As world leaders attend a virtual summit called by President Joe Biden the World Economic Forum has warned that greater resilience will be needed when the world moves beyond the low hanging fruit in the drive for energy transition.
The organisation has published the latest edition of its Fostering Effective Energy Transition 2021 which said as countries continue their progress in transitioning to clean energy, it is critical to root the transition in economic, political and social practices to ensure progress is irreversible.
The tenth edition of the report, published in collaboration with Accenture, draws on insights from the Energy Transition Index (ETI) 2021. The index benchmarks 115 countries on the current performance of their energy systems across the three dimensions of the energy triangle: economic development and growth, environmental sustainability, and energy security and access indicators – and their readiness to transition to secure, sustainable, affordable, and inclusive energy systems.
“As we enter into the decade of action and delivery on climate change, the focus must also encompass speed and resilience of the transition. With the energy transition moving beyond the low hanging fruit, sustained incremental progress will be more challenging due to the evolving landscape of risks to the energy transition,” said Roberto Bocca, Head of Energy and Materials at the World Economic Forum.
The results for 2021 show that 92 out of 115 countries tracked on the ETI increased their aggregate score over the past 10 years, which affirms the positive direction and steady momentum of the global energy transition.
Strong improvements were made on the Environmental Sustainability and Energy Access and Security dimensions. Eight out of the 10 largest economies have pledged net-zero goals by mid-century.
The annual global investment in the energy transition surpassed $500 billion for the first time in 2020, despite the pandemic. The number of people without access to electricity has declined to less than 800 million, compared to 1.2 billion people 10 years ago (2010).
“Increasing renewable energy capacity has in particular helped energy importing countries achieve simultaneous gains on environmental sustainability and energy security,” added report. “However, the results also show that only 10% of the countries were able to make steady and consistent gains in their aggregate ETI score over the past decade. This highlights the inherent complexity of the energy transition challenge, as evidenced by the lack of measurable progress in the economic development and growth dimension – primarily through fiscal implications, labour market dislocations, and affordability challenges resulting from the energy transition. Moreover, the carbon intensity of the energy mix has been rising in many emerging economies in Asia and sub-Saharan Africa.”
“A resilient and just energy transition that delivers sustainable, timely results will require systemwide transformation, including reimagining how we live and work, power our economies and produce and consume materials,” said Muqsit Ashraf, a senior managing director who leads Accenture’s energy practice. “This in turn will require strong collaboration between policy makers, business leaders, energy consumers, and innovators. The journey to achieving such a balanced transition has been slow and daunting, but it is picking up momentum and offering countries and companies many opportunities for long-term growth and prosperity.”
The report warned the social, economic, and geopolitical interlinkages of the energy transition have exposed vulnerability to systemic risks and disruptions, which may threaten progress on the energy transition.
The report makes three recommendations to enhance the resilience of the energy transition process.
First is to pursue a just transition by prioritising measures to support the economy, workforces and society. Second is to amplify electrification while exploring other options for decarbonizing industries. Finally attract diversified, resilient sources of capital from the public and private sectors to fund multi-year and multi-decade investments.
Stephanie Jamison, a senior managing director who leads Accenture’s utilities practice, said resilience is a very important concept for the journey to clean energy. “The role of electricity in the energy system will increase significantly by 2050, which is a big transformation,” she said. “While it is great to see renewable energy sources stronger coming out of COVID, there is still a lot more work to do to further progress the shift to net-zero -carbon energy and ensure buy-in from a broad set of stakeholders.”