1 Introduction Recent crises have left countries continually struggling to balance energy security, equity and sustainability. The crisis has The energy transition is at a critical in昀氀ection the effects of the energy crisis on consumers and also shown that, point amid a series of shocks with compounding businesses imposed a heavy 昀椀nancial burden on under pressure effects (Figure 1). governments, with estimates of fossil fuel subsidies in 1 and led by strong excess of $1 trillion in 2022. Emerging economies, policy measures, Energy supplies and infrastructure have been already dealing with price shocks, are under an faster energy heavily weaponized during the Russia-Ukraine increasing debt burden due to monetary policy system changes war, exposing the vulnerabilities of the energy responses to control in昀氀ation. This exacerbates are possible. security architecture. Countries with otherwise the challenge of attracting low-cost capital on mature energy infrastructure and sophisticated a large scale to 昀椀nance the energy transition in supply chains were forced to resort to emergency emerging economies. Just Energy Transition measures to ensure adequate energy supply. Partnerships (JETPs) have emerged as novel bilateral Following the disruption of pipeline gas supply from arrangements to support coal-dependent emerging Russia, a combination of strong policy measures, economies in accelerating the phase-out of fossil alternative fuel supply agreements, accelerated fuels while addressing social impacts. lique昀椀ed natural gas (LNG) infrastructure development, demand management and The march of sustainable energy has kept pace curtailment, regional collaboration on the use of through this period of extreme volatility. Last storage reserves, and a milder than expected winter year, for the 昀椀rst time, investments in low-carbon 2 have helped Europe avoid energy shortages. energy technologies surpassed a record $1 trillion. Bilateral 昀椀nance 昀氀ows and early-stage 昀椀nancing Simultaneously, a concentrated fuel mix, reliance continued to grow, and global climate tech venture 3 on few trade partners and underinvestment capital funding totalled $82 billion. In response in energy systems emerged as important risk to the energy crisis, landmark legislations were factors. As a result, oil and gas 昀氀ows may have put forward, including the US In昀氀ation Reduction been permanently redirected, leading to the most Act, which was passed, and the proposed EU signi昀椀cant rebalancing of the energy geopolitical Net-Zero Industry Act to ramp up clean energy, landscape since the 1970s. Gas market volatilities drive innovation and set the scene for accelerated spilled over to electricity markets, prompting decarbonization. The electric vehicle market saw considerations for electricity market reforms. record growth as unit sales surpassed 10 million in 4 Competition for scarce LNG cargoes globally led 2022 and 14% of new cars sold were electric. More to some emerging economies being priced out, companies are committing to net zero. As of June resulting in blackouts in Pakistan and Bangladesh. 2022, 702 of the world’s largest 昀椀rms had set net- 5 The recent energy crisis is the 昀椀rst with a global zero targets though credibility gaps remain, leading scope due to interconnected energy supply chains to increasing scrutiny on the validity of targets and and calls for comprehensive rethinking of energy accountability of implementation. Post-pandemic security strategy in the face of the emerging risks recovery of energy demand and the energy crisis landscape. The crisis has also shown that, under may have led to a rebound in coal, with the slowest 6 pressure and led by strong policy measures, faster rate of coal plant closures in eight years. The latest energy system changes are possible, as seen with Intergovernmental Panel on Climate Change report Europe’s diminished dependence on Russian gas. warns that emissions need to be cut by almost half 7 by 2030 to limit warming to 1.5°C. The global energy crisis also highlighted multiple dimensions of the inclusiveness of the energy In light of these developments, it is now more transition. The unprecedented surge in energy prices important than ever for countries to further severely affected affordability, with poor households accelerate their energy transition in a way that spend a larger portion of their income on energy that balances and delivers on the need for affected the most. High energy prices sparked food an equitable, sustainable and secure energy in昀氀ation, leading to a cost-of-living crisis in many system, ensuring that it is right for the present countries. Energy market volatilities also affected and future. Policies will be at the core of shaping the competitiveness of energy-intensive industries a balanced energy transition by encouraging in some regions. Increasingly, 昀椀rms are seeking to investments in clean energy, promoting shift operations to markets with cheaper and more innovation, encouraging energy ef昀椀ciency reliable energy, raising concerns over employment and ensuring that the transition bene昀椀ts all in local communities. The 昀椀scal response to mitigate segments of society. Fostering Effective Energy Transition: 2023 Edition 6