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Three lessons on the energy transition in an age of crisis
Numerous crises have revealed how the global energy system is impacted by geopolitical shocks and fragmentation.These shocks do not signal a failure of the energy transition, but rather highlight the need to confront its fundamental constraints and manage them effectively.The challenge now is to design energy systems that are resilient to shocks and aligned with regional realities.In early 2022, Jason Bordoff and Meghan O’Sullivan cautioned in a Foreign Affairs article titled ‘Green Upheaval’ that “talk of a smooth transition to clean energy is fanciful,” adding that “the process will be messy at best”.Four years and three crises later – COVID-19, Russia’s invasion of Ukraine and the current war in the Middle East – and that warning reads less like foresight and more like a diagnosis. Each crisis has stress-tested the global energy system and revealed a central truth: the energy transition is not unfolding in a vacuum of climate ambition, but in a world shaped by geopolitical shocks, economic fragmentation and competing national priorities.Beyond immediate price pressures, recent crises have exposed a deeper structural challenge: the risk that the energy transition exacerbates existing inequalities, both within and between countries. Higher energy costs disproportionately affect lower-income households, while fiscal responses to shield consumers vary widely across regions. At the global level, developing economies – already facing constrained fiscal space – are being asked to accelerate their transition while expanding energy access and supporting economic growth.These shocks do not signal a failure of the energy transition, but rather highlight the need to confront its fundamental constraints and manage them more effectively.Energy security and affordability key to fighting climate changeThe first and defining lesson of recent years is that climate ambition cannot be sustained without addressing energy security and affordability.COVID-19 exposed the fragility of investment cycles and supply-demand balances. In 2022, the war in Ukraine triggered a full-scale energy security crisis, particularly in Europe, driving unprecedented natural gas price spikes. The war in the Middle East continues to reinforce the geopolitical premium embedded in global energy markets.The World Economic Forum’s Fostering Effective Energy Transition 2024 report reflected this shift: countries that maintained balanced progress across the energy trilemma – security, affordability and ...
ECB's Radev Says Energy Crisis May Spread to Wider Economy
The energy crisis sparked by the US war in Iran could spread to the rest of the economy if the conflict continues, European Central Bank Governing Council member Dimitar Radev said.
Energy crisis raises concerns for financial stability, ECB's Panetta ...
Tensions in the energy markets due to the U.S.-Israeli war on Iran are a cause of concern for their potential repercussions on financial stability, European Central Bank Governing Council ...
Faced with new energy shock, Europe asks if reviving nuclear is the ...
As war drives up gas and fuel prices, Europeans turn again to the issue of energy independence.
