Finding The Right Balance Between Sustainability, Security And Affordability

Energy price shocks are testing the resolve of many consumers and businesses around the world. The current global energy crisis arose from geopolitical conflicts, supply chain disruption, underinvestment in broader energy sources, resurgence in demand following the COVID-19 pandemic, legacy and disconnected infrastructure, and slower-than-required investments in clean energy sources. While it took a decade or more for this perfect storm to develop, the path forward should be addressed quickly. By 2050, the global population is projected to reach approximately 10 billion, while global material consumption is expected to double. In order to enable inclusive economic growth while remaining within the targets of the Paris Agreement, energy intensity will likely need to be dramatically reduced and the energy transition may need to proceed at a much faster rate than it has to date.

Tackling the current crisis and accelerating the energy transition may require concerted action not only from businesses and societies but also from individuals across the three dimensions of what has become known as the “energy trilemma”—or the overlapping aims of addressing sustainability and climate change, bolstering energy security and resilience, and creating a just and affordable system. To help balance these goals, swift, yet fundamental, changes are needed in energy production, delivery, and consumption.

Addressing sustainability and climate change

Energy consumption and production account for more than two-thirds of annual greenhouse gas emissions. There are a range of mitigation pathways, many of which currently employ some combination of energy efficiency, end-use electrification, grid modernization, and low-emissions power generation. Beyond electricity, there are a spectrum of technologies, such as carbon capture utilization and storage, green hydrogen, ammonia, and biofuels that will likely require further investment and new financing solutions.

Scaling decarbonization pathways has been especially challenging for hard-to-abate sectors. But many companies and investors have successfully piloted new technologies. For instance, the chemical industry, which is built on hydrocarbons…