The energy system is often characterised as driven by a shifting balance between three pillars: Security of supply, economics of supply and environmental impact of supply — the ‘energy trilemma’.
The move away from Russian oil and gas — with Russia currently providing 40% of Europe’s natural gas — is the largest structural shift in global energy markets for decades. This seismic change coincides with a key phase in the global transition away from fossil fuels more broadly, towards a clean energy system able to support a low-carbon economy.
For investors, this means that pricing signals in the market indicate we have moved from a decade of energy abundance and relatively stable prices to a period of high and volatile prices, in fossil fuels in particular. The wider and more important question is how recent events will affect the overall energy transition.
