Global shocks are affecting energy transition progress, says new WEF report

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As countries shift their focus to energy security at the expense of equity, a much speedier and more inclusive energy transition is still required to deliver a sustainable, secure and equitable energy future.

After a decade of progress, the global energy transition has plateaued amid the global energy crisis and geopolitical volatilities, according to a new World Economic Forum report, Fostering Effective Energy Transition 2023. The report suggests that while there has been broad progress on clean, sustainable energy, there are emerging challenges to the equity of the transition – just, affordable access to energy and sustained economic development – due to countries shifting their focus to energy security.

The 13th edition of the report, published in collaboration with Accenture, draws on insights from the Energy Transition Index (ETI). This year, the ETI used an updated framework reflecting emerging shifts in the global energy landscape to benchmark 120 countries in two areas: the performance of their energy systems in the dimensions of equity, energy security and environmental sustainability and the readiness of the enabling environment for energy transition. This edition also evaluated countries’ “transition momentum” for the first time to highlight the urgency of consistent progress on timely and effective transition.

Enabled by increasing volumes of clean energy investments, improving regulatory frameworks, technological innovations and urgency to address the climate crisis, some long-term trends of global energy transition are positive. Over the past decade, 95% of countries have improved their total ETI score, with improvements more pronounced for countries that consume a large amount of energy, including China, India, Republic of Korea and Indonesia.

However, the report reveals that ETI scores have plateaued in the past three years. This speed of transition is not sufficient to meet the Paris Agreement targets in an inclusive and secure way. The geopolitical and macroeconomic volatilities that prompted the recent global energy crisis shifted countries’ focus to maintaining secure and stable energy supply at the expense of universal affordability and challenge progress observed in the past decade.

Indeed, ETI scores declined for approximately 50% of the countries in the past year, which disproportionately impacted vulnerable consumers, small businesses and developing economies. Moreover, the growth rate of energy access has slowed and, at the current pace, the UN’s sustainable development goal of affordable, reliable and sustainable energy access for all by 2030 will likely be missed.

Roberto Bocca, head of energy, materials and infrastructure at the World Economic Forum, said: “The recent turbulence in energy markets has exposed how interconnected energy prices are with macroeconomic and social stability. This can, and has, put developing countries at risk of losing their momentum gained before the energy crisis on access to affordable, sustainable energy. It further demonstrates the importance of balancing improvements in energy security, sustainability and equity – at the same time – to enable an effective energy transition.”

When it comes to progress on energy transition, the gap between advanced economies and emerging and developing countries in Asia, Central and Eastern Europe and Sub-Saharan Africa has gradually narrowed over the past decade.

As advanced economies and large emerging economies such as China and India push the boundaries of energy transition, propelled by ambitious industrial policy packages, progress in clean electrification, technology-intensive solutions for the decarbonisation of heavy industries and advanced nuclear, there is a risk of that gap widening again. Multilateral collaboration is more important than ever to ensure an equitable, inclusive energy transition across the world, in which emerging economies are active participants rather than late entrants.

“Over the past decade, significant strides have been made but not at the pace required to achieve net zero emissions by 2050,” said Stephanie Jamison, senior managing director and global resources industry practice lead at Accenture. “The focus must shift to helping more populous, developing nations make faster progress, which, while committed to decarbonisation, lack the financial and technological capability to fully develop their renewable energy resources. Through greater collaboration and support we can enable a more equitable and sustainable future,” she said.

Muqsit Ashraf, senior managing director and global strategy lead at Accenture, added: “The window of opportunity for reaching net zero targets is closing and countries must move urgently to cleaner energy systems. Leveraging technology – both physical and digital, including data and AI – will be essential. By pushing the boundaries of disruptive technologies, like generative AI, countries and companies can realise what was previously thought impossible and simultaneously bolster not just sustainability but also better enable energy security and affordability.”

Click here to download the report, Fostering Effective Energy Transition 2023.