Transition as a means to energy security

Energy security is a global priority given the sharp rise in energy prices that has been exacerbated by Russian’s Ukraine invasion and recent OPEC+ policies. Strengthening energy security is a key focus of governments’ energy transition policies and should serve as a further accelerator of the net zero trend.

Europe is grappling with a near-term shortage of energy sources and supplies following Russia’s hostilities. In this environment, security-linked energy initiatives are aimed at identifying reliable gas supplies from “friendly” countries to reduce the dependence on Russian gas. Coined “friend-shoring”, this is being achieved in the near term by building new pipelines and/or increasing LNG imports.

But long-term, the entire energy system is expected to undergo a profound and deep transition which is likely to create a variety of investment opportunities across the infrastructure asset class, many of which will be inextricably linked to energy security.

The key themes on which we are focusing include the trend towards reliably sourced electricity to enable the electrification of industries and transport, green hydrogen to replace gas, and the resurgence of onshoring in developed economies, which is likely to require carbon capture technologies to deal with the near-term emissions implications.