Lessons for the energy transition from the 2021 energy crisis

Excerpt from weforum.org/agenda

As we head into the final quarter of 2021, a global energy crisis is sending shockwaves through economies and industry sectors around the world. In addition to the immediate shortages and price hikes, this crisis could also foreshadow the fallout from a badly handled energy transition.

Energy is vital to almost every aspect of modern life. From keeping the wheels of industry turning to powering the internet, heating and lighting people’s homes, to keeping transport moving, so much of what we rely on is energy-dependent. Energy shocks are therefore likely to ripple through an economy and be felt by almost everyone. When the price of gas and electricity goes up, so too will the prices of many other things.

Depleted supplies

Speaking to Bloomberg TV, Jeff Currie, global head of commodities research at Goldman Sachs, explained how demand for gas has risen as many coal-fired power stations have been decommissioned around the world. That has had the twin effect of pushing up prices and depleting global gas stocks.

“The supply chains are so severely depleted, the system cannot accommodate any type of disruption,” he said.

Currie expects energy prices to remain high and to go even higher as winter approaches in the northern hemisphere. In Currie’s view, rising energy prices could help to accelerate the energy transition, pointing out that higher prices make all forms of renewable energy more commercially attractive.