A few years ago, in an era of abundant energy supplies, the world’s focus was on curbing fossil-fuel use to achieve net-zero carbon emissions. Today, priorities have shifted amid supply threats and price increases since Russia’s invasion of Ukraine. The scramble to secure affordable and reliable energy could imperil climate action. How do nations and their leaders manage the gap between urgent energy needs and longer-term green goals?
In this issue of Finance & Development, energy policy leaders look at where the transition to greener energy sources stands amid geopolitical tensions.
It’s a fallacy that the world must choose between energy security and climate action, writes International Energy Agency chief Fatih Birol. He warns against using the current crisis as an excuse to deepen dependence on fossil fuels. In fact, he says, the situation strengthens the case for more investment in clean energy—including energy efficiency, renewables, electrification, and a range of clean fuels—to reduce dependence on imported oil and gas.
Energy authority and author Daniel Yergin warns that the energy transition needs careful planning and will lose public support if it comes at the price of economic disruption, especially in developing countries grappling with other competing priorities like health, poverty, and economic growth. “Advocacy has too often taken precedence over analysis,” he writes.
But Europe’s supply challenge is now. The IMF’s Andrea Pescatori and Martin Stuermer explain the structural differences between oil and gas markets, while putting the energy crisis into a broader perspective. European think tank Bruegel’s Jeromin Zettelmeyer and coauthors urge European Union countries to strike a “grand bargain” to reduce energy demand and boost supply while keeping internal energy markets open and compensating vulnerable consumers.
For emerging and developing economies, the clean energy transition offers an opportunity to supercharge growth, says Harvard’s Ricardo Hausmann. Investing in green technologies creates value and jobs, enabling these nations to do more to decarbonize, he argues.
Long-term security still depends on a mix of clean technologies, from solar and wind power to nuclear, green hydrogen electric vehicles, and carbon capture. As Birol argues, massive investment in clean energy is the best guarantee of energy security. Indeed, climate security and energy security must go hand-in-hand.
Elsewhere in the issue, Columbia University’s Jason Bordoff suggests that America’s new climate law presents an opportunity for the US to engage with partners to create special trading rules that support clean energy. We interview Poland’s former energy minister Piotr Naimski on the country’s pursuit of energy independence, and we look at the push towards renewables—from Chile’s hydrogen bet to Kenya’s geothermal industry and Indonesia’s solar future.