The Global Energy Crisis: Reassessing Priorities for a Sustainable Transition

The need for energy security was a concern that had largely faded in the last few years. However, a range of factors such as an unforeseen energy shock, the subsequent economic challenges, skyrocketing inflation, and geopolitical conflicts, have brought it back to the fore, pressuring governments to reevaluate their approaches. 

This re-evaluation recognises the fundamental requirement of anchoring the energy transition in energy security – that is, the uninterrupted availability of energy sources at an affordable price – to avert severe economic disruptions and the political repercussions that may follow.  

As OPEC’s Secretary General Haitham Al Ghais justifiably stated on Monday, ‘climate action should not come at the cost of global energy security.’  

What we are seeing now is that the trilemma of energy security, affordability and sustainability is perhaps more closely interlinked than we initially thought, yet governments across the world still have not made a conscious decision in any particular direction.  

Currently, approximately 770 million people worldwide lack access to electricity, with those in developing countries struggling the most. Without energy, economic development, quality of life and public health suffer and the support for climate action and the energy transition, which is essential, weakens.  

The global commodity shocks triggered by the war in Ukraine along with the subsequent interest rate hikes and currency devaluations, have only served to further deepen the challenges that lower-income nations face. 

For developing countries, an exclusive focus on emission reduction needs to be weighed against other urgent priorities such as health, poverty and economic growth. Many of these nations see an expanded use of hydrocarbons as fundamental to improving living standards. For example, while India is making a big commitment to renewables, it is also building a $60 billion natural gas distribution system with the aim of reducing indoor pollution and promoting job creation. 

Similarly, in 2022, the West’s condemnation of the construction of the East African Crude Oil Pipeline (EACOP) due to climate concerns was received with an unsurprising strong resentment in Uganda, where the pipeline is seen as vital for economic development.  

The deputy speaker of the parliament denounced the European resolution as ‘the highest level of neocolonialism and imperialism against the sovereignty of Uganda and Tanzania,’ with the energy minister stating that ‘Africa has been green, but people are cutting down trees because they are poor.’ 

These differing reactions underscore the disparity in perspectives, emphasising the need for a nuanced approach to addressing climate challenges and the urgency of the energy crisis.  

This may involve sourcing additional supplies and in the near-term ramping up operations at diesel or coal facilities as well as building new LNG import terminals whilst we make our way towards an orderly and equitable energy transition in which supply and demand are aligned worldwide.