Energy Shocks Are Back. This Time, the Response Can Be Different.

Compared with those who prioritize supply first, leaders who reduce and shape demand can move faster, unlock greater flexibility, avoid unnecessary infrastructure buildout, and preserve limited investment resources.

Jon Creyts — Electrification and efficiency: Capturing compounding benefits

Chief Executive Officer, RMI

The current crisis will require a prolonged recovery that demands actions to deliver both near-term protection and long-term energy security. What this means for the energy transition is unprecedented: more technologies and options exist today than ever before to diversify energy systems, improve efficiency, and reduce exposure to future shocks.

Electrification is central to this shift, enabling countries to move away from reliance on volatile global fuel markets and toward electricity systems powered by diverse and domestic resources that can get cleaner over time. Cost-effective technologies such as solar and wind, electric vehicles, and batteries exist today that did not exist at scale during the 1970s oil crisis.

Efficiency must play a bigger role, too. In a world where supply chains are vulnerable and capital is constrained, the strategic question isn’t how much energy we’ll need. Instead, it’s: How should we design the whole system to deliver the desired services and human comforts we value? Amory Lovins, RMI’s cofounder, famously framed this distinction as prioritizing “cold beer and hot showers” over the fuels that go into our energy system.

In a time when we cannot get electrons, turbines, or terminals to market fast enough to meet forecasted growth, our innovation opportunity is in flexing demand. Reducing demand by building systems that waste less is the most immediate and scalable solution available. It lowers costs, reduces vulnerability to fuel and supply chain shocks, and generates more value from the infrastructure we’ve already built.

Compared with those who prioritize supply first, leaders who reduce and shape demand can move faster, unlock greater flexibility, avoid unnecessary infrastructure buildout, and preserve limited investment resources. Cost-effective solutions including peak demand reduction, virtual power plants, and new approaches to energy storage offer  proven ways to grow with less risk and less capital, and those advantages compound over time, leading both to energy security and increased profits.

As the source for much of the world’s raw materials to make fertilizer, the Gulf energy crisis has triggered a global fertilizer shortfall. Without enough, the world faces a potentially dire food crisis.

Oleksiy Tatarenko — Green molecules are vital to boost security of food, industry

Senior Principal, Industries, RMI

As the source for much of the world’s raw materials to make fertilizer, the Gulf energy crisis has triggered a global fertilizer shortfall. Without enough, the world faces a potentially dire food crisis.

Clean alternatives exist. And this energy crisis sharpens the case to pursue a dual strategy to scale up the production of green molecules that can stand in for oil and gas, such as hydrogen or ammonia synthesized via renewable energy. To do so, there’s an urgent need to rapidly scale domestic production where it’s feasible. And in parallel, it’s vital to build trusted import partnerships with allies and friends to ensure multiple sources of supply to reduce the risk of further disruptions.

While clean power will be the main lever pulled by many countries to diversify away from fossil fuels to power their grids and vehicles, clean molecules such as hydrogen and ammonia are another part of the solution for the fertilizer, chemicals, shipping, and aviation sectors.

Once most exposed countries have managed the current emergency situation, we expect to see a renewed push into domestically produced and imported clean molecules and feedstocks, such as hydrogen, ammonia, methanol, and sustainable aviation fuel. For example, countries across Asia — which currently face the sharpest disruptions to fertilizer and ammonia supplies from the Middle East — are likely to accelerate efforts to produce green ammonia locally, a key ingredient for fertilizer.

However, despite some policy signals, green molecule markets remain immature because supply and demand do not yet meet in a bankable way. The missing links are mechanisms that can de-risk new supply value chains by aligning producers, offtakers, infrastructure, and policymakers across borders. This will set the stage for a sustainable market. Trade corridors can help build these market links too, by creating demand visibility, aligning standards, and structuring risk across the value chain.

Adapted from a post first published by New Energy Industrial Strategy (NEIS) Center, an RMI affiliate. Read this and other expert takes at the NEIS Center on Substack.

Governments have managed energy security as a matter of supply, yet the deeper vulnerability is structural, rooted in dependence on imported fossil fuels and exposure to volatile global prices.

Wini Rizkiningayu — For Southeast Asia, temporary fixes reveal further energy insecurities

Principal, Southeast Asia, RMI

As the US-Iran war disrupts energy markets worldwide, Southeast Asia confronts a familiar yet unresolved weakness. Governments have managed energy security as a matter of supply, yet the deeper vulnerability is structural, rooted in dependence on imported fossil fuels and exposure to volatile global prices.

In response, regional governments have leaned heavily on fiscal buffers — such as subsidies, price caps, and tax measures — to shield consumers. While necessary in the short term, these interventions increasingly strain national budgets and divert resources from long-term development priorities.

As a commentary in The Jakarta Post recently noted, fossil fuels are not just a supply risk but a systemic economic burden, locking countries like Indonesia into cycles of fiscal pressure and volatility. Meanwhile, Thailand’s reliance on oil funds and hybrid subsidy mechanisms further exposes its dependence on external fuel markets.

The Philippines presents a more acute version of vulnerability. With 98% of crude oil imported from the Middle East and most liquefied petroleum gas (LPG) — widely used for cooking burners — tied to refineries that depend on Gulf supply, the country operates with limited insulation from global shocks. In a liberalized market without fuel subsidies or price caps, the government has declared an energy emergency. Short-term measures, including suspending transport fare hikes and issuing one-off cash assistance, have provided limited relief, while costs continue to fall disproportionately on drivers, small businesses, and farmers.

Across the region, short-term measures reveal weak and uneven social protection systems, highlighting a deeper issue that current energy systems are not socially resilient. Meanwhile, the crisis is already driving geopolitical trade-offs in fuel sourcing, with Indonesia diversifying crude imports and the Philippines exploring supply from politically sensitive partners such as Russia and potentially China. These shifts illustrate how fossil dependence can constrain strategic autonomy and erode policy independence.

Southeast Asia’s significant renewable energy potential across solar, geothermal, and wind offers a pathway to reduce import dependence and improve price stability, positioning renewables and electrification as central to long-term security. Continued reliance on fossil fuels has the risk deepening fiscal stress, price volatility, and policy trade-offs across the region, while accelerating the clean energy transition provides a more credible path to resilience, affordability, and reduced systemic risk.

The good news is that there has never been a better time — with more affordable clean energy technologies available than ever before — to pursue greater resilience, diversification, efficiency, and a stronger energy system.

Sarah Ladislaw — Leaders face a familiar tradeoff between guns, butter, and energy security

Founding Director, The New Energy Industrial Strategy (NEIS) Center

However the current crisis resolves, the recovery will be challenging and heightens the need for measures that provide both immediate protection and strengthen long‑term resilience and security.

In the near term, OECD governments have released emergency oil stockpiles to calm markets. The United States relaxed sanctions on Russian and Iranian oil shipments that were already in transit. Countries across Asia, Europe, and elsewhere introduced price relief measures and temporarily relaxed limits on coal‑fired power generation to ensure adequate and affordable power.

But as disruptions persist, these initial steps will be insufficient to prevent higher prices for oil, natural gas, fertilizer, and other strategic commodities, exacerbating global inflation, raising debt levels, and slowing economic growth — impacts that will fall hardest on vulnerable countries.

And over the medium to long term, a prolonged disruption or altered security environment could reshape fundamental growth trends, global commodity and trade flows, investment decisions, and technology choices.

The good news is that there has never been a better time — with more affordable clean energy technologies available than ever before — to pursue greater resilience, diversification, efficiency, and a stronger energy system. The challenge is that government budgets are stretched, facing complex, competing demands on funds to secure energy, food, and other facets of economic resilience.

To balance these priorities, where possible, governments should prioritize investments that advance multiple strategic objectives, including many directly aligned with energy industrial strategy, while enhancing resilience:

• Accelerate grid reforms and investment to enable diversification, modernization, and electrification of key sectors, pursued aggressively alongside defense, manufacturing, and technology priorities.
• Re‑evaluate the adequacy of stockpiles of strategic resources as historical transit routes may become less reliable in a changing security environment.
• Strengthen industrial heat electrification and efficiency where cost‑effective solutions exist, ensuring new and expanded manufacturing capacity does not reinforce existing vulnerabilities.

Adapted from a post first published by New Energy Industrial Strategy (NEIS) Center, an RMI affiliate. Read this and other expert takes at the NEIS Center on Substack.

At a time when longer-term demand for oil and gas is uncertain, scaling near-term investment in the efficient use of existing oil and gas assets through methane and flaring mitigation is a unique opportunity to improve energy security that makes eminent business sense and brings meaningful climate co-benefits.

TJ Conway — Doubling down on methane mitigation: Good for energy security, business, and the climate

Principal, Climate Data, RMI

As conflict in the Middle East and constraints on energy flows continue, elevated oil and gas prices may endure for months, if not years. In this environment, the benefits of slashing methane leakage and stopping routine flaring are even greater. Every molecule of methane leaked across the oil and gas supply chain or burned in a flare is precious energy wasted and revenue lost.

Taking steps to capture these losses would deliver significant amounts of energy back to markets. The IEA estimates that 130 billion cubic meters (bcm) of gas per year is vented and leaked through the global oil and gas system. Another 150 bcm is wasted to flaring according to the World Bank. The total loss: roughly 280 bcm. Keeping a portion of this wasted gas in the pipe instead of disposing of it into the air has energy, economic, and environmental benefits.

To put these figures in the current market context, in 2024 (the latest year for which comprehensive data is publicly available), Qatar exported 107 bcm of liquified natural gas (LNG), according to the Statistical Review of World Energy. The Middle East region as a whole exported 132 bcm. Add in the world’s top LNG exporter — the United States, at 115 bcm — and we’re getting close to the volumes that robust methane and flaring mitigation could deliver to the global gas market. All in, the gas lost to leakage and flaring is equal to about 45% of total worldwide LNG trade.

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At a time when longer-term demand for oil and gas is uncertain, scaling near-term investment in the efficient use of existing oil and gas assets through methane and flaring mitigation is a unique opportunity to improve energy security that makes eminent business sense and brings meaningful climate co-benefits.

There has been notable progress on tackling methane so far this decisive decade. Companies comprising nearly half of global oil and gas production are participating in a combination of the Oil & Gas Decarbonization Charter and the Oil & Gas Methane Partnership 2.0.

It’s time to double down.