The most appropriate strategy is for the UK government to liaise with all key partners and stakeholders to ensure that the projects are launched in a timely manner.
The decision to pursue wind power is plausible and in support of the triple bottom line perspective. Within the wider area of sustainability, this concept compels or guides governments and businesses to consider the possible social and environmental implications of their actions (Zhu, Zou and Zhang, 2019). This model ensures that participants in the economy do not primarily target profits when completing their businesses. The “bottom line” attribute guides these stakeholders to strike a balance for these three Ps: people, planet, and profit (Isil and Hernke, 2017). When done professionally, the UK government will realize that wind power delivers sustainability, empowers companies and households to pursue their goals, and protects the global environment for posterity (Vishwanathanet al., 2020). These descriptions, therefore, show that wind power is sustainable in accordance with the triple bottom line model.
While the proposal to introduce wind energy as the best option to deal with Russian oil and gas seems appropriate, its viability remains unviable currently. As an alternative, wind energy cannot meet all the energy demands associated with oil and gas (Valdez-Juárez and Castillo-Vergara, 2021). This knowledge explains why the government needs to fund the needed projects and ensure that their energy contributions continue to rise steadily in the next few years. For a start, the UK can identify potential sources from the Middle East as it expands its wind energy infrastructure. Since it is not currently available, additional mechanisms are needed for constructing such facilities and ensuring that they meet future energy demand. Based on these issues, a combination of offshore and onshore projects appears to be the best strategy to maximize wind energy generation in the next decade.
The current level of capital expenditure (CAPEX) required for this proposed massive project remains high. For instance, Haar (2021) indicates that country would need around 100 billion pounds annually. The CAPEX could also be increased by an annual rate of around 10 percent for the next ten years. This trajectory will ensure that the country is able to balance demand vs. supply and help reduce its dependence on oil for energy generation. However, some obstacles are predictable that might disorient this project, such as the absence of adequate financial resources, strained budgetary allocations, and protests from environmentalists. However, the government can complete additional environmental impact assessment studies, engage key partners, and seek additional sources of revenues to mitigate them (Solarin and Bello, 2021). These approaches will increase chances of launching such wind energy projects successfully.
Conclusion
The invasion of Ukraine has led to major crisis that does not appear to end any time soon. The involved parties are adamant that their needs should be met. Based on this sad reality, the UK is one of the nations in the EU affected by the problems surrounding the availability and use of oil and gas from Russia. The current situation has exposed the dangers of fossil fuels and how they still contribute to climate change. This upheaval in Eastern Europe needs to become a wakeup call for the UK government to reconsider its energy mix and consider evidence-based approaches to deliver sustainable energy sources. The studied triple bottom line model supports a new transition aimed at increasing the use of wind power since it helps protects the natural environment while meeting the energy demands of all key sectors in the country. This strategy will improve the country’s energy mix by ensuring that most of the available options are renewable and sustainable in nature. When the government applies Kurt Lewin’s model effectively, chances are high that the involved professional will offer proper leadership and address any form of opposition that could emerge.
The government will also identify the challenges and grievances the people present and address them amicably through increased awareness. The possible outcome is that the UK will benefit from a new energy mix that is sustainable and capable of helping more stakeholders protect the integrity of the natural environment. Consequently, the UK will be in a better position to get rid of Russian oil and eventually make stricter foreign policies since the Kremlin has always remains a threat to geopolitical issues and economic stability of the West. In conclusion, the involvement of all citizens would be critical to support this transition and help the country to achieve its futuresustainability and economic goals.
Recommendations
The completed analysis has exposed some of the issues and challenges arising from the current dependency on oil and gas. The UK economy has been getting some of its fossil fuels from Russia in an effort to achieve its goals. However, the emergence of the Russian-Ukraine crisis is a harsh reality that calls for additional measures. To transform the existing operational model, there is a need for the government to consider various strategies and approaches that can address the outlined challenges (Awasthi, 2018). The ultimate concern is to expedite the construction of wind generating plants and make them operational within less than two years.
The first recommendation capable of delivering timely results is for the government to consider the power of private-public partnerships (Zhu, Zou and Zhang, 2019). Such arrangements are capable of increasing the supply of resources and ensuring that the government is capable to undertake and complete the identified projects within the shortest time possible. This approach would also help reduce the existing level of resistance from different stakeholders and eventually ensure that timely results are recorded (Melander, 2018). The arrangement should also be designed in such a way that all players eventually help deliver the intended results within the stipulated period.
The second one could be the increased level of collaboration between government agencies and its experts or employees. The leaders in senior positions will be involved to guide environmentalists and sensitize them about the current energy requirements. They will also be engaged to find a common ground and ensure that desirable outcomes are eventually recorded (Pereira, MacLennan and Tiago, 2020). This approach will become a new opportunity for identifying some of the existing obstacles and barriers that some of the citizens could outline. This effort seeks to minimize the level of opposition and eventually ensure that the projects are started immediately.
The third recommendation would entail the use of improved networking to link and engage more players outside the energy sector. The government could go further to promote data sharing with the key stakeholders and ensure that they all focus on the best approaches to support the use of the wind power in the country. The continuous training of workers and consideration of emerging skills would also be necessary to ensure that all completed activities are capable of improving the country’s energy mix (Yun et al., 2020). The professionals would be ready to work round the clock, consider emerging opportunities, and focus on the best ways to deliver results. The idea of digital transformation will also be necessary to support this transition. Such an approach would be auctioned or implemented by guiding workers to embrace emerging technologies. The approach will help minimize dependency on non-renewable energy sources. Companies would introduce solar systems for lightning in an effort to improve this country’s energy mix. A proper plan led by the government can support the implementation of these recommendations. The model will present the needed resources, guidelines, and policies. The involved stakeholders will present their ideas and allow the government to solve some of the emerging grievances. The wider population will be aware of the suggestions and how they seek to transform the country’s energy mix in accordance with the triple bottom line perspective. The end result is that wind power will become a considerable source of renewable energy, thereby reducing chances of demanding Russian oil and gas.
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