How finance, ag-tech and more can speed the energy transition - 4 experts explain

Moving away from coal and towards clean power is critical to mitigating the worst impacts of climate change and meeting the goals of the Paris Agreement. While the world is better placed than ever has been to take real action, much work is ahead.

The energy transition will require new types of thinking and collaboration. These experts share a breadth of options as leaders drive new solutions for the shift.

The challenge: To reach net zero by 2050, we must decarbonise – and we must do so quickly. To succeed, we need to concentrate on the sectors of our economy which emit the most carbon, such as fertiliser production, cement making and steel production. These sectors are vital to the economy, and strong job creators.

The solution: In the UK, the government is supporting projects that decarbonise six of the country’s largest industrial clusters to help scale climate action. HyNet’s UK cluster in the North West of England and North Wales has a deep industrial heritage and it’s here that the company will deliver low-carbon energy infrastructure to decarbonise this region, integrating hydrogen into the economy and infrastructure all while slashing carbon dioxide emissions.

Starting as soon as 2025, HyNet will produce, store and distribute low-carbon hydrogen as well as capture carbon dioxide emissions from industry, locking away the carbon offshore deep underground. The hydrogen will heat homes across the region as well as replace fossil fuels in industry and transport, supporting the decarbonisation of a vast range of industry sectors, including chemicals, glass, ceramics, oil refining, food, paper, and automotive.

Just HyNet’s efforts in the UK will reduce annual carbon dioxide emissions by 10 million tonnes by 2030 – the equivalent of taking four million cars off the road each year. A resulting hydrogen economy will create thousands of local jobs, leveraging and reskilling an existing skilled workforce. Such initiatives will also safeguard employment by providing a route to long-term sustainability for organisations to operate in our future net-zero economy.

-David Parkin, HyNet Project Director, HyNet

The challenge: Fully 80% of the food and 40% of jobs across sub-Saharan Africa and South Asia are tied to small-scale agriculture. Yet, of the roughly $600 billion in climate-related financing globally, just 0.2%, goes to small-scale agriculture value chains and the financing institutions serving them. As all future energy demand growth--and CO2 emissions--will come from low- and middle-income countries, a better approach is needed to ensure a sustainable, resilient future for these populations.

The solution: Climate finance can build low-carbon development pathways with the rural poor tackling a number of social, economic and environmental issues simultaneously. Our research team at Duke University’s Energy Access Project, in partnership with RMI, Shell Foundation, and the U.K.’s Foreign, Commonwealth & Development Office, has been studying three potentially transformative agriculture value chains where solar is enabling clean, low-cost and distributed cold storage, irrigation, and processing capabilities for rural communities in Africa and South Asia.

By leveraging local knowledge and networks, these enterprises are helping farm communities increase income through higher yields and higher-quality produce, reducing the risk of crop failure, and reducing post-harvest loss. They’re building resilience in communities facing more frequent and destructive droughts, heat waves, floods, and invasive pests. Scaling these value chains could deliver real carbon mitigation benefits as well, as seen in the figure below.

National adaptation plans that recognize the role of AgTech enterprises, combined with climate finance that rewards them for verifiable climate benefits, would help jump-start the sectoral transformation that climate-vulnerable communities need most.

-Jonathan Phillips, Director, James E. Rogers Energy Access Project at Duke University

Challenge: Over the past decade, low- and lower-middle income countries (where half of the global population reside) accounted for only 5% of the global investment in energy transition. Meanwhile, three-quarters of coal-fired power capacity is located in developing countries. These countries require support to phase out and replace coal-fired power.

While urgency is crucial for 1.5 degrees, moving too fast and without consideration of all stakeholders risks jobs, livelihoods, communities and nature. In addition to the finance sector’s usual central role providing investment and technical support, there is also an irrefutable need to engage in the social dialogue, ensuring worker re-skilling, communities are supported, and natural environments respected, for a truly sustainable transition.

Solution: The World Economic Forum has developed the Principles for Financing a Just and Urgent Energy Transition (JUET Principles), a multi-stakeholder initiative to help accelerate financing for a just energy transition in developing countries. It consists of eight principles designed to guide investment and financing decisions and facilitate collaboration among stakeholders, as well as a call to action to countries to create the conditions to attract investment. The JUET Principles will be supported with workshops and model transactions highlighted to accelerate understanding and application and driven by three platforms at the World Economic Forum: the Sustainable Development Investment Partnership (SDIP); the Platform for Shaping the Future of Energy, Materials and Infrastructure; and the Civil Society Community. With initiatives like JUET helping to guide the energy transition in developing countries, recognition and support is provided across the energy ecosystems, including workers, communities and natural environments, safeguarding both economic and climate justice.

-Nikki Kemp, ASEAN Hub Director, Sustainable Development Investment Partnership (SDIP)

The challenge: Traditionally, diverse end-use sectors such as buildings and industry operate separately, meaning we miss out on opportunities to recapture excess energy and apply it where it is needed. To accelerate the energy transition, we must optimize energy use and integrate renewables cost-effectively. This requires an energy system that is flexible, intelligent, and integrated.

The solution: Energy system integration is not a set of specific technologies, but rather a concept for how several technologies can work together across siloes, so we use resources more efficiently. This includes using district energy as thermal storage for balancing electricity systems to decarbonize heating and cooling. It also involves creating circular systems. Excess heat given off from cooling equipment in supermarkets and data centers can be used in nearby homes and buildings. Finally, it also involves using digital tools to gather performance data, and match demand and supply across sectors to coordinate improvements.

For the heating and cooling sector, energy system integration is a necessary step to reduce greenhouse gas emissions. We have a big opportunity to cut consumption here, as heating and cooling make up roughly 50% of the total final energy consumption in Europe. In Denmark for example, energy system integration could halve the cost of their emission reduction goals. The technology we need already exists – be it district heating, heat pumps, building automation or heat recovery. New awareness of the potential of this approach can lead to the collaborations needed to put these solutions into place.

-Jürgen Fischer, President, Danfoss Climate Solutions