{"text":[[{"start":6.65,"text":"The writer is chief investment officer of equities at Fidelity International"}],[{"start":11.95,"text":"One immediate consequence of the current Middle East conflict is already clear: the question of energy supply — and who controls it — has returned to the forefront of government thinking."}],[{"start":22.85,"text":"The oil crisis of the 1970s was not just an inflation earthquake. It forced governments everywhere to re-evaluate the meaning of national security and resilience. The response in terms of industrial policy and investment shaped the geopolitical landscape and energy system we see today. Similar dynamics may be playing out here and investors need to pay attention, shaping portfolios accordingly."}],[{"start":47.3,"text":"After the 1970s shock, we quickly saw major economies establishing strategic reserves of energy as well as wide-ranging conservation initiatives, but more profound, in retrospect, were the supply-side stimuli kicked off by anxious governments. Denmark’s global leadership in wind, France’s low-carbon nuclear plants, Japan’s strength in energy-efficient manufacturing were all accelerated by a shared objective: reducing dependence on imported fuel."}],[{"start":75.19999999999999,"text":"The gains Japanese automakers had made on fuel efficiency also provoked a sea change in how the American consumer chose cars. For Toyota then, read China’s electric vehicle maker BYD now. Transitions are never easy, however. Toyota’s 1970s vehicles were fuelled at the same pumps as Chevvies; EV charging infrastructure is still being built. The jump in the price of oil will accelerate the needed investment."}],[{"start":null,"text":"
"}],[{"start":101.64999999999999,"text":"While the costs of the transition to a low-carbon model are still substantial, changes in the economics of energy supply are shifting in favour of renewable solutions. Every country, every region that continues to import energy — particularly Europe — must now recalibrate decisions that will underpin their consumer and industrial bases for future decades."}],[{"start":123.44999999999999,"text":"The past month has provided a telling lesson. Countries that backed low-carbon generation and stayed the course over many decades are reaping the rewards. Low-carbon sources — wind, solar, nuclear, hydro — account for the clear majority of the energy for electricity in France, Spain and the Nordics. Right now, they are escaping the worst of the energy price spike. Others have much more to do."}],[{"start":146.2,"text":"For example, the percentage of fossil fuels in the overall energy mix for electricity use in the Nordic countries and France was under 5 per cent in 2024. Trading indicates an average 2027 power price for those countries of €46.3 and €56.9 per megawatt hour respectively. In contrast, Italy and Germany — which had a 50 per cent and 39 per cent contribution from fossil fuels to its energy mix for electricity use in 2024 — have a 2027 average energy cost of €107/MWh and €97/MWh."}],[{"start":183.29999999999998,"text":"At its core, the resilience problem is one of control. With imported fossil fuels, neither the physical flow nor the price is set domestically. Supply depends on vulnerable transit routes, seaborne or otherwise, while pricing is determined in global markets. That leaves even well-diversified economies exposed to shocks they neither generate nor govern. Domestic generation does not eliminate risk, but it shifts it into areas that can be managed: infrastructure, regulation and capital investment."}],[{"start":213.6,"text":"Europe had a stark reminder of this reality with the invasion of Ukraine in 2022. High power costs continue to erode industrial competitiveness, particularly in energy-intensive sectors. The strategic objective is increasingly clear: reduce reliance on imported fossil fuels to a residual share and regain control over the energy system."}],[{"start":237.1,"text":"China recognised the importance of supply chain security early and the decisions it made years ago on renewables are what has partially insulated it from this oil shock. This power base also underpins a low-cost manufacturing sector that is the envy of the world. The greatest defence for Europe’s industrial base for the long term must be through underpinning its competitiveness. A decisive factor will be the cost and reliability of energy. "}],[{"start":263.7,"text":"More broadly, the lesson is that energy shocks have long-tail impacts. The policy choices made in response to the crises of the 1970s shaped the next half century. The same may prove true again."}],[{"start":277,"text":"And the next constraint on growth may not be oil. As AI gains continue to astound, compute capacity can be seen not just as an opportunity but also as a vulnerability — a question not just of what can be created, but also what can be sustained. Ongoing progress depends on power, water and the industrial supply chains that sustain the technology industry. The binding constraints may not be the technologies themselves but the environments that support them. The countries that recognise that early, and invest accordingly, will shape the next era."}],[{"start":310.4,"text":"This article has been amended to correct an editing error to clarify that the contribution of fossil fuels in the energy mix in countries was for electricity usage"}],[{"start":328.65,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1776763172_1408.mp3"}