What are the top causes of the current energy crisis and their impact on business?

More than nine in ten energy leaders (94 percent) believe that the current energy crisis is the most severe their market has ever experienced. Unlike previous crises, such as the oil shocks of the 1970s and 1990s, the current crisis is truly global and multidimensional, impacting all parts of society.

This crisis is underscored by a drive towards net zero that is reliant on the energy sector following a rapid decarbonisation path and an emerging appreciation of the enormity of the infrastructure build required to avoid the worst of climate change impacts.

The top causes of the current energy crisis include:

1. Increased energy use associated with the strong economic rebound from the COVID-19 pandemic
2. Geopolitical tensions
3. Varying weather patterns reducing renewable energy output
4. Supply chain issues
5. Lack of natural gas facilities
6. Lack of largescale renewable energy battery storage

Energy leaders identify the economic rebound from the COVID-19 pandemic as the leading cause of the current energy crisis. The pandemic led to a sharp reduction in energy demand as the global economy stalled. As a result, when the economy returned to growth, the industry struggled to cope with the subsequent upswing in demand.

Leaders also identify the significant role that geopolitical tensions have played in destabilising the energy system. The Russian invasion of Ukraine, which sent energy prices soaring across the globe, is undoubtedly one of the largest contributors.

Increasing economic tensions between the US and China, as well as other regional and market-level tensions, have restricted the supply of materials essential for the energy transition such as semiconductors and rare earth minerals. Countries that depend on foreign energy imports have been unable to guarantee reliable supply, resulting in disruption and driving energy prices up further.

There is no single cause that can be blamed for the current crisis. It is the confluence of a multitude of factors that has led to the volatility being experienced by the sector, requiring a unique set of solutions to overcome it.