Supply-side energy transition and demand-side energy transition

A supply-side energy transition consists of rapidly reducing investments in fossil energies to reduce fossil fuel production capacity. A demand-side energy transition consists of implementing regulations (concerning transport, industry, thermal insulation of buildings, etc.) or price incentives (CO 2 price) that reduce demand for fossil fuels. We believe that a demand-side transition is more effective than a supply-side transition. If demand for fossil fuels declines, supply will adjust. But if the supply of fossil fuels declines more than the demand for fossil fuels, there may be unsustainable increases in fossil fuel prices and an inability to meet demand and rationing. Basing the energy transition more on stopping financing for investment in fossil fuels than on policies to reduce demand for fossil energies can therefore be dangerous. However, this is the direction taken today by civil society and by governments, for which it is politically less dangerous to call for an end to the financing of fossil fuels than to organise a reduction in the demand for these energies.