WEF Says Pandemic Could Have Negative Effects on Global Transition to Clean Energy Without Urgent Stakeholder Action
The current coronavirus pandemic could put the brakes on the world’s recent progress and attempts in transitioning to clean energy, says the World Economic Forum (WEF). The massive drop in oil prices, currency volatility, and a focus by government to redirect green spending on mitigating the socioeconomic costs of COVID-19 are pulling attention and funding from the clean energy movement.
But on the other hand.
“The coronavirus pandemic offers an opportunity to consider unorthodox intervention in the energy markets and global collaboration to support a recovery that accelerates the energy transition once the acute crisis subsides,” said Roberto Bocca, Head of Energy and Materials, World Economic Forum. “This giant reset grants us the option to launch aggressive, forward-thinking and long-term strategies leading to a diversified, secure and reliable energy system that will ultimately support the future growth of the world economy in a sustainable and equitable way.”
According to the latest edition of World Economic Forum’s Fostering Effective Energy Transition 2020, policies, roadmaps and governance frameworks for energy transition at national, regional, and global levels need to be more robust and resilient against external shocks.
COVID-19 has forced companies across industries to adapt to operational disruption, changes in demand and new ways of working, and governments have introduced economic recovery packages to help mitigate these effects. If implemented with long-term strategies in mind, they could also accelerate the transition to clean energy, by helping countries scale their efforts towards sustainable and inclusive energy systems.
The report draws on insights from Energy Transition Index (ETI) 2020, which benchmarks 115 economies on the current performance of their energy systems – across economic development and growth, environmental sustainability, and energy security and access indicators – and their readiness for transition to secure, sustainable, affordable, and inclusive energy systems.
The results for 2020 show that 75% of countries have improved their environmental sustainability, even as the global average score for this dimension remains the lowest of the three categories assessed. This progress is a result of multifaceted, incremental approaches, including pricing carbon, retiring coal plants ahead of schedule and redesigning electricity markets to integrate renewable energy sources.
However, this hard-won progress highlights the limitations of relying only on incremental gains from existing policies and technologies to complete the transition to clean energy. The greatest overall progress is observed among emerging economies, with the average ETI score for countries in the top 10% remaining constant since 2015, signalling an urgent need for breakthrough solutions – one threatened by COVID-19.
The Energy Transition Index 2020
Sweden (1) leads the ETI for the third consecutive year, followed by Switzerland (2) and Finland (3). France (8) and United Kingdom (7) are the only G20 countries in the top 10.
They share common attributes, such as limiting energy subsidies, reducing reliance on imports (thereby improving energy security), achieving gains in energy intensity of GDP, and increasing political commitments to pursue ambitious energy transition and climate change targets.
Performance is mixed among the rest of the G20. Emerging centres of demand such as India (74) and China (78) have made consistent efforts to improve the enabling environment, which refers to political commitments, consumer engagement and investment, innovation and infrastructure, among others.
In China’s case, problems of air pollution have resulted in policies to control emissions, electrify vehicles, and develop the world’s largest capacity for solar PV and onshore wind power plants. For India, gains have come from a government-mandated renewable energy expansion program, now extended to 275 GW by 2027. India has also made significant strides in energy efficiency through bulk procurement of LED bulbs, smart meters, and programs for labelling of appliances. Similar measures are being experimented to drive down the costs of electric vehicles.
Meanwhile, the trend has been moderately positive in Germany (20), Japan (22) and South Korea (48) and Russia (80). Germany has demonstrated strong commitment in coal phase-out and decarbonization of industry through clean hydrogen, however affordability of energy services has been a challenge. Both Japan and Korea face natural disadvantages as net energy importers. However, innovative business environment, infrastructure development, and political commitment remain key enablers in both countries. In Russia, the energy sector remains a strong pillar of the economy and continues to lead globally on energy security, though progress on environmental sustainability has been moderate.
On the other hand, the ETI scores for United States (32), Canada (28), Brazil (47) and Australia (36) were either stagnant or declining. The challenges confirm the complexity of trade-offs inherent in energy transition. In the United States, the headwinds have been mostly related to policy environment, while for Canada and Australia, the challenges lie in balancing energy transition with economic growth given the role of energy sector in their economy.
The fact that only 11 out of 115 countries have made steady improvements in ETI scores since 2015 shows the complexity of energy transition. Argentina (56), China (78), India (74), and Italy (26) are among the major countries with consistent annual improvements. Others, such as Bangladesh (87), Bulgaria (61), Czech Republic (42), Hungary (31), Kenya (79) and Oman (73) have also made significant gains over time.
On the other hand, scores for Canada (28), Chile (29), Lebanon (114), Malaysia (38), Nigeria (113), and Turkey (67) have declined since 2015. The United States ranks outside the top 25% for the first time, primarily due to the uncertain regulatory outlook for energy transition.
More than 80% of countries have improved performance on energy access and security since 2015, but progress in developing countries in Asia and Africa remains a challenge. Energy access programs in these regions need to prioritize community services, such as street lighting, district heating and cooling, cold storages for food and pharmaceuticals preservation, urban sanitation and traffic management.
In advanced economies, “access” is defined by affordability. Utility bills represent growing share of household expenditure, a challenge that could be exacerbated by the economic uncertainties created by COVID-19. Furthermore, energy security is increasingly vulnerable to extreme weather events such as hurricanes, floods and wildfires – which have been rising in frequency and intensity – and cyber-attacks.
While the gaps between what is required, what is committed, and what is likely to be achieved remain large, the compounded disruptions from COVID-19 have destabilized the global energy system with potential short-term setbacks.Ultimately, greater efforts are needed to ensure that recent momentum is not just preserved, but accelerated in order to achieve the ambitious goals required.
In his 20s, he sailed around the world on small yachts and wrote a series of travel articles called, ‘The Hitchhiker’s Guide to the Seas’ travelling by hitching rides on yachts (1989) in major travel and yachting publications. He currently lives in Groningen, the Netherlands where he has set down his anchor to raise a family and write. Founder and publisher of industry publication Blockchain News (EST 2015) and director of education company Blockchain Partners (Oracle Partner) – Vancouver native Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur. He has written over 2500 articles on Blockchain technology and startups at Blockchain News and has also published in Harvard Business Review, Venturebeat, Wired, The Guardian and a number of other publications.
Kastelein has an Honorary Ph.D. and is Chair Professor of Blockchain at China’s first blockchain University in Nanchang at the Jiangxi Ahead Institute software and Technology. He has over a half a decade experience judging and rewarding some 1000+ innovation projects as an EU expert for the European Commission’s SME Instrument programme as a startup assessor and as a startup judge for the UK government’s Innovate UK division. Kastelein has spoken (keynotes & panels) on Blockchain technology at over 50 events in 30+ cities.