The transformation of the world’s energy systems from being powered by fossil fuels to renewables has seen huge progress with the “vast majority” of countries moving toward clean power production but, according to a new World Economic Forum (WEF) report, progress has been stalling – and Covid-19 has imperilled the advances made so far.
The study, Fostering Effective Energy Transition 2020 – which is based on WEF’s annual Energy Transition Index (ETI), found there was “particular reason for optimism” in the fact that of the 115 economies studied, 94 were closer to having renewables-powered, environmentally sustainable energy systems than a year ago.
Yet, WEF, which organises the yearly meeting of economic thought-leaders held in Davos, Switzerland, noted that “gains” in the last five years “have only been incremental and breakthrough solutions are urgently required”, with disruptions caused by coronavirus “risk[ing] cancelling out any progress, even though the pandemic presents an opportunity to consider how to accelerate the clean energy transition”.
The UK topped the table among G20 countries ranked on the ETI – which is based on a 50-point ‘triangular’ matrix of transitional improvements in climate and environment, energy security and access, and inclusive economic development – ranking seventh overall, for “ demonstrating a balanced energy system, as well as a strong enabling environment for the energy transition”, highlighted by the country’s phasing out its coal-powered generation “ahead of schedule”.
Sweden, Switzerland and Finland place first, second and third in WEF’s ETI, which is in its tenth edition, having the highest scores for ‘energy system performance’ and ‘transition readiness’, with Denmark, Norway, Austria, France, the Netherlands and Iceland rounding out the top ten.
“The energy transition is certainly about climate but not only this – the environmental aspect is key, for sure, but also the elements of energy security and economic growth,” the lead author on the report Pedro Gomez, head of WEF’s oil & gas industry unit, told Recharge. “This is complex issue – there are so many variables we can use.
“We are making progress [in the energy transition] but that progress is not even. And that is the challenge. The energy transformation is happening. But that are just a handful of countries that have move forward in a consistent manner.”
The slow-down identified by WEF needs to be countered by governance frameworks for energy transition at national, regional, and global levels that are “robust and resilient against external shocks”, said Gomez, spotlighting that that Covid-19 has created a “further compound disruption” of historical falls in oil demand, price volatility and “pressure to quickly mitigate socioeconomic costs [that have placed] near-term trajectories in doubt”.
“The energy sector is used to booms and busts, particularly the oil & gas world, but what we are experiencing today is unprecedented; it is changing the industrial landscape,” he said. “And behind this the demands of climate change have not gone.
“We are not going back to where we were. There is going to be a new reality – Earth 2.0 – but some of the challenges, including emissions, are the same. We see what the electricity companies are doing, the oil companies, things are changing fast with renewables.”
“We are travelling in the dark and all swans are black in the dark,” he added, referring to the ‘black swan’ theory of unpredictable extreme occurrences that disrupt markets.
Gomez said that despite the “unforeseeables” being spurred by coronavirus, the WEF ETI pointed to petro-giants and oil-dependent countries “doing the right things, building in resilience to their energy systems, lowering emissions”.
“Transition implies a journey. Not an overnight shift. It is different based on the sector your company operates in, based on the resource you have, based on the ownership you have … how fast you can pivot to address this situation.”
“We need all hands on-deck [for the energy transition]. We need the oil & gas industry to play a role, we need every sector of the economy to play a role,” Gomez added.
Gomez reckons an all-of-the-above approach to energy transition technology solutions will help build momentum as the world comes out of the first wave of Covid-19, ranging from carbon capture, utilisation and storage, through supergrids, to “better solar panels and wind turbines”.
The WEF report underlines that the coronavirus pandemic “offers an opportunity to consider unorthodox intervention” in speeding the energy transition and global collaboration to support a recovery that accelerates the energy transition once the acute crisis subsides – “a giant reset”.
“Addressing the problems we are facing with the ‘same tools’ we have always used will be complicated,” said Gomez. “As we see the world’s governments drafting plans and defining priorities for recovery stimulus packages, we need new solutions.
“And we need to be mindful that some of these solutions will be solve today but will not be very effective for tomorrow. So we must prioritise those solutions that ‘score twice’, today and also in setting the world on the right path for the future.”