The writer is co-chair of the Glasgow Financial Alliance for Net Zero and is set to become chair of Brookfield Asset Management

Recent events have put into sharp relief the many failings of the global energy system. Energy is a weapon in a horrific, unjust war. Households in developed economies are facing crippling energy bills. Across the developing world, the grind of energy poverty is worsening. All the while, the climate crisis grows, building future costs that will dwarf current hardships.

Our energy system today is unreliable, unaffordable, inaccessible and unsustainable. We need to move rapidly to a new system that supports both climate stability and a thriving, inclusive economy. This transition will be complex and, if mishandled, disruptive. As recent IMF analysis demonstrates, getting demand and supply incentives wrong could mean the difference between a barrel of oil priced at $20 or $190 by 2030.

Current high energy prices are, in part, the product of energy policies that have been too timid. As a consequence, the burden of adjustment is falling on households, oil majors are amassing record-breaking windfall profits and progress on energy security and environmental sustainability is lagging. Turning this around requires bold actions by governments, companies and the financial sector.

Although the transition to a resilient energy system will still require some limited investment in fossil fuels to replace declining fields and diversify away from unreliable suppliers, the real action will be in clean energy. To limit warming to 1.5C, projected clean energy investment must run at four times the rate of fossil fuel investment by the end of this decade. That will require a tripling of the current pace of clean energy investment.

Energy majors could help fill this financing gap by funnelling a portion of profits into energy transition opportunities such as renewable generation, transmission and battery storage, investing in our future while phasing down their past. Thus far, however, these companies have largely directed their windfall profits to shareholders via dividends and share buybacks. For a comprehensive solution to the energy transition, we must look elsewhere.

The financial sector will play a crucial role. Given the current limited ambitions and capabilities of traditional energy companies, investors need to redeploy their windfalls to the solutions of the future: wind, solar, hydrogen, nuclear and other clean energy sources. The current spending practices of oil and gas majors are misaligned with the transition to net zero by 2050. Investors should take this misalignment into account and redirect capital to companies with credible transition plans.

The Glasgow Financial Alliance for Net Zero is creating the tools and commitment so that financial institutions can make these decisions. We are working with the UN, OECD, IMF and French president Emmanuel Macron to establish a public platform for climate transition data that will provide all stakeholders with the transparency they need to encourage progress and track outcomes. Increasingly, GFANZ members are aligning their financing activities with the net zero transition through robust emissions reduction targets, plans and metrics.

To help convert its members’ financial firepower into action, GFANZ is developing a comprehensive framework for transition planning. This includes guidance for transition plans of financial institutions and companies, decarbonisation pathways for key sectors of the economy including energy, a framework to support the transparent and responsible phasing out of high-emission assets, and the alignment of the portfolios of financial institutions with countries’ climate goals.

The windfall profits of energy companies and the much larger balance sheets of GFANZ members create the opportunity to accelerate the move to a resilient, sustainable energy system. Governments must now seize it. To convert their climate goals into meaningful progress, governments must back their Glasgow net zero commitments with credible, comprehensive and ambitious policies that support the deployment of private capital to clean energy.

In recent months, momentum has accelerated with initiatives including the UK’s Energy Security Strategy and the measures in the proposed Inflation Reduction Act in the US. The latest European energy strategy, RePowerEU, slashes clean energy project approval times to one year, sharpens incentives and aims to more than triple the installed base of clean power while quintupling the run rate of clean energy investment by 2030.

As they implement these policies, it will be critical that governments prioritise a just transition. The energy transition won’t be sustained if we sacrifice our economy and, with it, people’s livelihoods. Workers in unsustainable firms need retraining to move into the jobs of the future. And governments should direct tax windfalls from the energy sector to vulnerable households through near-term direct financial assistance for the bleak and costly winter ahead, and medium-term measures to improve energy efficiency and lower bills.

The war and windfall profits expose the many deficiencies of our current energy system. But they also offer a way forward for those bold enough to seize it.