This paper is an enquiry into the role of finance in energy transitions. The paper provides evidence that finance and financial innovation were important aspects in every energy transition. We look at three energy transitions; the transition to the steam engine, then to that of oil via oil exploration and refining, and finally of electricity and harnessing water for electricity. It is interesting to note that at the point of inflexion of these energy transitions financial innovations were at their heart. It can also be noted that though scientific discoveries are important and without them no transition was possible; but scientific discoveries were always accompanied by innovations in finance to make the energy transition possible. The paper finds two types of financial innovations, named in the paper as systems dependent and systems independent. The paper concludes by enquiring about the transition to sustainable energy and suggests that financial innovations like financial gradients and real options may be what the latest transition needs.
