Green energy systems are essential in managing the risks associated with energy supply as the world heads for a global oil crunch, according to a new report by Lloyd’s and UK think tank Chatham House.

The report, titled Sustainable Energy Security: Strategic Risks and Opportunities for Business, warns of expensive fuel and ripple effect on “a wide range of commodities” as a result of the global market heading toward an oil supply crunch and global price spike.

It points to the current Gulf of Mexico oil spill as one example of fossil fuel reliance pushing the search for reserves into more difficult and risky territory as production from more accessible reserves decline.

The report points to green energy as the way forward, with rising costs and political pressure expected to force the adoption of clean and renewable technology.

Investment in new forms of technology is forecast to reach up to $US500 billion ($584 billion) a year by 2050, presenting opportunities for business that are currently stymied by a lack of global agreement on carbon reduction.

“The environmental and economic cost of our reliance on fossil fuels is too high,” Lloyd’s CEO Richard Ward said. “We need a long-term plan to reduce consumption and diversify our energy sources.”

However, new methods are expected to present their own unique risk attributes, such as the use of rare materials and the vulnerability of electrical and IT systems to cyber attacks.