The energy transition is a pathway toward transformation of the global energy sector from fossil-based to zero-carbon by the second one half of this century. At its heart is the need to reduce energy-related CO2 emissions to limit climate change. Decarbonisation of the energy sector requires urgent action on a global scale, and while a global energy transition is underway, further action is required to reduce carbon emissions and mitigate the consequences of climate change. Renewable power and energy efficiency measures can potentially achieve 90% of the required carbon reductions.
The power transition will be enabled by information technology, smart technology, policy frameworks and market instruments. IRENA has assessed decarbonisation pathways through REmap, and is equipped to back up and accelerate the vitality transition through providing the essential knowledge, tools and support to Member countries because they raise the share of renewable power within their power sectors.
The Energy Transition has numerous dimensions. The ubiquity of energy in modern industry and society will be sure that the impacts are felt throughout the global economy. Policymakers have an opportunity to pursue pathways that effectively channel the transition to deliver a potential energy system that is secure, sustainable, affordable and inclusive. A strong enabling framework and multi-stakeholder collaboration are key for the effective energy transition.
There are several universal drivers for energy transition, which turn it into a concern for all countries to actively investigate their priorities:
Demand and provide shifts: Global energy consumption is anticipated to increase by 30 percent from 2017 to 2040. This growth is driven primarily by non-OECD countries, because they move nearer to universal access to energy and consume more energy to support economic and industrial growth, and as developed countries decouple energy consumption and GDP. Additionally, the long run demand also will be met with a more diversified primary energy fuel portfolio, driven by the gradual replacing coal in power generation by renewable energy sources and gas, by reduced interest in liquid hydrocarbons due to electrification of transport, and by increased prioritization of national energy security and import independence.
Innovation: Innovation has become a constant companion in the energy system, ushering previous transitions from biomass to coal, and subsequently from coal to liquid hydrocarbons. While previous transitions were gradual processes, the power market is looking towards a dynamic future. Recent trends in technical maturity and price reductions in solar photovoltaics, onshore and offshore wind, battery storage and unconventional fuel extraction fundamentally have altered the international energy balance. Moreover, technologies such as smart grids, demand response and blockchain will open up new frontiers for the future energy system by changing the connection between consumers and suppliers.
These new energy market participants demand new set of skills, highlighting the necessity for human capital development.
Environmental concerns: The power system contributes two-thirds of global greenhouse gas emissions. The necessity to act has materialized in landmark international cooperation (like the Paris agreement) and national renewable energy targets in countries such as India and China. Private sector organizations have stepped up their responses: the Norwegian sovereign wealth fund announced divestment from coal-based assets, while oil and gas majors have raised stakes in renewable power and Swiss Re is implementing ESG benchmarks across its entire $130 billion investment portfolio.
However, progress on environmental sustainability is slow, because the carbon intensity of the global energy system remains flat, while air pollution has worsened in numerous countries and two-thirds in the world’s energy consumption is not subjected to efficiency interventions. Going forward, as countries work to meet increased demand, environmental concerns will intensify vaaelo implications for energy system reliability and fuel diversity planning.
Driven by these trends, the energy transition is well underway, and there are significant opportunities for countries to improve the performance of the energy systems.
Policy decisions made today will determine if the energy system of the future is capable of delivering across its three key imperatives: economic growth and development; energy security and universal access; and environmental sustainability. The difficulties in the current system are largely because of path dependencies from historical over-(or under-)prioritization of one of these three key imperatives. Consumption patterns and sunk investments represent significant socioeconomic lock-in, adding to the system inertia.