Executive Summary:
- Fossil fuels currently represent 80% of global energy supplies.
- These fuels are deeply embedded in all aspects of the current energy complex.
- This energy complex is composed of different facets such as transport, manufacturing, heating, electricity, agriculture.
- There are no immediately available substitutes for any individual facet of this energy complex, much less all concurrently.
- Due to ESG pressures on top of a classic investment cycle (where low prices lead to low investment), fossil fuel supply looks to be significantly underinvested – and has been so since 2015.
- The world is returning to peak demand, but investments are a fraction of peaks.
- Signs of this underinvestment are popping up across the system, not least in the form of higher energy prices (and this was the case even before the Ukraine war.)
- This predicament for the global economy – of dependence on fossil fuels but underinvestment in them – inevitably leads to higher prices for longer periods of time.
- With this backdrop, sector-leading energy majors remain exceptional investments.
For more details please refer to our recent refer to our recent Fossil Fuels at a Time of Transition paper.
