This past year has taught us sage lessons about transitioning to the green economy. The need to decarbonise all forms of human activity is undisputed. Arguably, the energy sector is further along the journey than other, yet the complex web of supply, cost, competitiveness and energy security has faltered this year, giving rise to crises of different types and magnitudes across the world.

The sharp surge in energy prices has fueled inflation across the world and shaken consumers, who have faced increased electricity bills across Europe, shortages of fuel at pumps in the UK, restrictions on energy usage in China, not to mention the impact on fertiliser availability and price.

You would be forgiven for thinking that we had entered an era of fundamental energy shortages given the year gone by. The reality is that a combination of factors have collided in the context of transitioning energy systems.

Energy demand rebounded sharply as the world emerged from COVID-19 lockdowns, supply bottlenecks challenged fuel distribution, a combination of emissions-related policy and health and safety checks in mines served to lower coal production in China and European gas storage, which was at low levels coming out of last winter, was not sufficiently replenished during the summer months.

Added to that, local market policies and conditions, such as labour availability in the UK, have served to exacerbate in some cases and alleviate in other cases the extent of the impact.

The road ahead is highly uncertain

When world leaders came together in Scotland in early November to negotiate implementation of the Paris Climate Agreement, it seemed ironic that Joe Biden was calling on OPEC to increase oil production while others were fighting to protect their coal-fired manufacturing sectors that supply so much of Europe and indeed the wider world's appetite for consumable products.

Indeed, it surprised many to hear Minister Eamonn Ryan confirm, in the context of tight electricity supplies for the next five years, that Ireland will need fossil fuels into the future. We are already importing coal this winter, which in itself makes it difficult to condemn others for doing the same.

The reality is that with billions to be invested in transitioning to renewable energy in Europe alone and the patchwork of energy supply in a green economy very different to what we are currently used to, it is little wonder that governments are seeking to ensure they can keep the lights on for core economic activities and provide assurances to consumers.

In gas alone, the International Energy Agency has said that reaching a net zero emissions objective by 2050 implies the extensive deployment of low-carbon gases in order to decarbonise the current gas system.

This, it says, needs to be supported by policy that takes into account the security of supply challenges that are likely to emerge in this transition. Future gas systems, it says, will be more complex and decentralised, posing challenges for quality standards and flexibility, which it cautions needs to be factored into systems design.

Striking the right balance

The ultimate goal is to transition energy production to a system that has ideally no - but in reality a much reduced - negative impact on the environment and climate. Possibly the single greatest challenge of the decades to come will be executing this objective while at the same time ensuring security of supply, managing costs for consumers and businesses and ensuring competitiveness of industries and economies across the world. The challenge will be made all the more difficult in the future by geopolitical influences, possibly more so than today, as the fragility of energy systems seems likely to be heightened.