Putting the energy transition into context for today’s markets
Posted 25/05/2022 13:36
The transition to renewable energy is not without its challenges, but today’s markets are increasingly shifting in response to it. Understanding the massive swings in energy supply and demand taking place will enable oil and gas traders to confidently plan for the years ahead, especially as capital allocations shift in response to market signals.
Traditional supply sources will still be needed well into the future, but renewables will take big bites out of demand in places, causing energy markets to pull in many directions at once. Policies seeking to guide the speed and direction of the transition will only amplify the challenge.
Although the transition to net-zero emissions is a multi-decade effort, governmental policies and investment decisions by market actors are already having an impact on energy markets. The effects of these deep trends on tradeable markets will only be further amplified in the future.
This is where Energy Aspects comes in with the launch of Trading the Transition, their new service that analyses how the outlook for the decarbonisation drive over the next decade is affecting today’s energy landscape.
Trading the Transition is aimed at helping participants in today’s energy market understand the balance between expanding green energy demand and the realities of the current energy landscape. Rather than focus on climate targets and long-term solutions, they seek to identify the energy transition’s short-term challenges and analyse how they are shaping markets right now.
The energy transition will not be accomplished without a substantial effort or considerable investment, but top-down and grassroots pressure will induce energy supply systems to shift toward renewable energy sources sooner than may occur without market intervention.
The interaction of these forces creates price signals to invest in lower-carbon fuel sources, and Energy Aspects analyses how effective these price signals are at driving the needed level of investment and at deterring demand for high-carbon fuels, helping clients make informed trading and investment decisions amid the rapid shifts taking place.