After the energy shock

Key takeaways:

• The current energy shock makes energy transition an energy security and economic competitiveness priority.
• Whilst the short-term response to the energy shock may be more fossil fuels, the medium to longer term response is likely to be more energy transition. We’ve seen similar in the past, in the 1970s energy shocks, and it’s already happening in numerous countries.
• The infrastructure to enable an acceleration in the energy transition has evolved significantly, even compared to 2022. The maturity, capacity and economics of renewable energy, energy efficiency and electrification technologies is now highly advanced.

Points of differentiation:

• Looks beyond the current crisis to the potential, structural responses.
• Splits the response between the more obvious short-term boost to fossil fuels and the potentially more profound medium/longer term energy transition.
• Analyses and equates responses to historical shocks, the extent of energy transition activity already happening and the infrastructure and capability for further energy transition to accelerate.
• It also looks at the potential factors which could challenge the thesis of accelerating energy transition.

What does our research mean for investors?

It highlights the way in which the current energy shock is reframing energy transition from an environmental topic to one of energy security and economic competitiveness. We analyse the historical, economic and technological reasons supporting the thesis of accelerating energy transition and the extent to which it is already happening. The potential impact for investors is split between risk to look out for and the potential beneficiaries from an accelerating transition.