A five-step beginner's guide to the energy transition

The International Energy Agency (IEA) expects greenhouse gas (GHG) emissions in 2020 to decline by 8%, to their lowest level since 2010. Normally this would be reason for celebration, as the world requires an annual 6% decline in GHG emissions to meet the objectives of the Paris Climate Accords. However, instead of being caused by structural changes, the reduction is being caused by a devastating health crisis and a resulting economic crisis. To prevent a surge in GHG emissions, as happened during previous economic downturns, it is imperative that the momentum around the energy transition is not lost.

Like the COVID-19 response, a successful energy transition requires broad support from society to implement the measures necessary to bend the curve. This starts with creating a general understanding of the challenges involved, potential solutions and measures, and the science behind those measures. For that matter, we recently launched a briefing note, called Energy Transition 101, which goes ‘back to basics’ on the what, why, when, where, who and how of the energy transition.

Five important messages stand out.

1. The energy transition is about more than decarbonization

More than 800 million people – predominantly in sub-Saharan Africa – are still living without access to electricity, and hundreds of millions more only have access to very limited or unreliable electricity. Also, economic prosperity is deeply dependent on energy access and consumption. Although the current energy transition is mainly driven by environmental sustainability concerns, it will only succeed if it simultaneously provides energy security and access, and facilitates economic growth and development. In other words, a successful energy transition needs to balance the energy triangle (see below).

2. There is not much time to complete the energy transition

The experience of previous energy transitions shows that these transformations don’t happen overnight but are a process over decades. However, for the current energy transition the question is how much time there is to complete it. An interesting concept called the ‘carbon budget’ clarifies the urgency of the situation. In short, the IPCC estimates that, in order to stay within 1.5˚C of global warming, the world can ‘spend’ a maximum budget of 2,600-2,900 GtCO2 of anthropogenic emissions, of which 2,200 GtCO2 has already been used to-date. With current emissions of approximately 42 GtCO2 a year, the remaining budget will be depleted in 10-17 years if no transition is made.

3. The energy transition is not just switching coal to renewables and petrol cars to EVs

Energy-related emissions count for approximately 73% of global GHG emissions, the majority of which are CO2 emissions. When analyzing these CO2 emissions, the focus is typically on power generation and personal vehicles. And rightfully so, as power generation is responsible for 38%, and light road transportation is responsible for 13% of total energy CO2 emissions. However, this does not tell the full story. A successful energy transition needs to include solutions for the remaining 47% of energy-related CO2 emissions. For these so-called ‘hard to abate’ sectors, such as heavy trucking, iron and steel, cement, shipping, and aviation, scalable solutions are still being developed.

4. There is no ‘one size fits all’ solution

The ‘hard-to-abate’ sectors show that the energy transition challenge cannot be solved by one type of solution. Instead, there is a need for a combination of solutions to achieve ‘net zero’. Broadly speaking, solutions for decarbonization fall into one of three categories:

a) Increasing energy efficiency: among all the primary energy used, only 33% is converted into useful energy. The remaining 67% is lost due to the inefficiencies in electricity generation, transport, heavy industry and buildings. So, as the IEA states, energy efficiency is one of the best solutions towards building an inclusive, sustainable, affordable and secure energy system.

b) Developing alternative, low-carbon energy: well-known examples are the switch from fossil fuels to renewable energy sources such as wind and solar for power generation, or the switch from internal combustion engines to electric vehicles. But scalable solutions to replace kerosene for aircrafts, bunker fuels for ships, or naphtha for chemical production are still being developed.

c) Capturing unavoidable emissions: there will be instances where increased energy efficiency or alternative low-carbon energy sources are not viable. In these cases, carbon capture plays a role, either mechanically through carbon capture and storage (CCS) facilities, or with nature-based solutions, such as reforestation.

5. A multistakeholder approach is needed

As with the response to COVID-19, individuals carry a large responsibility for making the energy transition happen. However, given the complexities mentioned before, a broad coalition of public and private actors is needed to address the unique region/sector carbon footprint, and to develop a mix of solutions that are technically, economically, politically and socially viable in every part of the world. These actors include governments and policy-makers, businesses, international organizations, think-tanks, NGOs and academia.

To capture a glimpse of how this works in practice, the Mission Possible Platform provides a good starting point. This platform is an initiative focused on delivering emission-reduction measures and innovations in order to decarbonize seven of the ‘hard-to-abate’ sectors, including steel (~6.5% of global energy CO2 emissions), chemicals (~3%), aviation (~2.7%), and shipping (~2.6%). For each of these sectors a broad coalition of public and private actors is developing scalable solutions.

To learn more about Mission Possible Platform and the underlying initiatives, all were invited to participate at the Virtual Industry Transition Day on 7 July.

The Industry Transition Day was an important starting gun for the journey towards COP26 in November 2021 where the World Economic Forum’s Climate Initiatives are working with the High Level Champions for Climate Action and others towards sectoral agreements. More than 180,000 viewers from around the world joined the conversation through five live streamed sessions, across three key themes, with more than 30 world-class speakers and more.

Check out the live blog for all the main highlights.