Competition in markets has many similarities with competition in races.
There needs to be a set of rules and regulations, known and understood by everyone in the competition, and followed by those taking part. The rules need to be simple, clear and without ambiguity. They must set out the governance for how the race (or the market) will be run and for how competitors will be expected to perform and conform. The higher the level of performance, the greater the pressure on conformance. The higher the stakes, the greater the temptation to find short-cuts.
With higher levels of performance, you also increase the levels of risk. The margin for error shrinks as competitors seeking the rewards accept a higher tolerance for risk. Potential hazards can be operational, financial and reputational, but they can be mitigated and managed. Whatever the nature of the risk, or its associated controls, it cannot be avoided or ignored.
With risk there is reward, which can bring out the best and the worst in competitors. It can fuel high performance, but it can also encourage low behaviour. In order to provide confidence in the race (the market) and the results, you need to ensure full compliance with rules and regulations. Fairness in competition promotes a better race for the competitors and its audience (the consumers).
What race is the energy market running?
The energy market is in a race towards net zero. Protecting our privileges and pleasures for future generations to enjoy means finding new ways to fuel those activities. Greater electrification from wind and solar is one track to lowering carbon emissions. A more recent competitor to the race/market is hydrogen and its rainbow of sources.
Global climate change forces us to find more progressive solutions for increasing energy efficiency and lowering emissions. The transition to net zero needs leadership and innovation to ensure the welfare of our families for generations. But the race also needs to be fair, so that countries and communities can benefit both now and in the future.
In many ways it matters less which energy source wins the race towards being the dominant fuel. It matters more that the outcome is achieved within a clear and accepted governance framework; where risks are recognised and managed; and where competitors are compelled to comply. That way the race/market works better for everyone.