The New Energy Priorities Arising From This Moment of Chaos

(SeaPRwire) –   My understanding of U.N. Secretary General António Guterres’s work on climate has been extensive. Throughout his tenure, he has consistently warned about the dangers of increasing emissions. However, during a recent fireside chat at the TIME100 Summit in New York, the most significant insight I gained from his “Future Proof” perspective was not his climate warning, but rather his apprehension regarding the erosion of international norms.

“When international law is disregarded, and nations disregard the standards they themselves have established, the outcome is the kind of chaos we are observing in numerous regions globally,” he stated.

The energy sector relies on global supply chains, international collaboration, and the rule of law. Not long ago, these elements were largely taken for granted, allowing most executives to concentrate on operational execution. However, the chaos Guterres described poses a threat to all these aspects, elevating geopolitics to an urgent concern. The conflict in Iran and the crisis in the Strait of Hormuz are merely the initial signs.

While the exact nature of the system that will emerge from this period of upheaval is unpredictable, it is reasonable to anticipate shifts in a few fundamental assumptions. After decades where efficiency was paramount, nations and corporations may become more inclined to incur additional costs for both domestically sourced resources and redundancy. Furthermore, although energy markets have always been influenced by governments, the pressure on public officials to enact policies prioritizing security over efficiency is expected to intensify.

“Every country needs to be examining its energy supply, energy security, food supply, and food security,” Jamie Dimon, the CEO of JPMorgan Chase, informed me last week, “in addition to military security.”

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The concept of redundancy is not new. Countries maintain strategic oil reserves to safeguard against disruptions. In electricity markets, power companies build their business models around having spare capacity to manage periods when the power system is under strain.

However, the current scale of discussion is unprecedented. For instance, the construction of new oil pipelines to circumvent the Strait of Hormuz, at a cost of tens of billions of dollars, has become a significant topic of conversation. Others are advocating for new mining operations within the U.S. to secure access to critical minerals whose supply chains are currently dominated by China.

Crucially, this concern is not confined to policymakers and a select group of executives whose businesses stand to benefit. In my discussions with executives across various sectors, the cost has become a secondary consideration to the imperative of securing supply, period. Boards are also appointing members with geopolitical expertise. Additionally, banks and consulting firms are increasingly expanding their geopolitical risk advisory services. A 2024 EY survey revealed that over 80% of boards were factoring political risk into their strategies, a significant increase from 40% just three years prior. The risks have continued to escalate since then.

Inevitably, this will lead to new demands on governments. In our conversation, Dimon reiterated his call for the U.S. to adopt well-structured industrial policies to bolster national protection. “National security is energy security,” he asserted.

The implications for climate change are multifaceted. Localized supply chains can substantially reduce emissions associated with global product shipping. Conversely, redundancy can lead to increased emissions due to the construction of duplicate facilities and processes. Of course, as I have previously discussed, there is also the possibility that countries and companies will turn to renewable energy as a means to entirely avoid the volatility of the current situation.

Climate advocates, including Guterres, often highlight that renewables are both more cost-effective and quicker to deploy. In an era defined by energy security concerns and a focus on redundancy, this may no longer be the most compelling argument. “The sun will not disappear, the wind will not stop blowing,” Guterres remarked. “Every country that bases its energy on [renewable energy] will have security in its energy use.”

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