Energy prices in Australia have climbed higher this year and wreaked havoc on household budgets.

Energy ministers are meeting on Friday this week to discuss possible solutions such as price caps to combat soaring prices. 

In this video, Dr Philipp Hofflin talks about the concerns around the management of the energy transition and the lack of investment.

Dr. Philipp Hofflin: Clearly, we have very high energy prices at the moment, and particularly, in the energy prices, fortunately, that we export because, as you know, we don't really export oil, but we do export coal and gas and the prices there are very high. We do worry about disruptions in energy but not so much, to be honest, about the war in the Ukraine. We're much more concerned about the longer-term issues of what we see as the mismanagement of the energy transition in the Western world, or I should probably say, the non-Chinese world.

You'd be aware that for many decades now, the globe's demand/supply of energy has been balanced through the price mechanism. Prices go up, supply comes on. But that link is broken, and we now have the risk of an economic coordination problem. Prices are very high, but the investment is not coming. And to put some numbers on this, at the usual levels of investment, 75% to 80% of the investment is required just to maintain production. Oil and gas resources run off at 5% to 6%. It's the natural depletion rate. We're only investing now at 50%, 60% of normal. So, we are probably investing at rates that mean fossil fuels are going to decline. And while that is in line with our ambitions for the energy transition, we are not doing enough on the other side. So, the gap is not being filled on the other side with renewables or nuclear.

So, we run the risk that we effectively run off the old system before the new one is ready. And that means that we run the risk of continued high energy prices, spikes in energy prices and perhaps even shortages. Really, what we are lacking at the moment is any sort of coordination. The only country that is getting this right is China. They are continuing to invest in their fossil fuels. They have, for example, an amazing 1.25 billion tons of coal mining capacity under construction. To put that in sort of layman's terms, that's like completing an Adani-sized mine every two to three days for a year. But at the same time, they are building very large-scale solar facilities and they have the ultra-high voltage networks to actually transmit that energy to the coasts, something the West doesn't have. There were some commitments made in Egypt by Western countries about wind. China is doing the same thing at 15 times the rate. So, in the West, we're very worried about the fact that this is an uncoordinated, unplanned transition and that there are going to be problems along the way.