Energy Transition

8 steps towards a sustainable economic recovery

Power-generating windmill turbines are pictured during the sunset near Larnaca, Cyprus September 30, 2017.

How to build a bright new future for all Image: REUTERS/Yiannis Kourtoglou

Gerard Reid
Founder and Partner, Alexa Capital
Clay Nesler
CEO, The Nesler Group
Christina Lampe-Onnerud
Founder and Chief Executive Officer, Cadenza Innovation
Claudia Vergueiro Massei
Chief Executive Officer, Siemens Oman
Atul Arya
Chief Energy Strategist, S&P Global
Share:
Our Impact
What's the World Economic Forum doing to accelerate action on Energy Transition?
The Big Picture
Explore and monitor how Energy Transition is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

Decarbonizing Energy

  • A successful transition to a sustainable future will depend on international collaboration and transformations across multiple sectors.
  • Here are eight recommendations for policy-makers to hasten the green revolution.

There has been much discussion over the past few years about the 'energy transition'. The underlying premise is that the transition to lower and zero-carbon energy sources should be accelerated to mitigate the impact of global warming. The current pandemic is shining additional light on global interconnectivity and the need to collaborate and share best practices.

Much of the focus today is on decarbonizing electric power production via renewables, but only about one quarter of global GHG emissions are from electricity. The industrial sector (refining, petrochemicals, fertilizers, cement and steel production) together generates about 21% of GHG emissions. At present, only 15% of industrial energy use is derived from electricity. Shifting the world’s transport sector, which accounts for circa 15% of global emissions, from oil-based to low carbon fuels will also require a diverse set of technologies.

Have you read?

As governments across the world consider implementing fiscal incentives to combat the economic downside from COVID-19 and to offset the threats posed by climate change, there are many opportunities to benefit from the sustainable revolution. Here are eight recommendations to consider for immediate implementation:

1. Ensure stimulus packages shape a sustainable future

When clean economy jobs are put at the centre of stimulus programmes, both a long and short-term jobs-boost across a diverse workforce is achieved. After the great recession in 2008, hundreds of thousands of jobs were created across the world as countries rolled out wind, solar and grid projects. Going forward, government stimulus could be used to support labour-intensive work such as energy-efficiency projects in buildings and industry. In addition, any support for carbon-intensive industries should include a commitment to carbon reduction.

2. Invest in the future

Rather than bail out the ‘past’, the better response is to enable businesses to become leaders in the future by enabling investments in technologies such as batteries, hydrogen, electric transportation, and AI, and in areas as diverse as sustainable agriculture, clean environment and clean food. It is also critical to invest in under-capitalised developing countries which are the growth markets of the future, and which are critical to meeting climate goals. Long-term government policy has traditionally inspired private capital and would potentially super-charge a global sustainable revolution.

3. Empower the consumer!

The more engaged the consumer, the greater the likelihood that stimulus packages will make positive impacts. Transparency is important and product efficiency standards for household goods or automobiles help provide this to consumers. Incentives and fees can also shape consumer behaviour and drive clean investment. One example is a ‘cash for clunkers’ programme which incentivises the purchase of cleaner vehicles, improving the climate and reducing air pollution.

4. Create a level playing field for clean energy

Across the world there are subsidies or taxes in place which benefit the incumbent fossil fuels industry at the expense of low-cost clean energy. In Germany, for instance, retail consumers pay up to 30 euros cents per kWh for electricity while gas or oil for heating purposes is only 7 cents. The introduction of a carbon fee would motivate badly needed investments in clean infrastructure, provide regulatory certainty to investors and businesses, and create a wave of entrepreneurship that can quickly stimulate the economy and benefit the environment.

5. Modernize existing infrastructure

Over many years, facility infrastructure has been allowed to deteriorate and many now lack modern technology and physical infrastructure to maintain safe, efficient, resilient and flexible operations under emergency and new normal conditions. The guiding principle for infrastructure renewal should be to build back better. Renewed facilities must meet modern standards for energy efficiency and air and water quality, and minimize long-term operational costs. Facilities should also have resilient, decentralized energy systems and be able to adapt to public health or emergency situations.

6. Simplify government bureaucracy

One big obstacle to investments in clean energy is complex and burdensome regulation. For example, rooftop solar installations in most of the United States are twice as expensive as they are in Germany and take three times as long due to complex permitting regulations and cumbersome installation laws. These types of barriers exist in multiple countries across the entire energy sector, illustrating the need for simplified accreditation and permitting processes.

7. Encourage state-of-the-art electricity system installations

Electricity companies across the world have done a very good job of maintaining electricity reliability despite the coronavirus. The crisis has also shown that our power system can operate with greater amounts of intermittent renewables than previously thought. However, negative prices and increasing price volatility showed us that there is a limit to what the current system can do. Going forward, the electrification of transport and buildings (acting as “prosumers”) is the next big opportunity and challenge for power systems, driving the need to strengthen and digitalize the 21st century distribution grids.

8. Incentivise energy sector restructuring

The fossil fuel industry, from shale oil drillers in Texas to coal miners in China, is in economic distress. Much of the industry will have to go through significant restructuring, causing local economic impacts. Financial incentives need to fund the transition to the clean energy economy and convert shuttered fossil fuel plants to alternative uses such as data centres.

Discover

What's the World Economic Forum doing about the transition to clean energy?

Building momentum

In summary, these eight recommendations can help lead the way towards a low-carbon, clean energy future. By using the momentum prompted by the global pandemic, a “can do” attitude from our political leaders, global businesses and local communities, provide awesome opportunities to build a sustainable future globally now. It is, perhaps our biggest opportunity to do good across the world.

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Energy TransitionHealth and Healthcare Systems
Share:
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

What is needed for inclusive and sustainable global economic growth? Four leaders share their thoughts 

Liam Coleman

May 24, 2024

About Us

Events

Media

Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum