There are five questions that need to be answered by the year 2023

Energy reshoring: tackling the energy crisis in developed and developing countries through an underwater natural gas pipeline between France, Spain and Portugal, and the BarMar project

Social inequality is made worse by the energy crisis. It has been found that vulnerable households and low- and middle-income countries have been hardest hit by energy cost hikes. The repercussions are not over. The debt burden of developing countries has risen to a 50-year high after the COVID-19 Pandemic and it is possible that the energy crisis will lead to a fiscal or debt crisis. Vulnerable economies could see their industries contract. Spiralling state support for ailing sectors empties public pockets and dwindles foreign exchange reserves, with the risk of increasing risk ratings for financial borrowing.

Meanwhile, Russia is shifting its lost European exports east to Asia, mainly China and India (see ‘Oil and gas reshuffle’). It could end up playing a junior partner in some of the relationships. Yet it could still retain or increase its influence in the OPEC+ fossil-fuel alliance, especially if Saudi Arabia continues to alienate the United States, its usual ally.

In 2023, researchers need to consider whether such steps are enough to compensate for lost Russian imports and avoid global supply shortages. They need to assess strategies for juggling supply and demand in a tight market and for Chinese manufacturers to ramp up after the COVID-19 shut down. Energy economists and political scientists must model incentives, trade-offs and cost implications, to inform how regulatory and policy tools must be redesigned.

Green hydrogen, obtained from water with ionising, is one of the energy solutions that is getting a boost. The Canada–Germany Hydrogen Alliance is aligning policies to develop hydrogen supply chains between the two countries. The EU wants to focus more on green hydrogen and power-to-X technologies which can be used to make synthetic gas, liquid fuels and chemicals that are carbon neutral.

The technological and economic viability of new energy projects must be investigated. Some have been rushed or changed. The BarMar project is a joint venture between France, Spain and Portugal that will pipe natural gas and green hydrogen through an underwater network between Barcelona and Marseilles over the next 5 years. The technical and economic viability of such infrastructure remains to be established, however.

But the jury is out on the feasibility and value of such ‘reshoring’ — returning the production and manufacturing of goods back to a country. China has invested a lot of money in becoming the dominant processing hub for solar power. Rather than duplicating that, Europe and the US should focus on developing the next generation of technologies, like thin-film, non-Silicon solar panels.

The countries with large reserves of key metals and minerals need attention. They might not necessarily experience a ‘gold rush’: as the Middle East has seen for oil, resource wealth can foster conflict. Venezuela and Nigeria have experienced a decrease in their domestic economy due to exports in foreign currency. Researchers need to assess the economic and social impacts of such ‘green extractivism’ in low- and middle-income nations.

Ultimately, the nature of the decarbonization transition is a political choice. Will the world tackle the transition as a global commons challenge? Does the world need efforts from development banks, financial institutions, and governments from the G7 to the G20? Is this race about accepting winners and losers and consequences, including worse prospects for countries not to attract clean capital? Evidence is needed to aid decision makers.

High costs and limited supplies of energy will reorganize industries, including processes and locations. The effects of structural changes are already being felt and decarbonization will take time, but will be brought forward by years.

Researchers need to inform new business models to help heavy industry to adjust swiftly while remaining competitive. These models will need to be rapidly refreshed as conditions and practices change. If refinery switch to low-carbon liquid fuels, they will survive in the long run. How can costs come down, and what sort of public support might help to bring viable clean products to market quickly?

Little is known about future supply chains for green technologies. Production and transportation costs for green hydrogen need to be worked out. Ammonia is a promising way to transport such fuel over long distances, but the commercial prospects of this remain in question.

This year, governments made huge financial interventions in energy markets, well beyond crisis management. Since last September, European governments have earmarked more than €700 billion (US$743 billion) in energy subsidies to ease the pain for families and businesses facing record prices (see ‘Energy cost hikes’, lower panel). Energy companies also received support; some were nationalized, including in Germany and France. The EU Energy Platform, which will pool purchases of natural gas (and later hydrogen), amounts to a cartel in the making. Researchers need to ask whether these events are temporary exceptions or lasting reorientations. What’s at stake is the idea of open global markets driving the effective allocation of scarce resources, rather than top-down state planning.

The coming year will show us trends in globalization. Some economists predict that reshoring will slow the global energy transition as markets fragment. Researchers also need to watch what happens to the global division of labour that drove the development of clean technologies and slashed the cost of solar panels in the first place — a blend of innovation in the United States, Chinese investments in manufacturing and subsidies in Europe. This circle might be broken if countries act in isolation.

Researchers need to evaluate the implications of national policies in the fields of lending and development. They should tell us what extent to which rising energy poverty, energy price shocks and energy-induced inflation are threatening political stability. Rich nations can also be affected, as protests in the United Kingdom and Czech Republic attest.

The ramifications here are potentially severe. Low- and middle-income nations are uneasy with Western responses to the energy crisis; rich countries that are turning to coal to replace Russian imports while calling on poorer nations to do their utmost to decarbonize seem hypocritical.

The challenge of the energy crisis is also an opportunity. As the clock ticks over into 2023, researchers must deliver answers to protect the green-energy transition.

The promises of the $8.5 billion are yet to materialize. There is an ongoing discussion about the terms of the agreement between South Africa and industrialized countries. A transition plan was laid out last year at the global climate summit in Egypt, that included solar and wind farms, battery development, and building electric vehicles, which could create much-needed jobs.

Right. When that happened, President Cyril Ramaphosa unveiled a new plan to solve the immediate energy problem. The main focus was to fix the existing plants, and while it included diversifying energy sources, it did not include renewables. And almost all of them are coal-fired.

The main obstacle is the energy crisis. South Africans are impatient and want a quick solution to keep the lights on. There’s also political opposition. The most powerful opponent is the energy minister, Mantashe, who is largely seen as one of Ramaphosa’s lieutenants.

And then, there is corruption. In a recent interview, the former head of Eskom, de Ruyter, who stepped down in December, said he had expressed his concerns about attempts to water down the governance around the $8.5 billion from the transition deal to a senior government official. The response, he said, was that “in order to pursue the greater good you have to enable some people to eat a little bit.”