In 2022, the need for the energy transition has become even more urgent.
Compounding crises underscore the pressing need to accelerate the global energy transition. Events of recent years have accentuated the cost to the global economy of a centralised energy system highly dependent on fossil fuels. Oil and gas prices are soaring to new highs, with the crisis in Ukraine bringing new levels of concern and uncertainty. The COVID-19 pandemic continues to hamper recovery efforts, while citizens worldwide worry about the affordability of their energy bills. At the same time, the impacts of humancaused climate change are increasingly evident around the globe. The Intergovernmental Panel on Climate Change (IPCC) warns that between 3.3 and 3.6 billion people already live in settings highly vulnerable to climate change.
Short-term interventions to ameliorate immediate challenges must be accompanied by a steadfast focus on a successful energy transition in the medium and long term. Governments today shoulder the challenging task of tackling seemingly opposing agendas of energy security, resilience, and affordable energy for all. In the face of uncertainty, policy makers must be guided by the overarching goals of arresting climate change and ensuring sustainable development. Any other approach, notably investing in new fossil fuel infrastructure, will only perpetuate the existing risks and raise the long-established threats of climate change.
Given the inadequate pace and scope of the transition, anything short of radical and immediate action will diminish – possibly eliminate – the chance of staying on the 1.5°C or even 2°C path. In 2021, IRENA stressed the importance of a wide-ranging shift in the current trajectory across all energy uses. While some progress has been made, it falls woefully short of what is required. The stimulus and recovery efforts associated with the pandemic have also proved a missed opportunity, with only 6% of the G20’s1 USD 15 trillion in recovery funding in 2020 and 2021 being channelled towards clean energy (Nahm et al., 2022).
Acceleration of the energy transition is also essential for long-term energy security, price stability and national resilience. Some 80% of the global population lives in countries that are net energy importers. With the abundance of renewable potential yet to be harnessed, this percentage can be dramatically reduced. Such a profound shift would make countries less dependent on energy imports through diversified supply options and help decouple economies from wide swings in the prices of fossil fuels. This path would also create jobs, reduce poverty, and advance the cause of an inclusive and climate-safe global economy.
Overhauling the plans, policies, fiscal regimes and energy sector structures that impede progress is a political choice. With each passing day the cost of inaction pulls further ahead of the cost of action. Recent developments have demonstrated that high fossil fuel prices, in the absence of alternatives, result in energy poverty and loss of industrial competitiveness. But in the end, it is political will and resolve that will shape the transition path and determine whether it will lead to a more inclusive, equitable and stable world.