RIYADH: The energy transition is more complicated than previously thought, despite the widespread global initiative to reduce carbon dioxide emissions and meet net-zero targets, disclosed a new report published by the International Energy Forum.
According to the release, which was in conjunction with S&P Global Commodity Insights, several factors — including energy security and affordability — are slowing the transition movement, which is critical for the healthy existence of the planet.
“Developments over the last two years demonstrate that the energy transition is more complicated than has previously been thought. While the transition proceeds, expectations of a linear global transition have been shaken as climate goals compete with priorities around energy security, energy access and affordability,” said the IEF in the report.
In an interview with Arab News, the IEF Secretary-General Joseph McMonigle said the energy transition has been going on since the 18th century. Still, the current change is much different from the previous ones.
“Energy transitions have been ongoing since 1709, but this one is different. We have committed to eliminating CO2 emissions ... in just 25 years. Transforming a $100 trillion global economy to a decarbonized energy system in 25 years is a massive undertaking,” said McMonigle.
Geopolitical tensions and energy crisis
The report further noted that rising energy prices triggered by geopolitical tensions, including the Ukraine invasion, have also played a crucial role in reducing public support for policies to enable a low-carbon future.
“The risks have increased significantly that high energy costs will undermine public support and acceptance for policies and investments to enable the transition to a low-carbon economy,” added the IEF in the report.
McMonigle said that the energy crisis of the past two years points to the need to develop a multi-dimensional approach inclusive of different situations in different parts of the world and is equitable.
According to the report, the emergence of a new north-south divide — or the economic disparity between the wealthy countries in the Northern Hemisphere and the developing countries in the South — has fostered an increasingly sharp debate over the cost and timing of the energy transition.
“There is widespread recognition that the path to net zero will have to travel via the Global South, and therefore it is in everyone’s interest to collaborate and cooperate to achieve the shared goals,” added McMonigle.
The report pointed out that the trilemma surrounding energy security, affordability and sustainability are very different in Africa, Asia and Latin America compared to Europe or the US, where per capita incomes are nearly 40 times higher than in developing nations.
“This divergence makes addressing the gaps in policy, technology and financing a significant challenge across geographies,” the IEF said.
The future of renewable energy
The report, however, added that renewable energy installations are progressing steadily globally, with 301 gigawatts of plants installed in 2022 alone.
S&P Global expects that 70 to 75 percent of the new generating capacity installed between 2023 and 2050 will be renewable power.
“Investments are already increasing in renewables, as solar in particular has become cost-competitive with fossil fuels, but the scale of investment needs to rise dramatically,” said McMonigle.
According to S&P Global Commodity Insights, renewable power and energy storage investments totaled around $477 billion in 2022 and will average $700 billion annually through 2030.
The report also highlighted the growth of the electric vehicles market, which is considered crucial to materializing the energy transition.
“In the first half of 2023, 28 percent of new cars sold in China were EVs; in Europe, 19 percent; and in the US, 9 percent. Technology advances, government support, regulation, growing private sector support — all of these will continue to push the transition forward,” the IEF added.
McMonigle, citing the predictions of the International Energy Agency, noted that renewables would only get the world halfway to climate goals, which makes it crucial to increase investments in clean technologies, including the circular carbon economy, hydrogen and nuclear fusion.
He, however, noted that the renewable energy sector could face supply chain issues if geopolitical tensions continue.
“Since Russia’s full-scale invasion, the global energy market has become partitioned between tradeable and sanctioned oil and gas, which has caused major dislocations and a lack of transparency in energy markets, which is regrettable,” said McMonigle.
He added: “Meanwhile, as renewables and EVs grow exponentially, we are seeing constraints on the supply chains for clean energy, which have been made worse by geopolitical tensions.”
Saudi Arabia’s sustainability drive
The IEF secretary-general also lauded Saudi Arabia’s progress in the sustainability journey, especially after the launch of the Saudi Green Initiative in 2021.
“The Kingdom has committed to increasing its renewable generation capacity by 50 percent of total capacity by 2030, reducing carbon emissions by 278 million tons per year, cutting methane emissions by 30 percent by 2030, and achieving net zero emissions by 2060,” said McMonigle.
He added: “The government is investing $5 billion in low-carbon hydrogen, huge emissions cuts in Riyadh city, massive tree planting, increased energy efficiency and improved waste management.”
