Time to rethink global energy policies

The war in Ukraine has upended global energy markets, with surging fuel and power prices being felt around the globe. Cash-strapped governments are rushing out subsidies to reduce the effects of higher prices on poorer citizens and hard-hit businesses. Energy prices were already high prior to Russia's invasion, driven by surging demand as economies bounced back from the pandemic. The latest crisis is simply piling on more economic pain and uncertainty about future energy supplies. Energy analysts expect fossil fuel prices, especially for oil and liquefied natural gas (LNG), to remain high for several years as nations cut energy ties with Russia. The crisis serves as a reminder that energy security is the lifeblood of nations and the global economy.

With the future looking increasingly uncertain, this is a good time for governments to rethink their energy policies. It is also an opportunity to speed up the transition away from dirtier energy that is polluting the planet and to ramp up investment in a clean-energy world. There are good reasons for doing so. The first is geopolitical risk. Global trade in fossil fuels is prone to disruptions and shocks - from wars, to sanctions, to extreme weather events and terrorist attacks - at many key supply points. Surging prices hit the poorest the hardest and Europe's current scramble for alternative gas supplies is going to hurt Asia, which buys about 70 per cent of global LNG production. Less developed and emerging nations in Asia will struggle to compete for LNG cargoes and could be squeezed out of the market. They will be forced to find alternatives or go without them.