3 strategies for a truly global and inclusive energy transition

The global energy transition is a defining challenge of our era. Its success depends on more than just technological advancements; it demands transformative financing mechanisms, international collaboration, and a truly global perspective. The question is no longer if we can achieve a clean energy future, but how we address the financial, structural, and regional barriers in order to do so.

I believe the energy transition must include three crucial dimensions:

For an even deeper dive into the issue, look for our white paper, Financing the Energy Transition: Meeting a Rapidly Evolving Electricity Demand, which will be published during the World Economic Forum Annual Meeting 2025.

The energy transition is not one-size-fits-all. Each region faces unique challenges and opportunities shaped by its resources, policies, and economic realities. Addressing these with tailored solutions is essential for driving meaningful progress.

For instance, the Asia Pacific region presents a diverse landscape. China is rapidly expanding renewables, with significant investments projected to reach $675 billion in 2024. This expansion is being driven by strategic policies such as government subsidies for renewables, and carbon trading mechanisms. South-East Asia remains heavily reliant on coal, with 67% of its electricity generated from fossil sources. Doubling investments in renewable energy in this region is essential to meet climate goals, and reduce reliance on fossil fuels.

Similarly, the Middle East and North Africa are witnessing a gradual shift from their historical dependence on fossil fuels, as more countries set net-zero emission targets. However, the economic and political challenges are significant, given that fossil fuel revenues constitute a substantial portion of government budgets in these regions. Tailored solutions, like those implemented by more advanced economies such as the UAE and Saudi Arabia, which leverage natural resources to increase non-oil revenues, are crucial. In Africa, despite having vast renewable resources, significant energy access challenges persist. Addressing these requires a multifaceted strategy involving policy support, financial mechanisms, and international cooperation.

New financing solutions are vital for scaling new energy technologies, as traditional funding mechanisms often fall short in supporting the high upfront costs and risks associated with them. Blended finance solutions and concessional loans are effective strategies. Development finance institutions play a crucial role in mobilizing capital, by providing risk mitigation instruments and supporting international development. By combining public and private capital, blended finance can fill investment gaps and attract private investors to otherwise non-bankable projects.

Export credit agencies are also essential for enabling companies to participate in international energy transition projects. These government-backed institutions provide export credit guarantees that reduce default risk and lower financing costs for projects in higher-risk areas. Performance guarantees further enhance project bankability, by ensuring that technology performs as expected – thereby encouraging investment in otherwise risky projects.

The use of green bonds is another promising avenue; India issued over $10 billion worth for clean energy projects between 2016 and 2021. These bonds provide a vehicle for private investment in large-scale renewable projects, facilitating the integration of renewable energy and modernizing grids. In Europe, the emphasis on sustainable bonds and debt has supported significant investment in energy transition projects, though challenges remain in sectors like wind power and electricity grids.

Small- and medium-sized enterprises (SMEs) are pivotal for innovation and market development in the energy sector. However, they face barriers such as limited access to financing and regulatory challenges. Addressing their specific needs is crucial for unlocking their potential to scale up new technologies. Governments can support SMEs by providing innovation funds and access to expertise.

The energy transition also benefits from integrated infrastructure planning, and international cooperation. By considering the entire energy system holistically, governments can improve the economic viability and bankability of projects. For example, anticipatory investments in transmission and distribution networks can prevent bottlenecks, and help accommodate future demand. International cooperation is essential for adopting energy transition technologies, especially in developing countries, where support for training and project development is critical.

We are at a critical juncture. The success of the global energy transition hinges on our ability to bridge financing gaps and tailor solutions to diverse regional realities. The challenges are immense, but so are the opportunities.

Our forthcoming white paper by the Electricity Governors Forum, in collaboration with Siemens Energy and other partners, serves as a call to action. It is not the final word, but the start of a vital conversation about how we can achieve a just, inclusive, and effective energy transition.