What the energy crisis is telling us about green and dirty energy.

The world is descending into an energy crisis. Prices of oil, coal, and natural gas are spiking. Natural gas prices are the highest they have been in 13 years. Crude prices haven’t been this high since October 2014. Wholesale power in parts of Europe have increased by 48% in less than two months.

Rising energy prices run the risk of bringing the post-pandemic recovery to a halt. Consumers will face higher prices at the pump and in their utility and grocery bills. Companies will face higher production and transportation costs. Job growth could slow, stop, or reverse.

However, a debate is heating up around the causes and two sides appear to be emerging: those who want renewable energy now and those who believe that fossil fuels must remain a part of the mix for the foreseeable future.

Those who want a rapid transition to renewable energy to mitigate the damage of climate change argue that global tensions and supply issues over natural gas (between Russia and Germany, for example) and coal (between China and Australia), are disrupting markets just when the economy was kicking into gear. OPEC countries, once again, hold the cards as the west looks to them to increase supply. In other words, fossil fuels are not only bad for the planet, but they are subject to countless forces affecting the supply and price.

The other side — those who believe that the transition to renewables is happening too quickly — point to how unreliable wind and solar are. Case in point: The UK has turned a swath of the North Sea into a wind farm and has become increasingly reliant on renewables. At the time, this seemed like a brilliant idea. However, the wind stopped blowing and countries are scrambling for natural gas and coal for power and heat.

In my view, both of these factions are right … and wrong. The current crisis is the result of a perfect storm. As the worst of COVID appeared to be over, factories around the world ramped up quickly to meet an unprecedented surge in demand. According to the International Energy Agency, after falling 4% in 2020, energy demand is likely to increase 4.6% in 2021. This would push demand above pre-COVID levels. Under any circumstances, this type of stop and start was going to throw markets out of kilter.

The Russians, rich with natural gas, saw this as an opportunity for leverage with EU countries, the Ukraine, and elsewhere and began constraining supply and raising prices. According to the IEA, Russia could increase the gas it is sending to Europe by 15%. Putin denied that Russia was manipulating the gas market but no one seems to be buying that.

In a spat with Australia, China banned imports of coal from down under — its second largest supplier behind Indonesia. Now China is buying coal elsewhere to make up the loss, pressuring global markets and driving prices up.

The problem with renewables has less to do with geopolitics, and more to do with technology. Solar only generates power when the sun shines. Wind turbines only turn when it’s, well, windy. The technology to allow power to be stored when it is produced and drawn on when it’s needed hasn’t caught up. According to research conducted by MIT, the current cost of storage will have to drop by 90% before it makes sense for the world to rely 100% on renewables. Until these hurdles are overcome, traditional sources of energy will still be needed.

In my view, we need to keep investing in green technology and power generation. The planet is getting hotter and, like every other potentially life-changing technological challenge, the science will catch up. In the meantime, we need to keep exploring, mining, and drilling for fossil fuels. I, like many others, look forward to the day when this isn’t necessary. In fact, it can’t come soon enough. But we aren’t there yet.

Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.