Past safe choices in energy are not so safe choices anymore

We have entered an era where the relatively safe choices we made as investors and traders in the past are no longer such safe choices. For example, until recently, we considered fossil fuels a stable investment and trading option, as their price fluctuations followed economic cycles, while geopolitical conditions were largely predictable because the common economic cooperation linked energy-producing and consuming countries.

Thus, the predictability of fossil fuel prices was largely achievable. That has changed. Western values are being challenged by powerful countries such as Russia and China, causing East-West partnerships to falter, causing a high degree of uncertainty in the energy and business future. The reliable production of fossil fuels and products from the countries of the East is no longer a given.

A year ago, few predicted Russia's invasion of Ukraine, and even fewer foresaw the deep energy crisis that followed. The war conflict on the Ukrainian plain between east and West is accelerating the energy instability already underway, undermining the long-standing assumption that fossil fuels are inherently more reliable than weather-dependent sources of clean energy.

Price volatility severely impacts the world economy, businesses and households, making it difficult for future budgets. Energy independence from low-cost energy sources such as wind and solar power is becoming an increasingly attractive option for reducing price volatility. What will be required, is the creation of reliable energy resources, such as clean energy, which will have a balanced distribution of sources. Relying on fossil fuel energy sources that come from an unbalanced distribution of resources is no longer an option. Those who fail to act to produce energy from balanced distributed energy sources will find themselves in a difficult position when they are called upon to deal with an unforeseen event that will affect energy sources.

In the future, what will be needed is to have infrastructures for the resilience of energy sources that will ensure the continuous supply of energy. To achieve this goal, new technologies are required that combine, as solar and wind energy, which are intermittent forms of energy, will need to be supplemented not by traditional fossil fuels but by new clean energy technologies such as geothermal, fusion, and hydrogen, adding the range of the solutions necessary to achieve true decarbonisation. Additionally, technologies such as blockchain will offer options for load shifting and backup power solutions helping companies and communities have carbon-free energy all time, every day.

The incentives to boost investment in energy transition technologies aimed at sustainability are already here, ranging from investment credits for zero-carbon energy resources to support retrofitting factories to become more energy efficient.

Thus, while until now, the transition to clean energy seemed expensive, support measures, which governments give, have made it more and more attractive. This will severely impact fossil fuel energy prices and their price volatility, which is expected to be reduced.

The age of fossil fuels will pass as time goes on. Those who will thrive in the future are those who will benefit from the solutions and incentives available today targeting environmental sustainability, which includes getting rid of fossil fuels. Those who delay, will be caught off guard by the unpredictable energy future.