The conflict between Russia and Ukraine provides valuable insights for worldwide energy markets.

• The need for energy security highlights the importance of diversifying energy supplies, as seen in the conflict between Russia and Ukraine and the EU's reliance on Russian natural gas.
• The Intergovernmental Panel on Climate Change's report, released on Monday, states that coal and fossil fuels are "harmful to human health."
• The intersection of these occurrences highlights several important aspects of the current global energy market.

The war between Ukraine and Russia has had severe consequences for global energy markets, with the Ukrainian people bearing the brunt of the conflict's impact.

The dependence of the European Union on Russian natural gas has compelled the United States and Europe to preserve loopholes in their strict economic sanctions against Russia.

Jen Psaki, the White House spokesperson, stated on Wednesday that the Biden administration was considering imposing energy sanctions on Russia. However, she acknowledged that this decision is challenging due to the current high oil prices in both the U.S. and Europe.

The Russian-Ukrainian war and climate change are two significant challenges to global energy markets, and the U.N.'s Intergovernmental Panel on Climate Change has warned that global warming poses an urgent threat to human welfare.

"Humanity is facing imminent danger with nearly half of the population living in the danger zone, and ecosystems on the brink of collapse due to unchecked carbon pollution," U.N. Secretary-General António Guterres stated on Monday.

The confluence of climate change and the Russian-Ukraine war is creating a new perspective on global energy markets.

Energy independence is not the same as energy security

Its national security policy is founded on the national energy policy of the nation.

Gazprom, the Russian energy giant majority-owned by the state, was found to be "staggeringly irresponsible" to outsource gas storage in Europe, according to Steve Cicala from the National Bureau of Economic Research, who specializes in the economics of regulation, particularly in environmental and energy policy.

Cicala stated that the EU should move at the fastest pace to reduce their dependence on Russian gas.

That does not mean energy independence is the benchmark.

David Victor, a professor of public policy at UC San Diego, stated that "while the objective is security, it differs from achieving independence."

A well-functioning global market is a better solution to energy independence than relying on national or local sources of energy, as flexibility is limited if one of those sources is interrupted or runs out.

“Security comes from diversity and diversity alone,” he said.

The problem for Europe is its overreliance on Russian natural gas pipelines, as it meets only 10% of its demand domestically and imports the rest, making it the world's largest importer of natural gas, according to the Directorate-General for Energy for the EU. Of the imported natural gas, 41% comes from Russia, 24% from Norway, and 11% from Algeria.

The European Union aims to boost its imports of liquid natural gas via tanker ships from the US and Qatar, according to Victor.

Victor stated that Europe is increasing significant imports from various nations, which enhances security by providing an alternative option.

Scaling up renewables takes time and political will

The EU aims to become carbon neutral by 2050 and reduce emissions by at least 55% by 2030 by decreasing its reliance on coal.

In 2020, Eurostat reports that 32% of the EU's energy came from oil and petroleum products, while 25% came from natural gas, 11% from solid fossil fuels, 13% from nuclear energy, and 18% from renewables.

According to Aaron Praktiknjo, head of the energy systems economics at the E.ON Energy Research Center at RWTH Aachen University in Germany, the focus on building out renewables is already significant.

Praktiknjo told CNBC that he believes the EU should not be blamed for not increasing renewables at a faster rate. He pointed to Germany as an example, where the share of renewables in electricity consumption has increased by a factor of 10 in 20 years, from 5% to 50%. However, he noted that electricity prices for final consumers have doubled due to subsidies for renewables.

German leaders are considering speeding up their shift to renewable energy, with the goal of generating all electricity from renewable sources by 2035, according to a draft government policy obtained by Reuters on Monday.

The transition of the EU's energy grid will necessitate physical renovations and international cooperation.

According to Sir David King, a former U.K. climate change official and chair of the Climate Crisis Advisory Group, it will require governmental intervention, which many current political regimes are reluctant to accept.

King stated that some governments, including the current British government, dislike regulatory behavior. Their goal is to deregulate everything and let the private sector operate freely. However, King emphasized that this transition cannot occur without regulatory behavior.

The reluctance to regulate the energy industry may be due to lobbying from incumbent energy providers, King stated.

The fossil fuel industry in the United States has the largest lobby system globally, according to King, who spoke to CNBC. This powerful system has also impacted other countries, causing the incumbent to fear losing their business.

Politicians often neglect energy policy because their constituents have more pressing issues, according to Benjamin K. Sovacool, a professor of energy policy at the University of Sussex Business School.

According to Sovacool, while energy expenses may seem substantial in total, they represent a small fraction of monthly household spending. Therefore, they are not as critical as other expenses such as mortgages, university fees, or car payments, which can amount to thousands of pounds or euros annually, but only hundreds in terms of energy costs.

According to Sovacool, issues such as immigration, Covid-19 response, military spending, health, and the war in Ukraine are more important to voters than climate policy and energy issues.

Even if investing in low-carbon alternates pays off in the long-term and benefits society, no politician wants to increase energy prices in the short-term by doing so, according to Sovacool.

Nuclear could be part of the solution

While nuclear energy does not produce greenhouse gases, there are concerns about the possibility of accidents and the lack of a permanent repository for nuclear waste, which is radioactive.

The Russia-Ukraine war will serve as a Rorschach test for nuclear energy, as Ukraine has 15 nuclear reactors that the International Atomic Energy Agency (IAEA) has been monitoring during the conflict.

Victor stated that those concerned about nuclear will find more reasons to worry about it due to the agitations surrounding the Ukrainian nuclear complex. On the other hand, individuals who view nuclear as a key component of the strategy for managing emissions and reducing dependence on foreign suppliers will see the logic in maintaining and constructing new nuclear plants in Europe.

Victor believes that shifting sentiment about nuclear energy is difficult, including during the current moment, and sees it as a crucial component of decarbonization.

Prior to March 2011, Germany obtained approximately 25% of its electricity from nuclear energy, as stated by the World Nuclear Association. However, following the Fukushima accident in Japan, the German government enacted legislation to phase out nuclear power.

Germany should restart its significant nuclear generation portfolio due to high gas prices and a lack of sufficient energy, according to Cicala. This would help buffer the shock in the short-run, he said.

"The short-sightedness of the decisions to retire nukes was not adequately addressed, as there was insufficient consideration given to how the shortfall would be made up. However, this would have been true even without the added risk of a supply interruption from Russia," he stated.

The Czech Republic, France, Poland, and the U.K. are also considering new nuclear reactors, according to John Kotek at the Nuclear Energy Institute. With Russia's falling favor in diplomacy, American nuclear companies have gained an opportunity to serve European customers.

Russia has been a strong competitor in nuclear exports due to its aggressive financing packages, but its unreliable behavior is disqualifying it from many opportunities in the free world, according to Kotek.