Second IEF-GARP Global Energy Risk Forum: Energy Security and Transitions in the New Risk Environment

The IEF and the Global Association of Risk Professionals (GARP) convened the Second IEF-GARP Global Energy Risk Forum on 7 June 2023 in Paris, France.

How will physical and financial energy sector risk managers navigate transitions in a decade marked by unprecedented levels of energy market volatility and geopolitical upheaval?

The Forum invited leading policy makers and senior energy and climate risk managers to consider responses that strengthen energy and climate security and reach sustainable development and emission reduction goals by 2030 and global net-zero emissions mid-century.

International collaboration to absorb successive macroeconomic and geopolitical shocks has advanced global consensus on climate solutions and placed energy security back on top of government and corporate agendas. A steady return of energy demand and sustained weakening of oil and gas investment incentives allowed energy and commodity prices to soar. This deepens social divides, impacts economic competitiveness, and rearranges supply chains between major economies.

Meanwhile both financial and physical markets continue to tighten. Rate increases in response to rising inflation expose new financial market vulnerabilities. The reduction in credit availability this may cause is likely to increase the cost of capital for transitions and entrench recession fears. Policy and market responses to Russia’s invasion of Ukraine amplify risk to energy security and inclusive transitions. The return of industrial policy in developed market economies to accelerate change signals how global energy market governance is entering a new era.

This presents producers and consumers with new challenges for which a range of policy and risk management solutions to energy security and sustainability questions are being re-evaluated and updated. ESG-related data is incomplete and lacks standardization. To safeguard an inclusive global economic recovery and allow energy transitions to succeed, sessions addressed:

1. Protecting Energy Security and Managing the Transition
2. Transformative Trends in Energy Supply and Demand
3. Socially Responsible Business Practices and ESG
4. Evolving Physical-Financial Energy Market Interactions

Invited participants deepened dialogue on the issues they explored under these key themes at the inaugural session that IEF and GARP convened in Madrid last year. The IEF-GARP Global Energy Risk Forum was governed by the Chatham House Rule. Key findings and insights will inform the global dialogue on energy security, sustainable development goals, and climate change and strengthen energy market governance in the new risk environment.

Key Questions for Discussion

1. How does the return of national industrial policy affect global energy market security?
2. How will governments balance national policy choices to stimulate investment in greater energy sector resilience with international partnerships on energy security and transition?
3. Can market volatility and recession fears be tempered in an age of disruption and rate increases; how will rebalancing affect just transitions and inclusive recovery?
4. How will ESG criteria, disclosure requirements and risk management evolve in the wake of the recent banking crisis?
5. How do import bans, price caps, and single buyer platforms affect energy security and accelerate orderly and just transitions?

Highlights Videos

Key Links

• GARP website