The global energy shock has remined us of the importance of safe and secure suppliers, and of the economic havoc spurred by shortages and volatility.
"There will be no energy security without decarbonisation," says Nick Stansbury, Head of Climate Solutions at LGIM. "The solution involves an even speedier energy transition, alongside an increase in investment in all forms of clean power - especially in the short term."
An analysis of the underlying causes underpins LGIM's view that that investors should not abandon or deprioritize climate goals in the interests of energy security and affordability.
"What brought us to this situation? There are a number of plausible suspects, not least geopolitical events. But at its heart, there is a crisis of underinvestment in which the world is simply not deploying capital into renewables on the scale required," says Stansbury.
"We are unconvinced by the argument that we are caught between financing decarbonisation and financing energy security, says Stansbury. "We believe the lowest-cost, long-term solution is to do both."
Not only is scaling renewables likely to be cheaper than many alternatives, it reduces dependence on third-party supplies of oil and coal, and over longer periods a decarbonised energy system in Europe may result in lower volatility as the impact of commodity cycles is dampened.
For more on decarbonisation and energy security, plus other trends in energy, read LGIM's latest exclusive Spotlight guide by completing your details in the form below
