As countries continue their progress in transitioning to clean energy, global economic body the World Economic Forum (WEF) says it is critical over the next decade to root the transition in economic, political and social practices to ensure progress is irreversible.
The energy transition requires a full transformation of the global energy, economic and social system, beginning now, as the next decade is crucial to delivering on climate goals, it states.
The focus must encompass the speed and resilience of the transition, as the world enters into a decade of action and delivery on climate change, the WEF points out in its 'Fostering Effective Energy Transition 2021' report.
“With the energy transition moving beyond low-hanging fruit, sustained incremental progress will be more challenging owing to the evolving landscape of risks to the energy transition,” says WEF head of energy and materials Roberto Bocca.
The social, economic and geopolitical inter-linkages 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, namely to pursue a just transition by prioritising measures to support the economy, workforces and society; amplify electrification while exploring other options for decarbonising industries; and attract diversified, resilient sources of capital from the public and private sectors to fund multi-year and multi-decade investments.
The 'Energy Transition Index (ETI) 2021' benchmarks 115 countries' progress over the past decade on their energy systems across the three dimensions of the energy triangle, namely economic development and growth, environmental sustainability, and energy security and access indicators, as well as their readiness to transition to secure, sustainable, affordable and inclusive energy systems.
The results show that 92 out of 115 countries increased their aggregate score over the past ten years, which confirms 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.
Over the past decade, more than 70% of the countries in the ETI made progress on the energy access and security dimension, owing to improvements in levels of access to electricity. However, more efforts are needed to improve the quality of electricity supply in newly electrified areas, the WEF says in the report.
However, only 13 out of 115 countries have made consistent gains - defined as consistently achieving above-average improvements - in ETI scores in the past decade, which demonstrates the difficulty in sustaining progress and the inherent complexities of the energy transition challenge, such as 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.
As of 2018, 81% of the world’s energy was still supplied by fossil fuels, global greenhouse-gas emissions rose through 2019 and more than 770-million people around the world still lack access to electricity. The transformation of energy systems needs to increase its momentum to help achieve critical objectives such as the UN’s Sustainable Development Goals and the Paris Agreement.
Moreover, the carbon intensity of the energy mix has been rising in many emerging economies in Asia and sub-Saharan Africa. Identifying viable ways for the early retirement of carbon-intensive assets will be needed to accelerate the transition.
However, eight of the ten 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.
Increasing renewable energy capacity has in particular helped energy importing countries achieve simultaneous gains on environmental sustainability and energy security.
There is a need for renewed focus and resilience to meet the climate goals of the next decade, the WEF says.