The Urgency of Energy Transition
The world stands at a critical juncture in the fight against climate change. The aftermath of the COVID-19 pandemic and the ripple effects of the Ukraine crisis have further compounded the challenges facing the energy transition. The stakes could not be higher – every fraction of a degree in global temperature change can trigger significant and far-reaching consequences for natural systems, human societies and economies.
Limiting global warming to 1.5°C requires cutting carbon dioxide (CO₂) emissions by around 37 gigatonnes (Gt) from 2022 levels and achieving net-zero emissions in the energy sector by 2050. Despite some progress, significant gaps remain between the current deployment of energy transition technologies and the levels needed to achieve the goal of the Paris Agreement. A 1.5°C compatible pathway requires a wholescale transformation of the way societies consume and produce energy.
Current pledges and plans fall well short of the 1.5°C pathway and will result in an emissions gap of 16 Gt in 2050. Nationally Determined Contributions (NDCs), long-term low greenhouse gas emission development strategies (LT-LEDS) and net-zero targets, if fully implemented, could reduce CO₂ emissions by 6% by 2030 and 56% by 2050, compared to 2022 levels. However, most climate pledges are yet to be translated into detailed national strategies and plans – implemented through policies and regulations – or supported with sufficient funding.
Accelerating the Transition: Renewable Energy, Efficiency, and Electrification
To stay on a 1.5°C pathway, the energy transition requires a rapid and systemic transformation. This includes:
-
Renewable Power Generation: Annual deployment of some 1,000 GW of renewable power is needed, compared to 300 GW added globally in 2022. Both the volume and share of renewables need to grow substantially, which is both technically feasible and economically viable.
-
Energy Efficiency: Improvements in energy efficiency, alongside the deployment of renewables, are crucial to reduce energy demand and achieve climate targets. Total final energy consumption would need to decrease by 6% between 2020 and 2050 under the 1.5°C Scenario.
-
Electrification of End-Use Sectors: Electricity would become the main energy carrier, accounting for over 50% of total final energy consumption by 2050 in the 1.5°C Scenario. Renewable energy deployment, improvements in energy efficiency and the electrification of end-use sectors would contribute to this shift.
-
Clean Hydrogen and Bioenergy: In addition to renewable electricity, clean hydrogen and sustainable bioenergy would play important roles, meeting 14% and 16% of total final energy consumption by 2050, respectively, in the 1.5°C Scenario.
Overcoming Barriers to Accelerate the Transition
While the business case for renewables is strong, deeply entrenched barriers stemming from the systems and structures created for the fossil-fuel era continue to hamper progress. Addressing these barriers requires a strategic shift that goes beyond the decarbonization of supply and focuses on designing an energy system that supports a resilient and inclusive global economy.
1. Physical Infrastructure
Transforming the energy system towards one dominated by renewable energy requires the modernization and expansion of infrastructure. This includes:
- Transmission and Distribution: Transmission and distribution systems will need to accommodate the highly localized, decentralized nature of many renewable sources, along with the various trade routes involved for electricity, hydrogen, and other energy carriers.
- Interconnectivity: Robust national transmission networks and cross-border power exchange facilities can share flexibility across regions, maximizing the complementarity between production and consumption patterns.
- Storage Solutions: Storage solutions will need to be widespread and designed with geo-economic impacts in mind to provide flexibility and resilience to the energy system.
2. Policy and Regulatory Enablers
The underlying policy and regulatory systems remain shaped around fossil fuels. While it is inevitable that fossil fuels will remain in the energy mix for some time, their share must dramatically decrease as we approach mid-century. Policy frameworks and markets should focus on accelerating the transition and provide the essential underpinnings for a resilient and inclusive system.
3. Skills and Capacities
A well-skilled workforce is a lynchpin of a successful energy transition. Filling these jobs will require concerted action in education and skills building, and governments have a critical role in coordinating efforts to align the offerings of the education sector with projected industry needs.
Enhancing International Cooperation
International cooperation on energy will also need to be enhanced and redesigned. The centrality of energy to the global development and climate agenda is undisputed, and international cooperation plays a decisive role in determining the outcomes of the energy transition.
Key aspects include:
- Roles and Responsibilities: The expanding variety of actors engaged in the energy transition requires an assessment of roles to leverage respective strengths and efficiently allocate limited public resources.
- Financing the Transition: Achieving the energy transition will require collective efforts to channel funds to the Global South, where the bulk of this funding should be in the form of concessional loans and grant funding for the most vulnerable countries.
- Aligning Cooperation Modalities: Multilateral financing institutions should prioritize building the infrastructure that would underpin the new energy system, coherently and simultaneously helping to deliver development and climate priorities.
Conclusion: A Decisive Decade for the Energy Transition
Our collective promise was to secure a climate-safe existence for current and future generations. We simply cannot continue with incremental changes; there is no time for a new energy system to evolve gradually over centuries, as was the case for the fossil fuel-based system.
The upcoming 28th Conference of the Parties to the UNFCCC (COP28) and the Global Stocktake must not only confirm our deviation from a 1.5°C pathway but also provide a strategic blueprint to steer us back on track. The World Energy Transitions Outlook can offer critical input to shaping our collective action following this important climate action milestone.
The energy transition must also become a strategic tool to foster a more equitable and inclusive world. By prioritizing investments in physical infrastructure, aligning policy and regulation, and building a skilled workforce, we can unlock the full potential of renewable energy and drive sustainable development globally.
